A Short Note about Inequality.

• Author: Narveson, Jan
• Position: Essay

Robert Frank--a man of high intelligence and great ingenuity--tells us in his essay "The Complex Ethical Consequences of 'Simple' Theoretical Choices" that "[t]here is no persuasive evidence that rising inequality bolsters economic growth or enhances anyone's well-being" (2016, 224).

Hmm. Anyone's? Really? Suppose that Smith gets very rich by developing a sizable business. That business employs many people; there's no way you can get very rich in business without doing that. All those employees voluntarily moved from their previous jobs to Smith's, presumably for the usual reasons: their incomes are higher, the work is more interesting, and so on. Surely those people's well-being has been enhanced? At least, they presumably think so, or they would not have moved.

And then there are all the customers who bought Smith's products, thus improving their own situations in some or other respects. Is Frank overlooking this? Or doesn't he care about customers? Or does he think they know nothing about their own interests?

Finally, what interests me most immediately here are Smith's new consumption patterns. Frank notes that the rich can now "buy bigger mansions and host more expensive parties" and that "the average American wedding now costs more than $30,000." And yet, he says, such things "have made no one any happier" (2016,224). How does he know that? Has he asked the wives or husbands in question? I live in a quite big house, though hardly lavish. Suppose that I could afford, without financial stress, to enhance it in various ways. (I have had occasional ideas over the years. I can't afford to realize them, and I rarely think about that. But would I be "happier" if I could have? Would it have enhanced my welfare? Well--probably yes. Just not enough to make it worth my while to make the changes that would have been necessary in order to earn the extra money needed for those enhancements.)

But let's also consider all the workers (and their employers) who make those nice big houses. I should think it would be a pleasure to work on the building of a lovely big house--more so than to make ordinary houses, even though that, too, could give satisfaction to those who make them. And because very wealthy people are probably very particular about workmanship and will pay to get really good workmanship, we can expect that the incomes of those who work on such houses are probably higher.

Or suppose our man Smith has a passion for fine cars--not unheard of...