Creating more value in an economy would do more than wealth redistribution to combat the harmful effects of inequality.
– Tyler Cowen, in a review about a much-discussed book by Tom Piketty on the subject of inequality. Piketty favours a lot of heavy state activity to control and reduce said inequality. Now, it is easy to just default to the standard libertarian line and say that fretting about such inequalities is just an excuse for a statist power grab. The fact is that the sheer gap in wealth we can see today is a reason why, however mistakenly, idealistic, smart people are fearful of, and hostile towards, laissez-faire capitalism. So it is worthwhile to keep making the economic, philosophic, and political case for why coercive measures to reduce inequality is bad and dangerous.
I could not resist adding in this paragraph from Cowen:
The simple fact is that large wealth taxes do not mesh well with the norms and practices required by a successful and prosperous capitalist democracy. It is hard to find well-functioning societies based on anything other than strong legal, political, and institutional respect and support for their most successful citizens. Therein lies the most fundamental problem with Piketty’s policy proposals: the best parts of his book argue that, left unchecked, capital and capitalists inevitably accrue too much power — and yet Piketty seems to believe that governments and politicians are somehow exempt from the same dynamic.