Economic Inequality and why not to care about it
Excellent essay from
Don Boudreaux:
I Do Not Care About Income or Wealth Inequality
Richard Ammerman, a registered nurse in Rhode Island, challenges me by e-mail to answer �yes or no� to the question: Do I care about income inequality?
No.
I do not in the least care about income (or wealth) inequality.
����
I suspect that some of my bleeding-heart-libertarian friends will berate me for being insensitive, so it is chiefly to them that I address the following explanation of my one-word answer.
I care � very deeply � whether the process for pursuing one�s life�s goals is fair or not. I want everyone to have as fair a chance in the economy as is humanly possible. I despise special privileges that stack the deck either in favor of Jones or against Smith. (We can have a debate about what the details of �fair process� and �special privileges� look like, but this post is not the place for such a debate.) But I do not care about differences in monetary income or wealth as such.
If (by whatever criteria) the process is fair, then the outcomes are fair. If the process is not fair, then at least some outcomes are lamentable. If those lamentable outcomes involve too little income for Smith and too much for Jones, then this income difference is evidence of the unfair or skewed or crony-fied process. But the object of my concern in such situations isn�t the income difference as such; rather, it�s the unfair or skewed or crony-fied process that gave rise to it.
I�m all for correcting the process, and would be no less in favor of correcting the process if I were told that such a correction will increase income inequality as I would be in favor of correcting the process if I were told that such a correction will decrease income inequality. Again, income differences can at best serve as evidence of a problem; the differences themselves � the income inequalities themselves � are not the core problem.
Worrying about income (or wealth) differences as such has always for me smacked of childishness. It�s envy elevated into public policy.
Emphasis mine -- love it!
envy elevated into public policy
A bit more -- it's a long essay with some good comments. This is just an excerpt. Don is talking about efforts at the margin -- working on the thin line between success and failure where the odds are higher and the potential rewards that much greater:
Because I know that most people in market-oriented economies who are materially wealthier than I am produced their wealth � they made the valuable contributions at the margin that generated their wealth � their wealth is in no way anything that I or anyone else has an economic or an ethical claim to. I understand that, were it not for the efforts at the margin of those �rich� people, the wealth that they have was not taken from me or from anyone else; it was produced by them and would not exist were it not for their efforts. (That the likes of Sen. Elizabeth Warren are led by ignorance of the importance of thinking at the margin to a failure to understand this truth does nothing to make it less true.) So for me to envy their possession of their fine car or luxury mansion or private jet or whatever would be evidence in me of smallness of mind and spirit � a smallness that I hope never marks my character.
Like I have said before, money is fungible. Bear Sterns and MF Global failed. These entities lost billions of dollars but where did the money actually go? Where were the trucks taking it away.
Conversely, a single mom in Scotland single-handedly created a multi-billion dollar global business*** inside of ten years.
And as a reminder, I am very much against crony capitalism. I am a strong advocate of the free-market. Wealth generated in the free-market helps everyone. When was the last time you were employed by a poor person?
*** Harry Potter of course
Posted by DaveH at May 5, 2013 11:04 AM