Earlier quoted context omitted.
No, the result of increased wealth inequality, even if you maintained the same level of social mobility, will worsen not improve situation. The description of a rise in absolute mobility would be a misunderstanding of the issue. If that is too theoretic, consider the analogy of a lottery where one group of children win automatically and an other group has say a 10% chance of winning during their life. Increasing the…
Or indeed by your logic simply raising the salary of a CEO by a massive amount also raises the "absolute mobility" of all other employees Yes. If I had a 1% chance of being the CEO and having my income go from $100k to $1M, my expected payoff was $900k x 1% = $9k. If my income stays at $100k but the CEO income goes to $10M, and my odds of being the CEO stay at 1%, my expected payoff is $9.9M x 1% = 99k. My situation…
Although in the CEO's case, often no further harm is done, if half of a population has a massive increase in wealth while the other half does not then then poorer half must compete for limited resources with a group that will not only drive prices up but can now purchase assets as a form of rent seeking. So in fact, greater inequality acts as currency devaluation for the disadvantaged group.
The CEO example was not meant to cause unjustified envy but to show that according to your logic, instead of ever giving employees a raise you could simply give all raises to the CEO and tell employees that by cost benefit analysis the effect is the same, that they are better off.
To put it concretely, from now on, every time you ask for a raise just ask that your boss get that extra compensation instead. I think you will find the effect is not remotely the same.
Or from now on, ask for all of your pay check that exceeds poverty line for chances at a completely fair trillion dollar lottery.
Simple cost benefit multiplication is being erroneously applied in these cases (and often is)