Why Economic Inequality Should Not Matter

I see a lot of liberal rants about the 'growing economic inequality' and the 'top 1%,' but I think that they are missing the fundamental issue. While it is a nice thought that wealth will be distributed more evenly, so that everyone can enjoy private planes and mansions, we should not be judging society by what the rich can have and the rest can't, but rather by what the normal person can afford. Perhaps it is because humans are a jealous species, but it strikes me that the rich being rich doesn't in any way hurt me.

Consider the case if we take inequality to an absurd extreme. The rich people own planets and have their own private space ships to travel between them. The poor people are stuck on Earth in the state that they are in now. The rich in this case are vastly wealthier than the rich are now, while the poor are just as poor as they are now. So why would the inequality make the difference in social good? Because the poor are more jealous of the rich for having access to more resources?

Contrast this case with a completely equal society with no wealth. There are no rich, only poor, but the income inequality is zero, since no one is making anything. This is where everyone is basically subsistence farming or hunting and gathering, working 12 hours a day to eat, and clothe themselves. This is a situation that is not unlike where humanity started. I think it should be fairly uncontroversial that we have made some progress since then, and I think it is somewhat uncontroversial to say that it is better to be living now, with the large inequality, than 10,000 years ago with less inequality.

What I think should be somewhat clear from my examples is that what is important is not the inequality between the rich and poor, but rather the condition of the poor themselves. If we are concerned primarily about poverty, then what we want is a society where the poor are getting better off the fastest. What happens to the rich should be mostly irrelevant. While the redistribution of wealth from the rich to the poor might sound like a way to fix the problems of inequality, in the long run, this ends up harming the poor more than it helps. In situations with attempted large scale redistribution, such as in the communist states or in other dictatorships (Zimbabwe comes to mind), the poor end up being worse off, eventually to the point where the system collapses, which hurts the poor the most.

As the saying about capitalism goes, a rising tide raises all boats. There are some objections to this from liberals who think that the system that we live in is pure free market capitalism, but there is no other system that I'm aware of that has led to a larger increase of the standard of living of the poor.