The Wealth Inequality Obsession

There have been more articles than usual about social science issues such as wealth inequality, ‘the 1%’, student loans, offshoring wealth, and so on. I counted ten such articles on Hacker News in the past week alone, all of them viral:

Wealth doesn’t trickle down – it just floods offshore, research reveals (2012)
The 1% hide their money offshore – then use it to corrupt our democracy
What if the problem of poverty is that it’s profitable to other people?
Congratulations You’ve Been Fired
The Blue State Model: How the Democrats Created a “Liberalism of the Rich”
Classism in America
The Housing Market in San Francisco and Ideas to Fix It
More Than 40% of Student Borrowers Aren’t Making Payments
A Basic Income Is Smarter Than a Minimum Wage
How Uber, AirBnB, and the Sharing Economy Avoid Sharing the Wealth

These are just the ones that made it to the front page. There are probably many more.

Economics is a social science, meaning that it affects everyone, from rich to poor, to students and professionals, whereas the ‘hard’ sciences such as string theory or astronomy, while interesting, are mostly confined to laboratories. Favorite discussion topics include student loan debt, rent being too high, STEM vs. liberal arts, the rich not paying their ‘fair share’, wealth inequality, and so on. These debates are almost everywhere online, but seem to be most concentrated in ‘rationalist’ communities.

But why so much debate? I think at the individual level, once essential needs are met (food, housing, employment), you begin to look beyond the purview of your personal economic situation to problems on the outside, whether it’s the rich having too much of the poor having too little.

There also seems to be an ‘activist personality’ involved too – a need to fix the world, to right perceived wrongs. Why are some rich people not paying their ‘fair share’? How can we help people who are displaced by automation? Why do so many students have so much debt, poor job prospects, and what can be done about it? Can a basic income work? And so on.

But I think after a certain point, enough is enough. We need to come to terms with the fact that:

In a free society, some will have more than others, and some will be better than others:

Maybe some rich people don’t pay as much as they should (or as much as you wish they would). Maybe you dislike and or morally object to how they made their money. Tough.

The labor market is competitive and difficult.

Jobs will be lost but also created by new technologies.

Capital gains reward investment and risk taking.

Life is unfair. Mark Zuckerberg became immensely wealthy with Facebook, even though the idea may not have been exclusively ‘his’. Is this fair? Maybe. Maybe not. It doesn’t matter.

Incentives matter. You punish the rich too much and they may not stick around to create jobs, instead moving money and jobs offshore.

The rent in the Bay Area is high, and homes are expensive, and there isn’t much you can do about it.

Sometimes the world can be maddeningly complicated, confusing, and unfair, and we need to let go. By the time you have finished reading this sentence, a couple hundred people will have died, a student loan will have gone into default, and someone will have lost their job. I’m not dismissing other people’s hardships, but you’ll drive yourself mad worrying about it.

Perspective is needed: the poor of America are economically better-off than the poor in other countries. From the Daily Caller Bernie’s Poverty Delusion: America’s Poor Are Richer Than Europe’s Middle Class:

Data from the U.N. agency UNICEF, shows that the US has a lower child poverty rate than other first-world countries, such as Spain and Israel. But Sanders is incorrect on a more fundamental level when claiming Europeans are better off than Americans thanks to a host of social programs and entitlements.

And finally, for many these social science topics, unlike the hard sciences, there aren’t clear-cut answers. Which I guess is why there is so much debate.