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wealth/income inequality is a good thing

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TANSTAAFL Posted: Mon, Feb 6 2012 9:04 AM

when individuals are able to collect large sums of wealth it makes lengthening the production process possible.

When individuals are able to collect large sums of wealth it makes it possible to undertake projects that require large amounts of capital. JJ Hill is a prime example. Alone he did not have the capital to build his RR. But because his two partners were also able to accumulate large amounts of wealth the three of them together could build the Great Northern.

 

 

Anyone else have any thoughts on why individuals amassing large amounts of wealth is beneficial?

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Wheylous replied on Mon, Feb 6 2012 10:24 AM

That's not inequality. That's just individual wealth. You could have a society with very wealthy individuals with a semi-equitable distribution.

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TANSTAAFL:

when individuals are able to collect large sums of wealth it makes lengthening the production process possible.

When individuals are able to collect large sums of wealth it makes it possible to undertake projects that require large amounts of capital. JJ Hill is a prime example. Alone he did not have the capital to build his RR. But because his two partners were also able to accumulate large amounts of wealth the three of them together could build the Great Northern.

 

 

Anyone else have any thoughts on why individuals amassing large amounts of wealth is beneficial?

 

So handing a few people a large part of the buying power in society, is for the common good?

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jdkdsgn replied on Mon, Feb 6 2012 12:26 PM

This group of people, of which you arbitrarily deem at variance with the "common good", are not "handed" a "large" proportion of purchasing power. They work for it, and then they repay society by lengthening the process of production (IF this is done during a period of unforced saving). In a free economy, this would result in the creation of more efficient technologies which would create new means of manufacturing. If the consumer good is able to be produced more cheaply and quickly (via the appropriate roundaboutness of production), the market price for a good will necessarily be lower. 

Also, the 'common good' is a collective (and abstract) term. The community is impossible to exist without the individual. Thus the common good is achieved by individualistic self-determination. It makes a whole lot of sense for the individual in a society to be "selfish" in the Randian sense. The result is increased means of production, lower costs, better standard of living, HEALTHY competition, etc. Classwarfare degrades constructive cooperation. 

Edit: I realize, after a second reading, that your criticism of handing a few people a large part of the buying power in society is NOT for the common good is valid in reality. If you meant to say that redistributing wealth is a bad thing, then I agree with you. But if you were making an argument against individual wealth, then my previous comment stands.

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Ultimately "equality" is just a statistical comparison. We tend to treat it as a good in itself, but it doesn't really do anything. Once you start thinking about it, the concept doesn't really make sense at all. It's just a positive-sounding word. The socialists invented it as a new good that only socialism can produce, when their claim was discredited that socialism is better at creating wealth.

"They all look upon progressing material improvement as upon a self-acting process." - Ludwig von Mises
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Albert replied on Mon, Feb 6 2012 1:18 PM

Going back to the headline of "income inequality"

There are people that are twenty times more beautiful than me,

there are people that are maybe twice as smart as me (heh heh not many)

there are people who are a hundred times more musical than me

there are people that are a hundred times more athletic than me  and lets thank the stars for such enequality because if it was dependant on mediocre old me to raise the bar in those areas, the world would be a much scarier place.

There will NEVER be a time when all things will be equal.

There would be NO benefit to society if we disfigured the pretty ones, did lobotomies on the smart ones, and crippled the athletic ones, all in the name of "righting inequality." Even if we did, there would just be new inequalities.

 

There will always be people that are at the bottom of the income scale ALWAYS. Some reasons cannot be controlled like physical and mental inequalities. Just like I would always rank at the bottom of the above mentioned criteria. Some areas are in my control; I can study harder and I can wash my hair and I can do some exercise.

The fact that there is a huge disparity between the bottom of the income rung and the top of the ladder is a great thing.

That means that circumstances here allow individuals any opportunity to advance.

The only thing you have to examine is if any state regulation favored them into that priviliged position- that would be bad.

Otherwise it is proof that even the lowliest in this society has equal access to similar success  (I did not say equal ability)

When those rich entrepeneurs discover a new avenue of riches (without help from the state) it won't be a day, before a competitor will try and copy them and create competition and force prices down and quality up.

IT IS A BEAUTIFUL THING.

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Clayton replied on Mon, Feb 6 2012 3:10 PM

Wealth/income inequality is like height inequality... it is neither good nor bad, it simply is. You may prefer that human biology were different than it is, of course, but such thoughts are idle nonsense. The imputation of "goodness" or "beauty" to wealth inequality - ala Albert's post above - is trite, at best. It is a category error.

And the State can do no more to solve wealth/income inequality than it can to solve height inequality. The fact is that some human beings have more than other human beings. This has been the case at all times and in all places. The reasons why this is the case are fairly straightforward - individual variation in circumstances and dispositions combined with the human behaviors of property, exchange, etc.

As Rothbard explains in Egaliatarianism as a Revolt Against Nature, it is simply an impossible goal to eliminate "wealth/income equality" and all resources poured into the achievement of this goal are simply destroyed. Rothbard compares it to spending large sums of money on researching unaided human flight. Human biology simply cannot achieve unaided flight. This is a patent fact of human physiology. If the government invests a million dollars into such research, it would have done just as well to buy up a million dollars worth of homes and burnt them to the ground - it would have essentially the same effect on human welfare.

All the hundreds of billions of dollars which are poured into the progressivist project to "eliminate inequality" are a pure loss to society because the goal which is sought is impossible. Because the goal is impossible, stealing resources from others to pour into achieving it is not only stupid, it is immoral.

The real inequality is that between the private individual and the State. This is an inequality of legal standing... the State has the power to break the law, that is, to write "laws" in such a way that its agents can commit acts that, when done by any other agent, would be a crime. Seizure of property, assault, even outright slavery (draft) and murder (executions, "collateral damage", excessive police force resulting in death). If you care about inequality, why not look at the single most destructive inequality that exists in society?

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tunk replied on Mon, Feb 6 2012 4:15 PM

Clayton:
Wealth/income inequality is like height inequality... it is neither good nor bad, it simply is. You may prefer that human biology were different than it is, of course, but such thoughts are idle nonsense. [...] The fact is that some human beings have more than other human beings. This has been the case at all times and in all places. The reasons why this is the case are fairly straightforward - individual variation in circumstances and dispositions combined with the human behaviors of property, exchange, etc.

I would also add to this that, since it appears to be what you might call a "natural law" that if human beings are left free and to themselves, their outcomes and opportunities will always tend to be disparate, it follows that the only way to achieve true equality of wealth is through inequality of power. I.e. to set up some kind of authoritarian planning commission with a monopoly of violence to foricibly level out all natural variations. And this would be an ironic outcome indeed for the egalitarian.

I once asked a friend of mine with leftist sympathies to explain to me why it would be unjust for A to make more money than B. He turned the tables on me instead of answering the question and asked why, if A is some struggling single mother with five kids making minimum wage barely getting by, while B is a multi-millionare with exotic luxuries of all kinds and very few pressing worries, we should regard this situation as just.

But in my opinion, only exactly half of this situation is upsetting, that is, A's situation. Why is B's situation necessarily bad? Let's assume that B earned his money without intiating force or fraud, purely through the provision of services on which others placed a high value on the free market. Doesn't he deserve some kind of reward for his efforts? And B is a multi-millionare! If we want to raise everyone's standard of living, shouldn't we want a society with more millionaires, not less? Isn't the problem with A's situation precisely that she isn't a millionare?

More importantly, people seem to on the whole fail to understand how voluntary exchanges are mutually beneficiary, and have a sort of ingrained tendency to believe that if someone has become rich it must have been at someone else's expense. If A is poor, it must be because B is rich. But I think much of our experience shows that you won't make the poor richer by making the rich poorer. As I think Margaret Thatcher put it, such people would prefer that the poor were poorer if only that would make the wealth gap smaller. It reminds me of a verse Benjamin Tucker cited:

State Socialism and Anarchism:
There are two Socialisms. [...]
Both desire equality.
One by lowering heads that are too high.
The other by raising heads that are too low.
One sees equality under a common yoke.
The other will secure equality in complete liberty.

To be fair, a society of total robotic uniformity isn't really what people who favour "equality" that I know advocate. The problem in the language they use. When they say "equal opportunity," what they mean is that everyone should have the option available to them to buy a mansion or send their children to a Montessori school if they like, and no one should be excluded from such opportunities simply because they don't have the cash. (Not that everyone must buy a mansion or send their children to such a school.)

But I would argue that to call this "equality" is confusing. We don't say, if we want every man to be able to buy a car, that "each man should have equality in car buying." What these people really want is abundance, not equality, and for that you need the free market.

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Clayton replied on Mon, Feb 6 2012 4:20 PM

it appears to be what you might call a "natural law" that if human beings are left free and to themselves, their outcomes and opportunities will always tend to be disparate,

But we can state this law even more strongly: "it appears to be what you might call a "natural law" that ... human beings' ... outcomes and opportunities will always tend to be disparate". This is true whether or not human beings are left free and to themselves. So even if we are willing to tolerate "a little tyranny" for the sake of achieving the noble goal of "equality", this is as futile as instituting a tyrannical government for the sake of achieving "height equality". The goal remains futile and unachievable no matter how much arbitrary power is applied to the problem.

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tunk replied on Mon, Feb 6 2012 4:40 PM

You're quite right Clayton. I was trying to make the same point you did. "Inequality," strictly speaking, is such an ingrained feature of human existence that, oddly enough, the primary way that people through the ages have proposed to get rid of it is to create more inequality. This suggests that equality qua goal is self-contradictory, impossible, and absurd.

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Eugene replied on Mon, Feb 6 2012 5:04 PM

I don't think we should be against income equality. That's all depends on whether this is a voluntary arragnment or not. A family is a voluntary wealth redistribution scheme. There is nothing bad about this.

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Marko replied on Mon, Feb 6 2012 5:50 PM

Instead of 3 people contributing 100 units of capital each, 300 people could have contributed 1 unit each and you would still end up with a railroad.

You want to have capital, how it is distributed is beside the point.

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Neodoxy replied on Mon, Feb 6 2012 6:23 PM

1. Gives a reason for everyone to work and make the lives of their fellow citizens better

2. It provides a method by which to do this

3. It generally and by and large rewards the citizens who have provided the most to other people

4. It is, in the market economy, the result of voluntary interaction and exchange

That's about it for purely economic reasons, but you hit the nail on the head, wealth in equality and the investment that accompanies this has provided the standard of living that the rich nations enjoy today. If wealth was exactly equal and everyone saved like they were in the middle class then the standard of living would fall dramatically. 

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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Agreed, to me it is a non-issue because it is such a collectivist notion it should not concern anyone in an individual world.  Someone elses wealth is someone elses business.

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