Can you explain why wealth inequality is bad?

If me and the rest the million other people in my city have $100,000, some billionaire in a city somewhere else making another 100 million doesn't really have any impact on me directly. Yet it increases this inequality metric and I'm supposed to be outraged.

If the billionaire was using this position to corner the real estate market I'm trying to buy a house in, then I might be upset. But, I could also pool 1,000 of my friends together each with our $100,000 into a corporation and corner a market as well.

So why exactly is inequality relevant? Shouldn't we be focused on just raising where the bottom of the income range is rather than cutting down the tall outliers?

It seems to me like trying to make yourself wiser by killing everyone with more education than yourself.

Because democracy stops working when inequality is too great. Regulatory capture and all that.

It's waaaaay harder for you to organize and mobilize your 1000 buddies than it is for 1 billionaire to decide he wants to do something you don't want, such as lobbying politicians to give him a tax break, for example.

It's not as hard to organize people along ideological boundaries as you might think. Look at the power of the US political parties, the NRA, unions, etc.

If we want to stop regulatory capture, stop that. Don't worry if it's one person or 1000 behind a movement.

Wealth and income inequality are only bad insofar as they have an effect on consumption inequality and leisure. (Another issue is that wealthy people may use their money to get politicians to pass laws that are harmful.) When people who are richer than you spend their money on yachts, the resources (labor, materials) used to build the yachts can't be used to provide other people with cars, food, homes, computers, and drinks from Starbucks. Since billionaires have most of their money invested, income and wealth inequality matter much less than the news try to make them seem.

According to this article, though, there has been an increase of consumption inequality from 1980 to 2005 in the US according to various papers: https://web.stanford.edu/~pista/JEP.pdf. But the consumption inequality is far less outrageous than income inequality and can be estimated to have been in decline in the world at large through data from the World Bank's DataBank.

The main problem is in political representation. In a democracy, everyone should count as one vote. The natural desire of the population is to have better education and health care, for example, that can lift the standing of the whole society. When a small minority has a disproportionate amount of wealth, they can relatively easily bend politics to their personal wishes. In the US this presents itself in politicians who vote for their wealthy donors to receive tax breaks, the rise of chartered schools, and the fight against public health care.

It seems to me that is a problem that should be solved by anti-lobbying/political donation laws.

The measure to look at is consumption inequality, not wealth inequality. It has also increased (though it is harder to measure than income inequality, but see https://www.nber.org/papers/w17982.pdf), but the progressive global wealth tax of up to 2% advocated by Piketty in Capital in the Twenty-First Century could increase consumption inequality instead of diminishing it, and is otherwise less efficient than a tax on consumption.

See “Measuring inequality: A three-headed hydra”[1] in The Economist and “Economics is all about consumption” by Scott Sumner.[2]

[1]: https://www.economist.com/blogs/freeexchange/2014/07/measuri...

[2]: http://econlog.econlib.org/archives/2014/07/economics_is_al....

Yes, and that's what the article should be talking about. It's not, so it's garbage.