Is Wealth inequality repugnant?

Different societies, at different times, have found different things repugnant. One widely prevalent view was that piety- or at least the appearance of it- should be equally distributed. Those who had too little of it should be coerced into orthopraxy while those who were unabashed atheists should be killed.

Gold has been called the devil's dung. Great wealth is likely to make a man forgetful of God and impious in his conduct. Perhaps it is best for Society if any surplus possessions are confiscated from those who are more able or enterprising or thrifty so that they retain a proper sense of humility and sense of tribal solidarity or 'oikeiosis'. 

The reason this viewpoint has tended to die out is because Societies where it was prevalent fell behind and got conquered by more mercantile races. Sadly, there are some safe spaces in the Academy where it can continue to flourish.  

What happens when a philosopher writes about an Economic issue? Nothing good. Martin Butler is a philosopher. This is what he has to say in the pages of 3Quarks.

Does Wealth Inequality Matter?

Wealth is the stock of assets used to generate income. Control rights over wealth are optimal if the smartest investors have an incentive to ensure such assets are used optimally. This is less a matter of beneficial ownership than 'mechanism design' so capital is allocated properly.  Wealth inequality is like age inequality or height inequality. Provided there are enough young people to support the old, it does not matter if age inequality is rising because people are living longer. If professions requiring very tall or very short people get enough of them, increased height inequality does not matter. 

During a period of great technological change, it is probably a good thing if control rights are more narrowly concentrated and if this means beneficial rights too get concentrated- well and good. This is because there is greater Knightian uncertainty and those with broad financial shoulders should bear more of the risk. Equally, agile expert investors need to be in the driving seat. The very rich can afford to hire the smartest people to manage their 'family offices'. Markets become more liquid as a result and volatility becomes 'a feature, not a bug' which drives liquidity. 

In the UK and USA the gap between the richest and poorest ten percent continues to grow.

As does immigration and the incentive for poorer people to have more kids while the middling sort have fewer. In other words, the supply of poor people is rising. True, foreign billionaires too may be making their home in Manhattan or Mayfair because they enjoy rubbing shoulders with people as rich as themselves. 

Few would argue that inequality resulting from racism, sexism, disablism or any other sort of prejudice is morally acceptable.

All would agree that it is inevitable. I may feel it unfair that I don't have a womb while my wife may find it unfair that she has to sit down to pee, but it would be silly to say 'boo to evolution! Fuck you Darwin! Fuck you very much!' As for racism- sadly, affluent countries will want to keep out people from very poor parts of the world even if this correlates with certain racial characteristics. This is good for the indigenous working class. Disability can be compensated for by collective insurance schemes though, sadly, because of 'moral hazard' (i.e. the risk of people pretending to be disabled to get benefits) compensation can never be 100 percent.  

Wealth inequality, however, being a matter of degree, is far less straightforward.

It is more straightforward. That is why half the world, at one time or another, was ruled by parties which aimed to redistribute wealth. You can't redistribute height or IQ but money and property can be seized from the rich and given to the poor. Sadly, this may make them poorer yet while the smart and capable run away to places where they are better rewarded.  

The familiar nightmare vision of totalitarian ‘communism’ hangs over the idea that everyone should have exactly the same level of wealth.

and the same sexual opportunities. Attractive people should be 'collectivized' and redistributed on a weekly basis.  The same could be urged regarding cute babies. 

Most accept that some level of wealth inequality is a positive good, in that it incentivises effort and excellence.

That's the argument for income inequality. Wealth is a stock not a flow. People who excel can afford to spend more than they earn because their earnings will continue to rise. Look at Johnny Depp.  

But if we agree that wealth inequality pe se is not necessarily wrong, at what point does it become unacceptable?

I suppose different jurisdictions could impose ceilings on wealth just as some have imposed ceilings on land ownership.

And why would going beyond this point be unacceptable?

The law governing wealth ceilings could spell this out. As a matter of fact, Competition policy can force disinvestment if concentration of market power becomes too high. Long before I was born, there were efficiency arguments, equity arguments, political arguments, moral or theological arguments for this. I am not aware that any new ones have been added during my lifetime. 

Many would argue that equal opportunities are what matter.

Sadly, 'opportunities' are epistemic and thus can't be represented by a set. No one knows what they truly are and whether one is equal to another. I suppose one might say that the more people believe opportunities are equal, the more effort they will make with the result that outcomes become more equal. This is an argument against redistribution because it does not cause people who are poor to think this is because the game has been rigged against them and no effort of their own can help them rise up. Only a Revolution and a redistribution of property can alter their fate.  

We can imagine a society with excellent equal opportunities that nevertheless has significant levels of wealth inequality.

This is likely if the population is heterogenous. Some have traits which make for success. Others have traits which make for abject failure.  

And we assume here that all wealth is acquired legally though legitimate means.

Sadly, what is legal or legitimate can change quite drastically over a short time horizon.  

A society with excellent equal opportunities would be one where

high infant mortality killed off those with lower robustness while low IQ people starved to death before they could pass on their genes.  

the basics – education, healthcare, housing, a living wage and so on – were readily available right across the board

arguably, this was achieved well enough in welfare states by the time I was born. Sadly, having the luxury of a social safety net may mean lower work effort, thrift, enterprise etc. Young people may prefer to spend their twenties strumming a guitar or writing songs just in case they make it big as pop-stars. Moreover, even if they don't, they'll have enjoyed themselves and can enjoy a good enough material standard of living as they age.   

so that the young of the poorest in society would start life not necessarily on a level playing field, but at least on one that was not hopelessly skewed against them.

They may have lower expectations or lower drive precisely because they know that life at the bottom is comfortable enough.  

Of course family influences are crucial but these are always going to vary, so perfect equal opportunities – like perfect anything – is for the birds. Once off the starting blocks, those from the poorest background in such a society would have a similar (or at least not too dissimilar) chance to succeed as those from higher wealth groups.

The problem is that nobody knows in advance what their 'chance to succeed is'. I suppose the son of a Doctor may think he has a high chance to qualify as an MD, than the son of the docker. But both may be wrong. Sadly, the Doctor's kid may end up with better qualifications because he thought he could get into Med School while the Docker's son played truant thinking this would not alter the outcome of his exam results. 

No matter what their background, those who failed to take the opportunities on offer, or chose not to take them, would be likely to fall into the lower wealth brackets. There would still be significant wealth inequality

Income inequality. Wealth inequality may cause greater income equality if the rich decide not to work coz a true gentleman doesn't demean himself by taking a job or practicing a profession.  

but this would result from individual effort and talent or the lack of it, which would mean high levels of upward and downward social mobility.

I don't understand this. Surely, there would be less social mobility?  

Implicit in the vision of modern liberal democracies is the ideal of meritocracy, allowing for wealth inequality due to differences in talent and effort but finding inequality based on prejudice and discrimination morally abhorrent.

I think bigotry is considered abhorrent. It is equated with ignorance. But it can obtain even if there is no discrimination. Where prejudice does result in discrimination, the market has an incentive to 'arbitrage' away the difference.  

What’s wrong with this vision? One problem is the fact that in most liberal democracies, though upward mobility is not unusual – despite the fact that in recent years it has declined considerably – downward mobility is far less common.

It is common enough. It's just that people who have come down in the world don't gas on about it.  

This is in terms of wealth rather than income,

plenty of people have seen a decline in their real wage.  

and the reason for this is inheritance.

For most people, this is the family house which may have greatly appreciated in value. Thus those whose parents rented lose out while those whose parents bought their home in the right area get a windfall.  

Societies, despite the move towards individualism, are in the main composed of families. Every individual has a mother and a father who will usually pass on any accumulated wealth to their offspring.

Unless your Mum was a ho-bag and your dad a hobo. Poor people have kids who are more likely to be poor. The rich can set up a 'spendthrift trust' so even their most drug-addled progeny is well taken care off. Perhaps the grandkids will do well. 

This exposes one of the contradictions in the values of the liberal world view.

Liberalism comes in many forms.  

On the one hand we fully endorse equal opportunities,

Unless we prefer affirmative action

but on the other we regard it as natural that we have a right to hand on accumulated wealth to our offspring.

Sadly, many will have to pay inheritance tax. One workaround is to create an offshore discretionary trust such that your descendants have no wealth but receive significant benefits from the trust.   

Inheritance taxes are unpopular because they seem to undermine this right.

The truly rich can evade them. It is the middling sort who get caught. Currently, British farmers are up in arms because they will have to pay a twenty percent tax on agricultural assets worth more than a million. The Dukes and Earls who own vast estates won't pay a penny while working farmers earning 30,000 in a good year will have to sell land to pay this tax.  

But a society where inherited wealth plays an increasing role in wealth inequality is a society where opportunities are less equal.

Not necessarily. Opportunities may becoming more equal but the proportion of spendthrifts may be rising.  

Inherited wealth

like biologically desirable traits which are inherited or religious or moral values which are inherited

– or simply having well-off parents – increases an individual’s opportunities in all sorts of obvious ways that are unrelated to the merits of the offspring who receive these benefits.

No. Heritable traits, like cultural, religious and financial legacies are biologically related to the offspring of the people who have those traits. That's also why human Mummies don't give birth to baby rabbits. 

Inheritance works directly against meritocracy.

Only in the sense that it works directly against theocracy and democracy and kleptocracy. What is unfair is that few human Mummies give birth to baby rabbits.  

Another problem is that, in modern societies at least, wealth inequality is not static.

Sadly, we have no way of telling if a thing is wealth rather than worthless tinsel and vice versa.  

Even if we accept that some level (perhaps even a high level) of wealth inequality is acceptable, there will still be a natural tendency for this inequality to go on increasing.

Provided there is growth rather than secular stagnation or decline.  

And it’s not clear where this ends.

When an asteroid destroys all life on earth. Then there will only be a problem for Martians not descended from Elon Musk who will complain that they are as poor as shit. If only Granny had put out to Elon!  

There are at least two mechanisms whereby this occurs, both centring on the fact that wealth in modern societies is about the ownership of assets (property, shares, precious metals etc) rather than money in the bank.

This has always been the case. Money is an asset whether it is in the bank or hidden under your mattress.  

First, if asset prices increase at a faster pace than wages, which has been the case over the last decade at least, owning becomes a better bet than working.

Not if a lot of those assets represent 'sweat equity'.  

The more assets you own the greater your increase in wealth relative to those who own few or no assets.

Unless you are a spendthrift.  

Second, those who own many assets earn large passive incomes in the form of dividends, rents, or profits, much of which may well be above what is required for ordinary living, or even for a luxurious life style. What happens to this passive income? It is used to buy further assets which will increase the passive income of the wealthy still further.

In other words, there will be more investment. This means government's can borrow to finance roads, schools, hospitals etc.  

 This in turn buys more assets and on and on, the knock-on effect of which increases the price of these assets, effectively putting them well out of the reach of so many. This is what’s happened with housing, certainly in the UK. If you’re on the property ladder you will inevitably pull ahead.

Sadly, many homeowners are worse off than they would have been if they had rented and put their savings into equities.  

If not, good luck even getting your toe on the bottom rung.

Though that may turn out to be very bad luck indeed.  

Perhaps we can still accept the consequences of inheritance and the mechanisms whereby wealth inequality continues to widen, provided we stick to the key premise of our hypothetical meritocratic equal opportunities society.

Sadly, in Business, sticking to key premises leads to bankruptcy. You have to change your assumptions and expectations as circumstances change. 

That is, that those at the bottom have ‘the basics’ and can still live a minimally acceptable life according to the norms of society.

Till, the country goes off a fiscal cliff and there is entitlement collapse.  

Does it then really matter if some eat caviar and spend their time on expensive yachts? Poverty in any useful sense of the word must be understood in relation to the culture of a society. A rich person in medieval England lacked running water, a flushing toilet, etc., any meaningful notion of poverty is necessarily relative. So provided those at the bottom are not in poverty in terms of their own cultural expectations, what’s the problem?

Even if this is not the case, there is no problem, only a nuisance, if people who claim it is a problem can ruin the country by applying the remedy they think most suitable.  

There’s a political problem here that cannot be ignored.

Sadly, the reverse seems to be the case since about 1970. Voters don't want redistribution, they want cheap foreign holidays and lots of electronic tat.  

The continual accumulation of assets brings power, which can take control of large portfolios of property, shares, or the ownership of media interests – a particular problem we face today.

Do we though? Yes. 90 percent of all muggings are done by hedge fund managers.  

Widely distributed ownership seems in keeping with the values that liberal democracies at least purport to espouse – the Adam Smith vision of small capitalists trading with each other to their mutual advantage.

Or Jeffersonian small land-holders, not to mention Joseph Chamberlains adoption of the slogan 'three acres and a cow.' Earlier, '40 acres and a mule' had been promised to African-American ex-slaves. The problem here is making a living out of the land is back-breaking. Also, the pigs tend to look down on you because you smell so bad. 

Anti-democratic monopoly power, however, seems to develop quickly, and governments struggle to keep this tendency at bay, particularly when ownership brings political influence.

Elon Musk, we're looking at you. Scratch that. Poor people like Musk. We hope he can colonize Mars. That would be cool. Also, please stop bureaucrats pissing away tax dollars.  

Unrestricted wealth inequality presents an almost irresistible tendency towards oligarchy.

Sadly, oligarchs all hate each other. Look at Ukraine. There's a reason a comedian is now in charge.  

Another major problem stems from the number of ways in which extreme wealth inequality can threaten the coherence of society. Without mechanisms to counter the continually widening gap (such as a serious wealth tax), a number of negative consequences follow, the most obvious one being that the rest of society becomes poorer.

High taxes seem to have had the effect of slowing growth and causing higher incidence of poverty.  

You might argue against this that wealth is not a zero-sum concept.

It is a positive-sum concept. If it isn't contributing to Income creation, it isn't wealth. It is a white elephant.  

In other words, just because one group is getting richer its doesn’t necessarily mean that the rest of society is getting poorer.

Butler confuses Income and Wealth.  

If the size of the cake increases it may well be the case that everyone gets a larger slice. Economic growth is the perennial solution that governments obsessively adopt to solve the problem of wealth flowing upwards.

No. It is what people hope for because more money is better than less money.  

Continual economic growth, however, is not a given (or even desirable), and when it stalls or is weak, as has recently been the case in the UK, it’s those at the bottom who suffer.

It is when those who are in the middle who suffer that you might have a revolution- or the election of a Trump.  

This point connects to a more general one. As their affluence continues to increase, those at the top of the tree become more disconnected from the rest of society.

If you tax them too much they leave the society altogether.  

Even though wealth can only be produced within a society, with its laws, institutions, education system and so on, enormous quantities of wealth accumulated at the top float free from the jurisdiction of any particular society, often avoiding any serious taxation – through tax heavens for example – which in turn impoverishes governments.

No. You can tax economic activity in your own country. You can also tax those domiciled and (in the case of the US) expat citizens on global earnings. 

This in turn means that the basics can no longer be adequately provided.

That happens if average productivity is low. The solution is to increase it. Taxing the rich or saying 'boo to Capitalism!' won't change anything. 

Those at the bottom find it more of a struggle to maintain the minimally acceptable norm,

because the productivity of their class is too low. This limits 'transfers'.  

particularly if governments do nothing to counteract the upward flow of wealth.

No. This happens when the government does a a lot to counteract the upward flow of wealth- i.e. guys with assets getting rewarded for using them productively rather than selling them and spending the money on cocaine and strippers.  

There’s a social dimension to this disconnect too. It’s not enough for members of a society to formally belong in the sense that they have the appropriate passport. There has to be a deeper sense of belonging, otherwise

people may not conduct pogroms or kill kaffirs or roast and eat the bourgeoisie.  

society is simply a collection of individuals who happen to live on the same patch of land. This belonging is enhanced by day-to-day connection with other members of society.

Nobody, where I live, wants day-to-day connection with me. Snobbish bastards!  

If the super-rich go to different schools, use different healthcare facilities, shop in different shops and so on, they become a group apart.

They are a group apart. There's a good reason I don't go for a meal with my old pals from the City. They are ordering bottles of wine costing thousands of pounds. I am terrified they might forget I'm poor as shit and decide to split the bill.  

The idea that they ought to contribute to the society from which their wealth emanates begins to dissolve,

No it doesn't. The companies they own pay their workers and suppliers and so forth.  

and the rest of us, including governments, can easily go along with this illusion.

Whereas what we should be doing is ensuring the super-rich do my washing up at least once a week. Also a bit of light hoovering.  

We come to think of the wealthy and their wealth as having no ties or obligations to any particular society.

Very true. The last time I demanded the Duke of Westminster come and do my household chores was when Callaghan was Prime Minister.  Mummy slapped the black off me. 

Part of the problem here is the pre-eminence of the concept of ‘rights’ within our moral vocabulary.

Legal vocabulary. Moral vocabularies feature words like 'good' and 'evil'. 

Ownership rights come to be seen as unconditional and quite separate from the social group from which they originate.

Because they don't originate in any particular social group.  

The very notion of tax assumes a sense of belonging to a society to which obligations are owed, but if ownership rights are seen as unconditional

No legal system takes that view.  

paying tax becomes almost optional, as in fact is often the case.

No. The expense entailed by tax avoidance means it is an option out of the reach of the middling sort.  

But this is misguided. As Simone Weil

who was as crazy as a bed bug 

points out: “The notion of obligations comes before that of rights,

She meant that the word 'deon' comes before 'politeia' because deon was known to less developed Greek who hadn't yet created City-States of their own. What she forgets is that fathers and chieftains had certain rights and prerogatives even at that time.  

which is subordinate and relative to the former.” The tendency towards cultural atomism that has developed in many areas of modern life, facilitated by the language of rights, leads to the illusion that belonging to society is an option we can choose to forgo.

There have always been vagrants and vagabonds who have dropped out of society.  

This very much plays into the hands of the super-rich.

which are busy fisting trillions of starving people 

Far too often success is measured in terms of wealth acquisition. Even when we think of equal opportunities, we have in the back of our mind the opportunity to acquire wealth. Indeed, this can become almost an addiction – the wealthy don’t seem to lose the desire to acquire even more.

by providing useful goods and services. They should get addicted to scolding everybody instead.  

We shouldn’t be too judgmental about this, since in a society where wealth means security and a degree of freedom it’s completely understandable. That’s why I think the way out of this is to de-commodify at least those aspects of life that allow for a basic but secure existence.

Instead of buying stuff you like, the Government should send you a bag of health foods every week. You will kill yourself. 

A life that meets at least ‘minimally acceptable’ standards

i.e. one where one isn't obliged to work for a living doing boring shite 

should not be such a financial struggle to maintain, particularly in supposedly rich industrial countries.

By providing everybody a decent basic standard of living supposedly rich industrial countries will become starving shitholes.  

To ‘de-commodify’ something does not necessarily mean removing effort and commitment, it just means removing it from the realm of money and exchange, allowing a culture to develop where wealth acquisition is not central to everything we do.

Everyone should write unreadable books the way I do. Sadly, JK Rowling writes so well, there is no way to de-commodify her books the way mine have been de-commodified.  

It would produce a stronger sense of belonging, essential to any sustainable society.

A strong sense of oikeiosis is essential to a society sustained by head-hunting.  

Such a society cannot realistically be one where wealth inequality is completely unchecked.

Why do some head hunters have more trophies than others? The problem with asking head hunters this question you quickly become part of their collection. 

Still, it is good to know that Butler has emigrated from the UK to Borneo or the Amazon jungle. I hope he makes a nice head-hunter very happy.