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I Do Not Care About Income or Wealth Inequality

Posted By Don Boudreaux On May 4, 2013 @ 5:31 pm In Civil Society,Inequality | Comments Disabled

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.  I’m sure that it has something to do with how I was raised [1], but the very thought of fretting about how much money other people make relative to what I make has always seemed to me to be grossly impolite, anti-social, pointless, corrosive of one’s character, and in horribly bad taste.  This was so for me for as long as I can remember, even when my income was very low by American standards.

My economic training has only reinforced my gut-level antipathy toward envying other people’s material or financial possessions.  This training assures me that in a market economy the stock (or flow) of wealth isn’t fixed.  This training assures me also that attempts to ‘correct’ the results of ethically appropriate processes too often have too many undesirable unintended consequences.  This training assures me that income or wealth is not a glob of stuff that can be taken from Smith and transferred to Jones as easily and as meaningfully as too many people suppose.  This training assures me that to become wealthy in the material dimension often requires relative impoverishment in other, often less-visible dimensions (for example, being relatively poor in leisure).

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.

I could list other reasons for why I believe that envy concern with income difference is not worthy of civilized people, but I’ll content myself to end by saying again, very simply, that such a concern is immature and it corrodes the character of both the larger society and of the individuals who suffer the terrible misfortune to be gripped by such a concern.

UPDATE: Here, in full, is an e-mail sent to me just now from my Bleeding Heart Libertarian buddy Steve Horwitz; it is an e-mail with which I am in full agreement:

This bleeding heart libertarian mostly agrees with you about inequality.
 
What I DO care about is how well collections of social institutions do for the least well off among us.  That markets continually raise the standard of living of the poor is what matters, not how rich the rich are in absolute or relative terms.  Give me the society that is far more unequal but where the poor live better over the one that is more equal but where the poor don’t do as well.  Please.
 
It just so happens… I think we’re more or less in it.
 
SH
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