> But at least we're all (except probably Trixie) agreed that the very 
> fact of having a lot of wealth is not harming any poor people, except 
> perhaps in some very indirect way along the lines Michelle proposed. And 
> even then I don't think the studies Michelle cited point to an income 
> gap as a *cause* of poorer health, just a correlation.

I am not in agreement ;-). I believe that skewed wealth distributions 
can be *directly* harmful to poor people. I think that as an individual 
accumulates wealth, the utility accrued from every additional dollar 
decreases. For example, the additional utility that a billionaire gets 
from buying her fifth yacht is much smaller than the additional utility 
that a poor person gets from having medicine to cure malaria. Thus, skewed 
wealth distributions can have a pernicious impact on net utility. As I 
mentioned in my previous post, some amount of skewedness may be necessary 
to encourage the talented or the industrious to work for the benefit us of 
all. However, there reaches a tipping point at which this inequality 
starts to generate negative aggregate utility. This phenomenon is causal, not 
correlational---the accumulation of negative aggregate utility is a direct 
consequence of the diminishing utility return for wealth accumulation.

~j


p.s.

> > If Graham includes social injustice in his exceptions list, then I 
> > suppose that he and I are in agreement.
>
> He concedes at least one such social injustice (differing access to 
> educational opportunities) in footnote 16.

This is the type of focus inversion that I'm talking about! If you want to 
write about the impact of income inequality, then "Social Injustice" 
should be the name of a chapter in your book, and "The Ultimate Fairness 
of Income Inequality in the Absence of Such Barriers" should be a 
footnote, not the other way around. I would be much less infuriated by 
Graham's essay if he used the rhetorical framework of "here's how it 
should work, here's how it actually works." For example, I'd be fine with 
the following setup: "In an ideal economy in which everyone has equal 
access to opportunity and information, an individual is largely in control 
of her income, being free to interact with supply and demand as she 
chooses. However, due to certain unfortunate realities of modern society, 
wealth is distributed not only according to talent and industriousness, 
but according to a priori sociological factors over which individuals 
sometimes have little control." Instead of using this approach, Graham 
essentially gives us an apologetic for wealth inequality, telling us how 
such skew may have been a troublesome sign in the past, but that now, due 
to recent trends in technology, such inequality is a "sign of health" 
which axiomatically indicates an improvement in society's welfare. I don't 
believe it.

In general, the wealth-equals-welfare camp reminds me of creationists who 
conflate "exists" with "was created" and then proceed to show that 
everything that exists must have been created by a Creator because things 
that exist must, by definition, have been created. I think that Graham and 
the other wealth-equals-welfare economists are engaged in the same type of 
semantic indirection. Net wealth does not equal net welfare. These are two 
separate concepts. The equivalence between them must be demonstrated, not 
declared by fiat.