Inequality isn't a problem: it's a driver of progress

The London Telegraph ^ | May 2, 2014 | Andrew Lilico

[2ndDivisionVet]

Is there a genuine "issue of inequality"? I say no. There are (or at least may be) genuine issues of poverty, market and regulatory failure in the financial sector, or how best to raise taxes to fund public services. Very often discussions of "inequality" are either disguised discussions of one of these things or else inequality is seen a symptom of problems elsewhere (e.g. bonuses in the banking sector seen as a symptom of poor regulatory risk management oversight).

But once we strip out these other potential issues all that is left of the "inequality" discussion is this: is it bad if some folk are rich? And in truth, almost no-one claims that it is.

Try this thought experiment. Suppose each of us lived on our own desert island, like Robinson Crusoe, with identical resources and skills – so we're all perfectly equal - and get our food in the form of fish from the teeming oceans (there is no scarcity of fish). Then suppose one of us works out a way to fish better, so inequality increases. Is everyone else somehow worse off? Clearly the answer is that everyone else is not worse off unless the better fisherman makes fish scarcer for them. The one person's riches do not come at others' expense.

Obviously this is a rather abstract thought experiment, but it points at something simple and important: almost all inequality in developed economies does not arise by the wealth of almost anyone else declining. (That does happen in less socially and politically developed societies, in which wealth arises from political control of resources or access to corruption.) In modern developed economies inequality arises when someone – a Gates or Zuckerberg or Cowell or Ronaldo or Rowling or just an ordinary businessman or professional....

[2ndDivisionVet]

Andrew Lilico is an Economist with Europe Economics, and Chairman of the Shadow Monetary Policy Committee. He's also been a mathematical chemist, an opera singer, a philosopher, and a computer programmer.

[aquila48]

I can’t think of a hell on earth worse than “equality”.

[GeronL]

Bump

[driftless2]

The rise in socialist thought/communism gained great acceptance at about the same time the industrial revolution was creating wealth in unimagined totals from previous generations. The wealth of the average American rose faster during the period of 1850-1900 than any period in our history. All accompanied by tremendous increases in technology and science.

When he was living in New York City for a period of time in the early 20th century, Leon Trotsky marveled that the tenants of an apartment buildings in the city had their own toilets. In Europe, the average worker had to share a toilet. But American workers had their own....all because of the rise of capitalism. Of course, this did not stop Trotsky from believing that he and other socialists had a better idea.

The facts were, even though they were poor compared to the Rockefellers, average Americans were getting wealthier and living better lives than their ancestors ever imagined just 50 to 100 years earlier. Socialists are never happy...unless they're telling other people what to do.