Is income inequality a blessing in disguise?

December 7, 2024

Is income inequality a blessing in disguise?  

There are about 800 billionaires based in the United States with a combined wealth totaling about $7 trillion. If you take away all their money and hand it over in equal amounts to every American citizen, each one of us would receive about $20,000. We would quickly spend it and be equally poor in a heartbeat.  

If distributed equally, the fortunes of our billionaires will be reduced to almost a one time payment slightly above the annual poverty line income per citizen, which is $15,000. There would not be any billionaires and we would all have an extra $20k that would not last long. That is. after achieving the radical equality "dream" of getting rid of billionaires in furtherance of achieving income equality, we will all be equally poor. 

After getting rid of billionaires, millionaires would come next on the crazy income equality agenda. 

There are approximately 8 million millionaires in the United States with a combined wealth of about $27 trillion. Distributing their wealth equally to every U.S. citizen would provide a one-time payment of about $80k to each U.S. citizen. Adding the $20k from the billionaires, that means that every U.S. citizen would receive $100k. All the former billionaires and millionaires would be at significant risk of defaulting on their mortgages and other loans. Most of their businesses and holdings could be lost. Everyone will receive a windfall of $100k, which could last a few years until everyone becomes poor as dirt. 

Income equality would most likely bring economic stagnation. You can forget about innovation and welcome stagnation. This is because there would not be private capital for investing and there would not be any incentive to innovate or compete in business. We would achieve income equality with guaranteed poverty and misery for all. 

The Benefits of Wealth Concentration

The biggest benefit of wealth concentration and income inequality is probably that they incentivize and viabilaze investments. When income is spread equally, everyone may have enough to survive, but noone has enough to invest. 

Wealth concentration is probably beneficial also in terms of overall waste reduction and environmental conservation. While rich people consume more and waste more, the rich are a minority of the overall population. If income equality would lead to make everyone rich, which is unlikely, the result would be more overall consumption and more overall waste. 

Consumers in developed countries often waste more. Examples include food, energy, and water. Consumers often buy more food than they can consume, leading to a significant amount of food being discarded, especially fresh produce, which is highly perishable. Large portion sizes in restaurants and households also lead to a high volume of uneaten food that gets thrown out. High levels of energy and water consumption occur with electricity and water used inefficiently.

In a hypothetical world where everyone is rich and wealthy, presumably there would be even more overconsumption and waste.

What do you think?

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