> This is a big contribution to this debate.  Thanks Michelle!
>
> Quick thought though:
>
> A life expectancy gap is bad and efforts to narrow it are laudable. 
> Unless the solution is to kill old people to harvest their organs to 
> save people who are dying younger.
>
> I'm just pointing out that an income gap being bad doesn't mean that 
> forced redistribution is good (or even necessarily helps the poor in 
> absolute terms).


I realize that this is just an analogy, but it presents a misleading view 
of wealth redistribution. After all, it may be that older people have 
larger organs that are packed with redundant tissue. Thus, we could 
extract a sliver of an older person's organ with no penalty to her, and 
transplant that sliver into a younger person (with no organ at all!) for a 
great increase in net utility ;-).

For a more concrete example, suppose that the economy has generated a 
single "new" dollar and that we can give this dollar to an extremely poor 
person or an extremely rich person. I claim that giving the dollar to the 
poor person almost always increases net utility more than giving that 
dollar to the rich person. Relatively speaking, that single dollar will 
afford the poor person many more opportunities for acquiring food, 
shelter, medicine, or simple peace of mind than it would for the rich 
person.

Now let's suppose that the dollar is not "new," but instead has been 
redistributed from the rich person to the poor person. I would still claim 
that there is a net increase in utility. In other words, I claim that a 
public policy can be net-zero with respect to aggregate wealth generation 
but net-positive with respect to aggregate utility generation.

One might argue that, in some cases, the rich person should receive the 
dollar so that she can invest it. This is a valid point, since the returns 
on the investment might result in a net increase in utility---for example, 
the investment might result in new entertainment technology or the 
creation of high paying jobs. I agree that investment helps to improve our 
quality of life and that, to some extent, investment is driven by the 
existence of people with surplus funds (and thus is driven by income 
inequality). I have no problem with this. However, I also believe in John 
Rawl's notions on inequality. As he says in his book "A Theory of 
Justice":


"All social values---liberty and opportunity, income and wealth, and the 
bases of self-respect---are to be distributed equally unless an unequal 
distribution of any, or all, of these values is to everyone's advantage."


Thus, I can tolerate (and, in fact, celebrate) the existence of wealthy 
entrepreneurs to the extent that the fruit of their labor and talent helps 
everyone. However, I see no reason to celebrate wealth in and of itself, 
since wealth isn't welfare, and welfare is what I care about.

So, here's my question to the wealth-equals-welfare economists: do we 
currently live in a society with an acceptable level of wealth inequality? 
If the answer is yes, then why is this level of inequality acceptable? 
Furthermore, could it be that even *greater* inequality is acceptable, or 
even preferable? For example, could *fewer* people have health care in an 
acceptable world? Could *fewer* people have access to clean, safe 
neighborhoods? What areas of American society are too equitable for their 
own good?

If the wealth-equals-welfare economists agree that there is too much 
inequality in our society, I have a different question. Now I want to know 
why people like Paul Graham spend so much time writing about 
America-Prime, which is just like America but where poor people deserve 
their lot in life and rich people are swept by the Darwinian tides to the 
shores of luxury? Why would Graham claim to derive deep insights about our 
current society based on the sociology of an alien nation bereft of 
discrimination and institutional injustice? Sometimes I feel that Graham 
is not an economist, but an ethnographer for some strange extraterrestrial 
civilization.

Simply put, Paul Graham is not my boyfriend.

~j