Moving on to respond to why does everyone think wealth inequality is "sooo" bad.
The debate over inequality is tied together with notions of fairness. Most people in this country don't resent other people success, at least in our capitalistic society, though there certainly seems disdain here for those who inherit their wealth or obtain it from disruptive financial trading just look at portrayals in movies or TV. This gets into a couple things Unit 2 said. One was about who the new rich were.
In the US, the overwhelming majority of the rich did not inherit their wealth. For example, a study of billionaires around the world finds that fewer than 3 in 10 American billionaires got to that position by inheriting their wealth, and that "the share of selfmade billionaires has been expanding most rapidly in the United States." Caroline Freund and Sarah Oliver, "The Origins of the Superrich: The Billionaire Characteristics Database," Peterson Institute for International Economics, Working Paper 161, February. Roughly 20 percent of the Forbes 400 actually grew up poor, roughly the same percentage today as it was in 1982. Nor did most individuals on the Forbes 400 list (yes, but it is the best we have) inherit the family business. Furd and Cal researchers found that 69 percent of those on the list in 2021 started their own business, compared with only 40 percent in 1982. But this does represent a greater mobility to join the super wealthy not exactly consistent with the narrative. Overall, the rich get rich because they work for it, and our economic system rewards them. Looking again at the Forbes list, slightly less than 14 percent were involved in banking or finance. Roughly a third were entrepreneurs. Nearly 16 percent were professionals like engineers, scientists, and computer professionals that went into busines. Sports and entertainment figures comprised almost 2 percent. I looked at the list Bearister posted and the heirs of great fortunes have done especially poorly. For example, we might think of the du Ponts or Rockefellers as personifying multigenerational wealth. Thirty eight people from those two families appeared on the 1982 list but none of the 16 du Pont heirs are currently on the Forbes 400 list nor a Rockefeller (unless I missed them due to name changes). Nor are there any heirs to the Hearst fortune. The Mellons are out too, as are the Dursts and the Searles. The rich are not staying rich?
But wait, Bearister says that economic inequality has to be associated with poverty. The sky is falling and he has the quotes to prove it. His view seems to be poverty has to be the flip side of wealth, as he sits in his Bay Area splendor.
But getting to another Unit 2 point, poverty and inequality are not the same thing. As he points out, reducing wealth through taxation or otherwise doesn't eliminate poverty. Poverty rates have sometimes risen during periods of relatively stable levels of inequality and declined during times of what Piketty shows are rising inequality. The idea that gains by one person necessarily mean losses by another reflects a zero sum view of the economy that is simply not consistent with history or economics. The premise behind capitalism is that the economy is not fixed in size, with the only question being one of wealth distribution. Rather, the entire pie can grow, with more resources available to all. We give people incentive and thus we have the world's largest economy. The relationship between poverty and inequality remains unclear, in part because the number of variables, such as economic growth, social payments, racial discrimination, international competition, immigration, technology changes, etc. That said, the official poverty rate in the United States has been relatively stable since the mid1970s, though there is greater income inequality (which is different than wealth inequality).
Finally, there is from Bearsiter and his others quotes that inequality skews the political process in ways that benefit the wealthy and penalizes the poor. There is certainly some merit to this argument. The federal and local government can and does dispense favors to those with connections to the levers of power, whether they be unions, business or wealthy donors. THEY ALWAYS HAVE HAD ACCESS REGARDLESS OF RELATIVE WEALTH. There is far less evidence that the wealthy are able to use their political power to enact a broad agenda that favors the wealthy or penalizes the poor, unless that is what the Democratic President and Democratic majorities (using this term loosely for the Senate) represent. According to a Gallup Poll, about one-third of the top 1 percent of wealthiest Americans self identify as Republicans, compared to roughly a quarter who self identify as Democrats, a statistically significant, but far from overwhelming move towards the party that is more conservative on social spending. When you look at wealthy activists: Soros, Kochs, Jobs, the Gates, Mackenzie Bozos, Alderson's widow, etc. they are all over the place politically. And while some wealthy individuals are politically active, that activism is often offset by groups that trend for representing lower income individuals, or groups whose politics cut across the socioeconomic spectrum. And it not just the wealthy. The Kennedy's are no where near the Forbes list anymore, but if Caroline Kennedy is on the phone, Biden takes the call. The quotes presented by Bearister that every thing is controlled by these invisible sources seems highly ignorant of the political process and more like rants. That said, individuals and businesses are able to secure favors and privileges from the government, often to the detriment of their competitors. And I would also think most of the very wealthy, despite their overall political views would object to tax changes that would harm them, but most of the very wealthy are insulated from income tax.
This also ignores that a key component in this equation is whether the inequality results from market forces or from government dispensed favors. Regulation often provides monopoly power to the biggest players in an industry. And then consider people using the government subsidies or benefits to make money, particularly and the State and local levels. By most measures, government cronyism is a far smaller contributor to inequality in the United States than in many other countries, such as say Russia, Malaysia, or Ukraine. U.S. industries, and therefore some fortunes, benefit from government action that most voters want. And it is undeniable that politically derived benefits are far more likely to go to those who already have wealth, power, and the connected. But there is little to suggest that wealth inequality is the cause. Elites in society will always have access to the government like Caroline Kenndy, regardless of the level of wealth inequality. In a way, that is how representative government works, even in other countries. Elites have access to the political apparatus.
