In response to my recent post explaining (some of) the reasons why I do not care about income or wealth ‘inequality’ as such, some commenters on that post – and three e-mail correspondents – reacted with this argument (which I summarize here in my own words, but which captures the essence of this objection to my post):
You, Boudreaux, don’t understand human nature. For better or worse, people care about relative standing. Therefore, large differences in income or wealth injure people psychologically and foster anti-social reactions. Income ‘redistribution’ is thus an appropriate government activity.
I agree that people are concerned about their relative standing in society. But:
(1) I don’t believe that such a concern should necessarily be embodied in government policy. (I also agree with those who point out that people naturally are biased against foreigners – prejudiced against others whose appearance and language and customs are very different from what is familiar – but I don’t want to elevate this natural tribal impulse into government policy.)
(2) Even more importantly than #(1), money is hardly the only dimension along which people differ from each other; therefore, it’s naive to suppose that success at making people more ‘equal’ along the monetary dimension will make them more ‘equal’ in any real sense. Other dimensions exist and matter greatly – a fact that those who are quick to dismiss economists for having too materialistic view of reality should be especially sensitive to.
You’ll pardon me for being reminded of my response several years ago, in the New Yorker, to a John Cassidy essay that leapt from the fact that low-status monkeys are more prone to illness than are high-status monkeys to the conclusion that government should redistribute humans’ incomes. It seemed not to occur to Mr. Cassidy that there is no income inequality among monkeys.
Use government to forcibly reduce differences among humans in monetary income or wealth and you will exacerbate the importance of differences along other (non-monetary) dimensions. All of my priors tell me that competing for ranking and status by earning monetary income is by far the least dangerous way to compete for ranking and status. Ponder the alternatives to such monetary competition.