- Cafe Hayek - https://cafehayek.com -

A Quick Note On Inequality and Cronyism

Tweet [1]

In an admirable comment on this post [2], regular Cafe patron Sam Grove (one of my favorites, I add to alert you to my partiality) writes in response to another commenter:

We [those of us of a free-market bent] do care about income inequality when it is a product of policies that inevitably favor the politically influential. Unfortunately, the poor are never among the politically influential, not even in a democracy.

I’d word matters a bit differently.  Cronyism of the sort that Sam rightly and consistently decries does indeed unjustly enrich some people by making other people poorer.  So such income transfers (which, as Sam suggests, government pulls off with far greater success than it has when it tries to transfer wealth from the rich to the poor) are not only rooted in force (and, hence, are presumptively unjust) but are also zero- or negative-sum ‘moves.’  In both of these ways such transfers differ from the voluntary and peaceful processes that create income and wealth differences in private markets.

But even with such rent-seeking, cronyist transfers, I’d not say that the concern is, or should be, with any resulting increase in income inequality.  The concern is, or ought to be, with the unjust policies and activities that give rise to these transfers.  If a millionaire embarks upon a life of successful house burglarizing, the problem with this activity isn’t that it further increases income inequality; the problem is that the activity itself is immoral and destructive.  So just as we wouldn’t look with less disfavor upon a burglar whose success decreases income inequality than we look upon this hypothetical millionaire burglar whose success increases income inequality, our assessment of crony capitalism isn’t made any more harsh because it increases income inequality.

Comments