Wednesday, February 5, 2014


The issue of inequality has been around for a long time:
James Madison, the Constitution's main author, described inequality as an evil, saying government should prevent "an immoderate, and especially unmerited, accumulation of riches." He favored "the silent operation of laws which, without violating the rights of property, reduce extreme wealth towards a state of mediocrity, and raise extreme indigents towards a state of comfort."
There really does seem to be some intellectual confusion about disliking inequality versus disliking private ownership.  The classical model of a healthy society had small farmers and wealth concentration has been an issue going back to Rome:

The system of small estates developed during the Republic gave way to the system of the great imperial private estates. The growth of the large estate was a catalyst to the general decline of Rome as a symptom.
So I don't think it was an accident that classically trained men worried about the issue of inequality and how it could be poisonous.  But I think that a confusion arose between "confiscate everything" (aka 20th century totalitarian communism) and "redistribute" (aka 20th century Sweden or Denmark).  It's like conflating surgery with lethal duels, because both involve a blade.  There are real differences of scale.

In the same sense, a healthy system is balanced and this point of balance is unobservable with the macroeconomic data we have.  I do not think that it is even predictable in theory (happy to be proven wrong).  But difficulty in finding the optimal point of leverage doesn't mean we should lose sight of the goal of balancing competing objectives (incentives versus equality) nor does it suggest either extreme is optimal. 


  1. During the Articles of the Confederacy era, Thomas Jefferson pushed through a number of reforms to make it convenient for small farmers to buy land from the federal government. He very much wanted some degree of equality in wealth and wanted to avoid the mechanisms that led Rome to becoming wildly unequal with only a handful of plantation owners.

    1. Yeah, it really helps to have a classical education and a sense of history. Helps avoid the really obvious problems that past institutions ended up with.