Brilliant analysis by ARI’s Don Watkins on Thomas Piketty’s The Economics of Inequality. Here are some notable gems:
Why should we care about inequality in the first place? Economic inequality, after all, can result from the rich getting richer and the poor getting poorer…but also from everyone getting richer, some more rapidly and others less. Indeed, the story of capitalism is of steady and, over time, dramatic improvements in living standards. Economic inequality in capitalistic societies refers not to absolute deprivation, of which there is less than ever in human history, but to relative deprivation, whose odiousness is not self-evident.
To earn something, however, doesn’t mean that factors outside your control played absolutely no role in the outcome. When we say that someone has earned something, we aren’t distinguishing people who chose their parents or place of birth from those who didn’t. Rather, we’re acknowledging that the knowledge, skills, or expertise that makes one person’s work more economically valuable required effort, ambition, and initiative, whatever one’s natural talents or social background. If you attained your wealth as a result of non-fraudulent, non-coercive exchanges with employers or customers, then you earned it—and it’s wrong for the government to seize it on the theory that it would be nicer if someone else had it rather than you.
[Piketty’s] egalitarian project rests on the premise that the actual possession of wealth and the moral right to it are inversely related. This dogmatic indifference to the processes whereby wealth is created and acquired, and the habits and dispositions that have proven conducive to individual prosperity, as opposed to the habits and dispositions that reliably result in poverty, means that advocates of “social justice” like Piketty are devoted to perpetrating a profound injustice. [Piketty’s Unaswered Question]