Conventional liberal opinion holds that the gap [between the rich and poor] is bad not only because of its consequences, but inherently — and the bigger the gap, the worse things are.
But that doesn’t follow. As self-described “liberaltarian” Will Wilkinson noted in a 2009 paper, U.S. inequality as measured by the Gini Coefficient (the most common measure of such inequality) is about the same as in Ghana. But being poor in the U.S. is much better than being poor – or for that matter rich – in Ghana. This raises another point Wilkinson makes, about consumption: When you look at how people actually live, what they have in the bank matters much less than their daily experience.
The difference between having a car of any kind or none at all is vastly greater than the difference between having a used Chevy and a new Porsche. And while the rich in the U.S. have gotten richer, so have the poor: Since 1979 the income of the poorest 20 percent of Americans has almost doubled, and market economics has provided them with riches, such as cellphones, once available only to the most well-off. This helps explain why the difference in happiness among income groups in the U.S. is vastly smaller than the difference in wealth. Which of those measures should matter more?
Focusing only on inequalities of result also ignores another important dimension to the question. Again, Wilkinson: “It’s not enough to identify a mechanism of rising inequality. An additional argument is required to show that there is some kind of injustice or wrongdoing involved.”
It is possible that inequality is rising because the system has grown more rigged. But as Mickey Kaus pointed out recently, while you would expect inequality in a rigged system, you also should expect it in a fair one: “Once the meritocratic centrifuge has sorted everyone out, there won’t be that many talented people at the bottom to rise in heartening success stories.” Divining how much truth there is in these competing narratives is vastly more complex than ideologues of any stripe would like to think.
Correcting inequalities caused by system-rigging is desirable, but “correcting” (as opposed to merely alleviating) inequalities caused by merit-sorting would actually be unjust. It also would require creating an inequality of a different sort: the inequality of authority.
Perpetual market interventions in the name of economic equality require a perpetual class of interveners who have the power to overrule the free choices made by everyone else.
Naturally, those coercive interventions require handing the levers of coercion over to progressives — which explains why this sort of inequality never seems to bother them in the slightest.
The fact that price inflation widens the gap between the rich and poor - as I’ve mentioned on this blog - only proves that the federal reserve (which is the source of monetary inflation, which in turn is the cause of price inflation) vastly enriches the rich at the expense of the poor. When new money is created, the first to have access to this money - banks, government agencies, government contractors, major corporations, the very rich - can use this money before the monetary inflation becomes price inflation. In other words, they have a large influx of new money before said new money drives up prices. The poor and middle class, on the other hand, do not have access to any of this money until it “trickles-down” to the rest of us - and that is generally after price inflation has taken some effect and before it has been offset by any sort of wage inflation.