University of Chicago economist John Cochrane has written one of the most unique and insightful perspectives on inequality in his blog, The Grumpy Economist. Read Why and how we care about inequality [1] in its entirety. It is about 6 pages long.
excerpts:
But let’s go with their argument. At least now the argument makes sense, in a way that limiting envy-induced spendthrifery does not. But looked at in the light of day, the argument is truly scary. They are saying that the government must confiscate individual wealth so that individual wealth cannot influence politics in directions they don’t like. Koch brothers, no. Public employee unions, yes.
We finally agree on a cause-and-effect proposition. Yes, expanding the power of the state to direct economic activity and strip people of wealth is well-proven way to cement the power of the state and quash dissent.
So now you see why I rebel at the presumption that “inequality” is a problem, and why I rebel at the task of articulating an alternative “solution.” “Inequality” has become a meaningless buzzword, or code word for “on our team,” like “sustainability,” or “social justice.” Should we discuss “free-market solutions” to address “social justice?”
“Inequality” has become a code word for endless, thoughtless, and counterproductive intrusions into economic activity. Minimum wages, stronger teachers unions, even prison guard unions, are all advocated on the grounds of “providing middle class jobs” to “reduce inequality,” though they do the opposite. Mayor Bill de Blasio has already reduced it to farce: As reported in the New York times, the latest energy efficiency standards for fancy New York high rises are being put in place. Why? To cool the planet by a billionth of a degree? To stem the rise of the oceans by a nanometer? No, first on the list… to reduce inequality. Poor people pay more of their incomes in heating bills, you see.
HKO
We are much better having wealth influence power than having power influencing wealth.