just from wikipedia: https://en.wikipedia.org/wiki/Economic_inequality

With high inequality, money becomes more valuable and people start to think of everything in terms of money. Even romantic relationships become money-oriented. It's not uncommon for marriages to break up because of financial reasons. Wealth inequality causes more human suffering than moderate poverty.

People who lived in communist Russia will often tell you that people were happier under communism, even though they didn't have much - Often, they had to farm vegetables from their own gardens to supplement their diets. But they were happy because they knew that they had the same as everyone else. Also, people had no ulterior motives to do anything - When people liked you, they liked you because of who you were. When people did something nice, they did it because of purely altruistic reasons.

In capitalist society, money underlies the behaviour of everything done by everyone. You can never know if a person is good or bad because you never know their true intentions.

I think the media coverage of wealthy people is itself a bigger problem than inequality itself.

The media motivates people to work harder and acquire more wealth. Without media, only innately passionate people would launch startups. Today, most people who start a company do it because they want financial rewards.

It is human nature to want equality. It reminds me of a Russian joke about a man who finds a genie in a bottle. The genie tells the man that he can get anything he wishes but that his neighbour will get twice as much of whatever he gets. The man pauses to think for a moment and then says: "Take out one of my eyes."

Plus, the sheer magnitude of inequality is immense in the area of wealth. It follows an exponential distribution; those other things you mentioned follow a normal distribution.

Having a huge class of people begging and sleeping in the streets and another small class of people with extreme wealth is just begging for violence to occur. Then you get enormous private security firms, walled private communities with hired cops to keep the riff raff out and prevent theft/kidnapping for ransom.

What happens when the unwashed masses decide to vote to take some of the wealth society has generated back? Or, more's to the point, what happens once they do this and realize their vote doesn't matter because the political power structure is rigged to only cater to the interests of the wealthy by, e.g., doing nothing but banning physical force, the kind of force that's exclusive to the poor?

Mobility is a ridiculous red herring; who cares if a poor person here or there wins some sort of lottery and ascends to the elite class of super-rulers every so often, or an elite drops into brutal poverty and abuse? The more things change, the more they stay the same.

Government regulations providing a safety net for the poorest and helping to protect the weak from the powerful is the only thing that makes inequality tenable for any amount of time. Minimum wage and taxes which go to pay for healthcare and infrastructure are the only thing keeping society civilized and livable for the poor. Without it, well, we'd see that violence is a very cheap solution that people turn to if they think they have very little to lose, or if they are hungry.

And profits do not represent value at all, profit is simply the difference between how much something is worth and how much you can force/trick someone else into paying for it.

Economic quality seems like a red herring for actual issues like how well off people are. Is the actual concern about how poorly off the poor are? Imagine a thought experiment where aliens come to earth and give every human 100x the resources they have currently (or 100x a year's min wage), as an annuity. The poor are all now rich, and the wealthy can buy their own space stations.

Is this intrinsically a problem, and why?

If the actual concern is about how well off the lower and middle class are, then that's reasonable: we're talking about the welfare of actual people. But actual people are not harmed or affected directly by some mega-rich person being much richer.

I expect that someone will reply to explain that inequality is the symptom of or cause of some other dysfunction, and it is the actual problem - and that's great, that's what I'd like to understand better. Whatever the actual problem is, let's talk about it. If the problem is about lack of adequate education, opportunities, etc. then let's discuss those concerns directly.

http://www.ted.com/talks/richard_wilkinson.html

Absolute poverty is the real enemy, but it is possible to have high inequality and low poverty.

Where I disagree with you is in accumulated wealth being the problem...it isn't generally bad or unproductive, but this is asset dependent, land-wealth is a sink and Georgist measures could significantly improve productivity and capital acceleration.

But the so called "left-wing" you describe seems intent on punitive taxation as opposed to productive...

What we do have to ask ourselves is how much inequality should we tolerate in the name of progress? Would Larry and Sergei not have created Google had they made only 1/10th of the fortunes they have today? What about 1/100th, or 1/5th?

My personal view on the subject is that that multiplier is set too high at the moment, and that society would churn out innovators just fine if there were extreme taxes at the ultra-high end of the income spectrum. I would be very surprised indeed if Larry and Sergei would have chosen to abandon their little search engine project if they only had the potential to make $100 million each.

I think any positions taken on this subject that don't discuss it as a question of where to place this multiplier are disingenuous nonsense, to be perfectly frank. And this is my, and I think many people's issue with PG's essay: he seems to be taking the position that some types of economic inequality are good and some are bad. But it's not how someone made the money that's good or bad, it's whether or not it's really necessary that they have that much.

If you think that wealth inequality is, itself, a bad thing, then ask yourself a simple question: If you create a software company that employs 200 employees making a median income of 125K, is that a good thing? But how can it be, when it has exacerbated wealth inequality?

In my humble opinion, inequality is bad only in the minds of people who want to fund their political wishlists with other people's money, and need to spin a narrative where not taking other people's money is morally wrong.

I think he's right: it's probably more productive in the near term to attack bad causes of economic inequality. [1]

But his first assertion (that inequality is not bad) could still be wrong.

I think his essay is built on the assumption that people care more about absolute values of wealth and not relative ones. Psychology indicates that relative measures of wealth more directly map to levels of happiness and unhappiness. People do care about relative levels of income as opposed to absolute levels of income, and social cohesion is affected directly by such resentment, even if there isn't extreme poverty and incomes are rising across the board!

In Singapore, where I live, there is relatively strong meritocracy and little extreme poverty. GDP per capita is high, and rising; the government is directly incentivised to create economic growth (their bonuses are pegged to national GDP increases). But ostentatious displays of wealth - made easier, IMO, by social media - have led to rising resentment of the government's policies, as well as resentment against the globalised rich who chose to make Singapore their home.

I also think economic literature and history is rich with the negative social effects of economic inequality (even if some of it is conflated with bad causes, as pg describes). Elsewhere in this thread tkiley talks about how economic inequality can be seen as a negative externality, which is a good way of describing it, and is, I think, the attitude economists seem to take.

While pg's essay contains a fascinating call: to imagine a world where we have to chose to live with increasing economic inequality, I do not believe such a world would be easy to live in.

[1] To paraphrase his argument, progressive taxation might bring down the Gini coefficient but not necessarily do anything to alleviate poverty if the systemic causes of poverty aren't attacked. Better to 'attack poverty and destroy wealth in the process, as opposed to attacking wealth and hoping it destroys poverty as a side effect'.

1. Too much inequality reduces economic growth. See my other comment in this discussion for a sources.

2. Large amounts of money and power are interchangeable. Large inequality leads to political instability. Even if people have enough bread and circuses, they may not want to be just observers and see to what direction the wealthy move the society. Relative poverty is also a form of poverty.

On the other, high inequality is socially unstable because that is not generally the case.

Envy and social status are not the primary reasons people fear inequality; instead, it is the fear that someone else has control over your destiny, and you are powerless to stop it. And this is what we see every day, even as entrepreneurs--regulatory capture by entrenched interests (and government corruption generally) prevents innovation and real competition, keeping too much wealth in the undeserving hands of those who have rigged the game in their own favor.

Furthermore, it is also quite possible that levels of inequality that we are seeing in the United States drag down economic growth, at least to the point that the material status of the poor is decreasing in absolute, objective terms. This makes perfect sense when you consider how important individual freedom is for broad economic growth--if economic inequality makes people less able to pursue their own objectives and best interests, all but the rich and politically connected will find themselves unable to contribute the best of themselves to society and to the markets.

It's entirely conjecture to attempt to assert that high levels of inequality are an inevitable result of sustained economic growth, and that high levels of inequality are necessary to sustain growth. However, it makes it very easy to hold conservative views in opposition to redistributive policies if you also believe that redistributive policies hurt growth--even when there is no actual evidence backing that belief.

Again, there is no evidence that redistributive policies as such harm growth. However, there may be evidence of a "goldilocks zone", an ideal level of inequality that spurs growth most effectively--where the opposite extremes of communism and the modern "gilded age"--and their well-documented drawbacks--are both avoided. To me this seems like common sense.

Consider a society A, and then society A+ which is identical except the most well-off person is twice as well-off. It's hard to see how A+ could be worse than A in any way. Maybe there's an even better A++ where A+ has some redistribution, but that's another argument.

We don't mind inequality within lives (nobody says it's inherently bad to have most of your happiness distributed toward the later half of your life), so we'd need an argument why inequality across lives is bad.