Comment by anovikov | Hacker News Reader

Comment by anovikov | Hacker News Reader

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Can someone explain why wealth inequality is bad?

Social exclusion is terribly bad and must be fought at all costs, true. Consumption/income-measured, absolute poverty is bad in all or almost all cases - true, we could probably afford sacrificing some of the economic efficiency to eradicate it.

Relative consumption/income-measured poverty is not "bad" as long as it rises with overall income levels rising faster.

And wealth... why do poor people need any wealth at all? If anything, in socialist-ish, European countries most people don't have any wealth at all, they own nothing, they live for generations in regulated rental apartment - that regulated rental contract they can pass as inheritance is their biggest (although intangible) asset. They don't need any "wealth" - government covers all their risks and funds their healthcare, unemployment, education and retirement and they can literally live hand to mouth all their life and don't feel at all precarious (and this is why wealth inequality is bigger in EU than in US, even as income inequality is smaller).

Repeating myself from above:

Why reduce inequality? Because inequality reduces social cohesion, promotes corruption -- it produces people who can buy government policy and action --, reduces democratic control of the government, and the mass of people lifted up by its reduction benefit much more than the few wealthy people suffer who are made poorer.

Wealth inequality is not the same thing as income inequality. Moreover, they are inversely related: more income inequality usually means less wealth inequality (because people know government won't care for them so they save and invest cash to make up for it). And there is nothing morally wrong with wealth inequality: European democratic states that American liberals love the most, like Netherlands, Denmark or Sweden, are more unequal in terms of wealth than the U.S. - but much less in terms of income, and even less in terms of after-tax income including "free stuff".

Netherlands and Sweden have a higher GINI than the US after a shift towards right-wing government - far-right in the case of the Netherlands, and also notoriously corrupt.

Denmark doesn't.

Russia also has a higher GINI than the US, but I don't think most Americans would consider it a successful economy.

If you prefer oligarchy to democracy and are happy with corruption at all levels, there is indeed nothing morally wrong with wealth inequality.

If you're not a humanist and have given up on the lessons of the Enlightenment, that makes perfect sense.

Which specific European countries are you thinking about? This does not match my experience at all - I have never heard of inheriting rental contracts & I have lived in Europe for basically all of my life. Family in Germany & Italy have also never mentioned such a thing.

there are areas in Torino with really subsized rents and a good chunk of these flats got sold to renters a lot below market value

You have an implicit assumption that progress (in terms of absolute wealth) and equality are negatively correlated.

Many of the people who argue the other way disagree with that assumption.

I would say historically equality has preceded and caused growth from Magna Carta onwards, do slave states progress more than those with hired workers? Did Monarchies progress faster than constitutional monarchies or republics?

There's an interesting argument that 20th century warfare lead to socialism since you need lots of healthy trained soldiers, compared with a knight on a horse where the power is concentrated. And so the country that promises more to their soldiers can steal progress from the others. And that might reverse again with robot-driven wars.

A libertarian perspective would point to what fraction of the billionaire's wealth was accumulated from free exchange versus coercion, corruption, nepotism, extracting rents and gaming the system as a better measure of both progress and equality.

Even the sophisticated arguments for inequality generally take the view that monopolies are bad, but any attempt to regulate them will be worse because it will be gamed by the powerful to achieve the opposite and strengthen monopolies.

Wealth inequality is bad for the same reason soviet communism was bad. Concentration of power and the corruption that comes with it.

it isnt

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