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Inequality

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I just read David Schmidtz’s wonderful inaugural post [2], at the Left2Right [3] blog, on egalitarianism. I recommended David’s post (as I recommend all of his writings).

Economists are frequently accused of believing that "everything comes down to money" or of being "obsessed with dollars and cents" or some such variation on this theme. Each variation accuses economists of either being blind to the many non-monetary (even non-material) inspirations that motivate human action, or of advising people to disregard non-monetary motivations and respond only to monetary ones.

This accusation is without merit.

The economist is the first, for example, to point out that when government caps the money price of a good, the full price of that good rises – the full price including such non-monetary costs as time spent queuing to buy the good, and such non-material costs as the anguish suffered from inability to get the good.

The truly money-obsessed legions seem to me to be income egalitarians. In their view, inequality of income is synonymous with inequality of persons. Or, rather, inequality of income (or wealth) is a sufficient condition for concluding not only that some real inequality exists but that this inequality is at least suspicious and, possibly, a justification for corrective government action.

Why the exclusive focus on money, on $$$, on the material rather than the spiritual and non-material? If Jones chooses to work 100 hours each week as an attorney in order to earn an annual income of $250,000, while Smith scratches out a modest $25,000 annually by writing poetry for 40 hours a week, is it really so obvious that Jones and Smith are unequal? It’s obvious and indisputable only if the only thing that truly matters in life is current monetary income.

But surely leisure matters. Leisure has positive value, even if this value cannot ultimately be reckoned in monetary terms. Is the value to Smith of his greater leisure irrelevant?

Surely job satisfaction matters.

Surely locational preferences matter. Smith might be able to earn more $$$ by living and working in Los Angeles, but he prefers to live in the wilds of Montana.  Is this decision stupid or irrelevant?

Surely status matters. Maybe Jones is a faceless and unknown, if well-paid, corporate cog, while Smith is a well-respected and celebrated poet.

And surely liberty matters. Even if the world’s most brilliant and fair-minded philosopher can find no justification for the difference in income between Mr. X and Mr. Y, is the power that must be granted to the state to tax Mr. X and transfer income to Mr. Y without any downside? Is the reduction in liberty that both Mr. X and Mr. Y suffer completely worthless?

Surely many things matter other than money. Why are these non-monetary things so routinely ignored or discounted in discussions of ‘inequality’?

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