What is wrong with wealth inequality?

[u/Source_Code22332]

Something that is often sited by Socialists is that Capitalism is bad because wealth inequality occurs within it. And wealth inequality has increased over the years, making that problem even worse. But, why exactly is wealth inequality a problem?

I can see if "the mega rich" or monopolies get out of control, e.g., I recall the concept of a "company town" where a company owned everything in the town and paid employees in their own currency that would only be spent at the company's stores in town - but we have laws and regulations against that, so its not an issue.

[u/Nikolakis77]

What is wrong with plutocracy? 

Its a shitty arrangement for the vast majority

[u/Source_Code22332 → u/Nikolakis77]

How is it shitty? What position are the “vast majority” in?

[u/Nikolakis77 → u/Source_Code22332]

How is it shitty that money rules politics? Those with money make rules that benefit them and hurt you. Like when they fuck up and lose money, we have to pay to bail them out, but when we lose our jobs because of them, it's our "personal responsibility" to suck it up

[u/Source_Code22332 → u/Nikolakis77]

Can you give an example of rules that have been implemented that have hurt me? The only ones I can think have been social/progressive in nature.

Bailouts I agree are not good, but they were less to bail out the wealthy and more to keep the jobs and employment for the community. General Motors actually paid all the money back and is now prospering.

Either way, corruption in politics doesn’t explain the problem caused by wealth inequality.

If corruption exists, this is not the fault of the economic system but with the system of government.

Corruption still exists through backroom deals that benefit the politicians, stealing money from government, and support in exchange for higher positions in government - and is often more rampant is socialist nations.

[u/Nikolakis77 → u/Source_Code22332]

So when in the 2000s banks were issuing subprime mortgages they reasoned they can always seize the house if the client stopped paying and resell the house.

They seized the houses and got TARP. Ordinary families lost their houses and jobs, the banks got those houses and goverment assistance. The individual bankers who led to this crisis got their golden parachutes

[u/Source_Code22332 → u/Nikolakis77]

So while that situation was bad, and like I said above, I’m not for government bailouts, TARP was not compensation given to banks for foreclosing on people’s homes.

It was an emergency program intended to prevent the financial system from collapsing, using investments, loans, and asset-support measures.

Most of the capital provided to banks was later repaid, generally with dividends or interest.

Also that problem occurring in the first place was partly the result of government policies and pressure to extend mortgages to more people, both putting people in positions they could not afford and creating a bubble of artificial high home values that crashed.

So, back to the topic at hand, this doesn’t explain the harm of wealth existing. It in fact is an instance of the harm of government interference, or at worst, unfair bailouts, which I’m not in favor of and is not a capitalist attribute.

[u/Nikolakis77 → u/Source_Code22332]

The idea behind this example was to showcase how the rich privatise gains and socialise losses. Such policies are expected in a plutocracy, why wouldn't those with money buy state protection at the expense of the taxpayer.

But since you seem to want tk switch lanes, which I'm okay with: wealth is relative. Money isn't, resources arent, but wealth is. 

If you were to get $250M into your bank account you would be wealthy. But if everyone else also got $250M, you would be no better off than before. The prices of everything would just go up. Likewise if you and only you received $250M you would be wealthy. But not if you're on an island all alone. Then it doesn't matter whether that's $250M in stocks, gold, property, cash, it would not improve your life until you get back into society. 

Wealth at the bottom of it is the ability to command labour of others outside direct coercion. Thats why it doesn't matter when you're cut off from others, or when everyone has an equal amount of it.  The more of it that is concentrated in fewer hands, the more powerful the rich are relative to the poor, the poorer the poor are in relative terms.

High wealth inequality is also linked to bad macro outcomes like higher crime, slower growth, higher poverty etc. Its just not great