On the Unequal Distribution of Wealth

 
Lately, economic discussions (and arguments) have often focused on the inequality in the distribution of wealth. While much of the concern is directed at the extreme ends of the distribution range—the desperately poor contrasted against the tremendously wealthy—there is also a vocal set who decry any unequal distribution of the economic pie. To them, any economic inequality is an artificial construct of nefarious human intentions and therefore unfair and unjust.

While I would argue that wealth and income inequality isn’t as much of a social problem as some make it out to be, I won’t dispute that some of the unequal distribution is the result of ongoing political corruption and cronyism or of historical exploitation and other injustices. However, the assertion that any unequal distribution of wealth is necessarily bad and should be eliminated is patently false.

Industry and trade are the engines that create and distribute wealth. However, like all dynamic systems, an economy is fundamentally about the organization and flow of energy. These forces are driven by differences in potential, moving and consolidating energy here and there about the system. Of course, some energy is also lost to entropy—and we see economic waste as well.

To describe a situation where there is no unequal distribution would require an appeal for total consolidation or for total entropy. Neither scenario is physically possible within a dynamic system nor desirable for human economies. The artificial controls and constraints that we impose on economic activities often do little more than introduce more inefficiency into the system, especially when such are built upon previous flawed attempts at interference. In other words, instead of applying a few careful drops of lubrication to our economic engine, we tend to throw random handfuls of sand into its moving parts. When that fails to produce the desired results, we throw in more sand.

On top of this legislative and regulatory blundering—and here I’ll set my usual cynicism aside—the mistake that too many “liberals” make is to equate all industry with exploitation and all trade with theft. While problems do exist, they are confined to a small segment of economic actors. Our response should be appropriately narrow and measured. Instead, as always, the impulse is to punish everyone for the crimes of a few. That impulse is as foolish in the statehouse as it was in middle school.