When asked in an informal conversation about income inequality, sometimes hyped as the defining challenge of our time, I’ll look into my peer’s eyes with sincerity, and quite frankly admit that I don’t give a damn. And then, like Clark Gable I turn my back and disappear into the fog, the most dramatic mic drop of all time.*
Let us remember that individuals have essentially two alternatives for economic gain: either through predation or through production.
Predation can take many different forms: robbing a bank, sending out false information, lobbying politicians for monopolistic privileges or barriers to entry, et cetera. The distinctive feature is that the “winners” only gain at the expense and to the harm of the other parties (simply because the other parties–the “losers”– did not consent to the “transaction”).
Productive economic behavior–exchange based on mutual consent–has no such losers. As economists wonderfully point out, we all gain from trade. When Apple (which today has gone over the hill) sells a new iPhone or laptop to a customer, has anybody “lost”? Both parties voluntarily consented, and it’s not in human nature to voluntarily shoot yourself in the foot.
Both species of economic behavior will affect the so-called income distribution. But so what? As a libertarian I don’t reflect with joy when Apple posts high profits on the basis that the resulting income inequality is “the good kind.” I’m simply happy that 1)Apple is filling consumer desires by pursuing its own self-interest, that 2)the profits are an invitation to other companies to enter, and 3)that scarce resources are being used efficiently. On the flip side, when news surfaced that Boeing essentially operates the federal government created Ex-Im bank, and can grant itself exclusive privileges not available on the free market, I didn’t pause bitterly on the “bad inequality” that was sure to follow. I was outraged by 1)the economic folly propagated by intellectuals, by 2)the injustice of the situation, and 3)by the fact that scarce resources were being allocated via political channels.
The real meat of the matter, then, is not what kind of inequality is desirable or undesirable, but rather how individuals are pursuing their self-interest.
Just this one mental adjustment has a few really important implications in the inequality debate.
Most importantly, fighting income inequality as an end in itself would no longer hold such popular appeal. With the focus now on the means employed for economic gain, people would debate less on class issues and more on questions of principle. “The rich have become richer and the poor have become poorer” would become “we must protect the producers from the predators.”**
This implication would translate into completely different political responses than those being thrown around by Sanders, et al. “The rich” as such would not be identified as a monolithic entity of capitalists who have it out for the little guys. Instead we would see each individual as a unique end in himself, regardless of how much income he earns, and therefore would not propose sweeping solutions that only penalize or “reward” folks on the basis of association. In other words, under the current terms of debate, those rich producers stand to be penalized simply because they earn a comparable income to the rich predators. It’s guilt by association, and the way I see it, that’s morally objectionable.
My apathy of income inequality, then, is not the product of an apathy for the welfare of my fellow man. Just the opposite is true: I wish to stand up for the producers and expose the predators. It’s based on morality, and from the conviction that this will make the world a better place.
*Actually this only happens in my mind. In reality what normally happens is my counterpart informs me just how devastated the middle class and poor are in this country, and why it’s so important that we elect leaders who are actually committed to “doing something about it.”
**Producers vs. Predators is not synonymous with Rich vs. Poor. Producers are anybody–rich and poor–who earns their lot through free exchange based on mutual consent and value creation. Predators are anybody–rich and poor–who gain economically through coercion, i.e., through transactions not based on consent.