(Honest question) do you have some citations where this has been studied, specifically in cases where the low-end of the inequality spectrum isn't poor? (i.e., to demonstrate the inequality and not the absolute state is the culprit)

The first problem is that wealth means control (e.g. from how VCs control opportunities to create businesses through their funding, to how the rich can buy politicians and laws).

So concentrated wealth = less democratic country (not in electing government, in actual control of what's to be done and opportunities).

Second problem is that concentrated wealth is not used in directly buying, so it sits out of circulation. A rich person can have 95% of its income sit in idle investments, land, etc, and still live like king with 5% of his earnings per year, while a middle class/working class person will spend most (say 70%-100%) of what they earn, thus keeping the economy going.

And when that 95% the rich keep is much much bigger than the aggregated 70% of what the majority of working people spend (e.g. because 1% of the people control 80% of the wealth), then you have a stifled economy and a dwindling middle class.

And lots of other issues, but those are quite major...

Plus, land rented to farmers is productive because of the farmers, not because of the land -- and would still be a sinkhole of money from the middle class (the farmers) to the rich person doing the renting, not entering circulation like the money a farmer would make (to buy animal food, seeds, whatever, and to live their family).

"rent seeking" seems to either be used by people who don't understand how trade/investment works or want something or subsidies'

or its a dog whistle that tends to go with gold bugs, cryptocurrency fantasists and then on to much less pleasant things

Not sure what you're going about re: gold bugs, and "less pleasant things"...

The natural end of that is generally going to be prosperity across the board, and hopefully a government financially solvent enough to actually pay for those in need and essential services, all of which should be lower as a result of a better market doing much of that naturally.

On the other hand I understand the principle that money makes more money (the principle of investment and ROI), and I don't see how "competitive market" tackles this.

It basically feels like the capitalism starts off from fairly-level playing field, but over time becomes more and more unstable, the gap ever-widening. We have already seen it fall (at the beginning of communist regimes), and I'm afraid we'll see it fall again.

That's a pessimist view, which I hope won't turn out to be true, but I'd be interested in exploring alternatives.

It doesn't address that because it doesn't make that argument, in that way. One of its starting axioms is that economy is a positive sum game. In the case of your statement, it might argue that (in the very general sense) money makes more money in a positive sum way -- more total wealth in the economy. Then to the latter it merely says that business that are better at making money (and generally, wealth) get to out compete those that don't. Its premise is it optimizes for wealth creation of the entire economy. I think that's the place to take the argument -- either that you fundamentally disagree with that premise or some outcome of it.

> It basically feels like the capitalism starts off from fairly-level playing field

Historically I don't think so. I"m not expert but read a lot and I'm currently under the impression that economies were historically locked down by government or tightly coupled government / mercantile entities.

WWII was a great leveling of the playing field. There are many times in history when Gini coefficients dropped precipitously. All the evidence points to the fact that wealth tends to accumulate in capitalist economies until crises or government intervention prevents it.

It's not a market problem. Even in a perfect market, a rich person would have most of its assets sitting or slowly moving, whereas a middle/working class person would spend their income.

So one gets the economy moving, while too much concentrated wealth stifles it.

Only if they're so inclined and even only part (they'll keep large parts in less risky form, including land etc -- also not sure how "investing" in "buildings in active use" is not rentierism and how it helps the economy. Whereas the middle/working class have no other option but to put the majority of their income directly in the economy again (buy things to live).

And that's not even taking into account the fact that the rich could very well invest elsewhere, or hide their money in tax havens, invest in foreign housing markets, and such, in which case the society they live in, and which they make their money, gets zilch of those money. Again, not the case for middle/working class people.

But assuming that the rich did invest most of their money, that would still have the problem of the rich calling the shots (through their investments and wealth), which is less of a problem in a less unequal society.

Edit: Love your name, love the reference.

(I think HN didn't like your very cynical comment :D)

"And we see the whole trickle-down through the economy, and that's good for the economy."

That's Gary Cohn, the chief economic advisor for Donald Trump.

To rephrase: You're saying that the "common" people are just not working hard enough and the rich need to take measures to make them work harder so that they can be better consumers.

It's the "common peoples" fault that there is no middle class because they don't work hard enough.

According to you...India has a half billion lazy people.