Just an observation, but societies with vast disparities of wealth tend to be poorer overall and to have flatter economic growth.
They also tend to be subject to catastrophic social events.
They also tend to be subject to catastrophic social events.
Many African countries (i.e. Zimbabwe) are extremely poor overall and have great wealth disparities. But it seems highly unlikely that there's a direct causal relationship (it's more likely that there's a third cause behind both conditions, i.e. government corruption).
If we throw out the bad datapoints and restrict our search to countries with relatively stable or well-established governments, I suspect you will find that the reverse is true, on the whole. Most U.S. economic growth happened during the oil boom and/or Rockefeller and/or train monopolies and/or ... Even recently, the first .com bubble coincided with Microsoft/antitrust. Contrast these periods with the relatively slow growth of Iceland, a stable country with low economic disparity.
Iceland is probably a great place to live (never been there). But I'm guessing they still put gas in their cars and use Windows and buy pharmaceuticals from the US.
I do think that the hypothesis that wealth disparities in the US are a product of massive corruption is not one to be dismissed lightly given the ongoing socialization of the costs of bailing out failing banks...
Of course, in order for a government to become corrupt it must first become powerful enough to be worth corrupting. It is my observation that governments most rapidly gain power as a reaction to perceived economic disparity: the New Deal, SOX, the IRS, the SEC. These were all once government 'solutions' to economic inequality and remain today some of the most powerful (and arguably, corrupt) organizations in the world. I would argue that almost any time you find a corrupt organization generating illicit wealth, you will also find a well-meaning person who proposed the creation of that organization to 'solve' economic disparity.
It is true that there are wealth disparities that are created through government corruption, especially in the short term. But historically that corruption is ultimately enabled (perhaps accidentally) by those overly concerned with the problem of wealth disparity.
I would love some numbers to back up that claim. I know that poor repressive governments tend to have high income disparity while the Western world tends to have less. However the last time I looked at the numbers I don't think the data showed that income disparity is a major causal factor in making a country poor or rich. It sounds to me like that is the dream of envious leftists, one of many unquestioned assumptions that they like to bring up in every debate.
There's a difference between a third-world country where the favored friends of the state are well-off while everybody else starves (see Zimbabwe) and a rich country where everybody is well-off but some are more well-off than others (see Britain). I question the "if you don't give us more money, we'll riot and break stuff" justification for income redistribution in a rich first-world country.
Also, third-world countries should be focused on getting rich, not redistributing what little wealth they have. I am highly skeptical of the benefits of income redistribution under any circumstances.
I'd like to apologize to every one in the hacker news community for having participated in it.
This is obviously not a topic it's possible to have an intelligent public discussion about.
Basically, it depends whether the disparities come from founding Google, or being the dictator's brother.
It would be interesting to actually quantify that. I suspect that the main catastrophes that occur involve rich people being robbed and/or murdered.
(I'm serious. I've had friends who were from wealthy parts of Latin America where kidnapping was a real concern.)
PG makes a good argument otherwise. Read the last paragraph for the concise version of the essay.