What are the best ways to combat inequality?

Richard Epstein writes at Hoover's Defining Ideas blog,

The critical political struggle of the 2016 presidential election may well be the redistribution of wealth. How that issue plays out is likely to depend on whether it is cast in terms of economic growth or income inequality. If the Republicans successfully push the growth agenda, then the Democrats will be on the defensive. If the Democrats drive home the theme of income inequality, then the Republicans will squirm. This is a contest that the Republicans should win if they play their cards correctly.

...Put simply, it is an intellectual fantasy to think that it is possible to address questions of inequality without taking into account any productivity losses that these proposals may take. Those difficulties do not arise if the first emphasis is placed instead upon the creation of wealth. Indeed it is altogether possible to improve the position of the worst off in society by a set of productive measures that widen the income gap between rich and poor.

Assume that we have just two groups in society, one of whose members all have wealth at the level of 10 and the second, far smaller, have wealth at the level of 1,000. A change in legal position that increases the wealth of the bottom group from 10 to 15 and the top group from 1,000 to 1,200 will increase absolute inequality even as it improves the position of the people at the bottom. Ironically, it will also give larger percentage increases to those at the bottom. Indeed, many social changes do produce gains across the board. But it is typically beyond the capacity of any social planner to steer productive activity in ways that ensure that whatever growth does take place will result in a reduction of any income gap by any system of state taxation and regulation.

This line of reasoning has not, of course, stopped the champions of income equality in the Democratic Party from pushing its front-running candidate, Hillary Clinton, into putting the inequality issue front and center during the current campaign.

...But it is a much harder position to think of how best to provide those “robust services” to get children out of poverty. On this score, the standard progressive line is to favor stronger unions within the framework of an overall public school system. But that system works for the benefits of the unions, and not for the benefit of the children who are denied access to charter schools, which provide better education to the children that they teach than ordinary public schools.

...Sensible policies to combat inequality follow from a consistent classical liberal position, which seeks to promote competition in the private market and in the provision of public education. The rest of the egalitarian program is counterproductive insofar as it keeps the poor worse while leaving the rich worse off as well. That is a strategy for dual ruin that will only deepen the current economic malaise.

Read more here.