> To kids, wealth is a fixed pie that's shared out, and if one person gets more it's at the expense of another. It takes a conscious effort to remind oneself that the real world doesn't work that way.
I think paul has a distorted view of wealth. Wealth is NOT a fixed pie. But it is NOT an infinite resource either. To see what wealth is let's follow where it comes from.
All wealth is extracted from nature or produced by man.
What one man is capable of producing/extracting is limited by his hands, feet, physical strength and mental abilities. Since physical strength, mental ability and natural resources are limited... wealth must also be limited.
Billionaires exist in this world. Does one billion dollars represent the wealth that one man can produce? By common sense and intuition... No. For example, Let's say a 747 airplane is worth one billion dollars. In short, one billion dollars in cash symbolically represents a 747. It is impossible for one man to build a 747 yet it is possible for one man to accumulate a billion dollars. Both one billion dollars of cash and a 747 symbolically represent the same value but it is possible for a single human to generate one billion dollars of cash but not possible to generate a plane. How is this possible?
By logic, since wealth comes from people and one person is incapable of producing a billion dollars then for the billionaire to even exist he must've taken wealth from other people.
The question is... how was the wealth taken? The answer is not obvious.
No single man has the physical or mental ability to run a company just like how no single man has the ability to produce a billion dollars in wealth. Thus to create 1 billion dollars in wealth (or a 747) many people MUST work together. A lot of people working together are often called Corporations (Sound familiar?). Corporations are essentially massive groups of people producing massive amounts of wealth.
We can also agree that by logic that the wealth produced by a corporation or a startup is bounded by the sum of the TOTAL WEALTH that the employees of the startup are capable of producing. But what does this have to do with wealth inequality?
Where wealth inequality comes into play is the DISTRIBUTION of the wealth produced by the corporation. The startup owner, the CEO, the C-level executives get an exaggerated portion of this wealth. It's basically a million dollar salary for a CEO who has the work output a single human being. A million dollars pays for 10 human engineers!
But it gets worse then this. At the most extreme case comes the Corporate owner (aka shareholder). Here we have a human that can contribute ZERO work. The owner contributes nothing to the corporation yet by virtue of being the owner he can extract an extreme amount of wealth. As a stock owner you do ZERO work in increasing the value of the company yet you as a stock owner benefited directly from it.
This is where wealth inequality comes from. It does not come from one person working harder than another. If this was the case then people would be relatively more or less equal in terms of wealth as one person can't really produce much more than another person no matter how hard he works, how strong he is, or how intelligent he is. The problem I describe here is a FEATURE of capitalism. Capitalism is the foundation of human civilization.
I'm not making this stuff up. This phenomenon was first noticed by a person called Karl Marx. Karl Marx developed this thing called Communism to combat the above problem. While communism didn't work out in practice, what Karl Marx noticed about it: that wealth inequality is an inevitable consequence of capitalism, was very true. Karl Marx is still considered a genius among many academics today because he was able to identify this critical flaw.
>So when I hear people saying that economic inequality is bad and should be eliminated, I feel rather like a wild animal overhearing a conversation between hunters. But the thing that strikes me most about the conversations I overhear is how confused they are. They don't even seem clear whether they want to kill me or not.
That's because no clear answer exists. Why forcefully make up an answer?
The benefits of wealth inequality are numerous. Capitalism is an anthropological phenomenon. The dawn of civilization started because hunter and gatherers developed the ability to accumulate wealth. Once wealth exists, you get wealth inequality. With wealth inequality you get poor people and rich people. Rich people can pay poor people to build amazing things like boeing 747s and the great pyramids. Rich people will also by virtue of having other people work for them, have a bunch of leisure time to play with subjects unrelated to survival like science, math, and art leading indirectly to the technological civilization we have today.
There is no doubt, that capitalism (aka wealth inequality) has lead to the advanced technological society that exists in the world today. The question of whether or not it is justified is more of a moral question. The thousands of workers who were paid pennies to build the Great Wall of China or the Great Pyramids... Did they get their fair share of the wealth? Do the workers/engineers who made the 747, did they get a fair share of the wealth? There is no question, that from a moral standpoint, the answer is unequivocally: NO. But from a infrastructure and economic standpoint, for the advanced technological civilization that live in today to exist, it was probably necessary.
Looking towards the future I would ask, is there a better way? Is there a way to make a society that is both efficient and moral? Communism was one possible answer, is there a better answer?