It isn't so much the inequality itself is bad, but rather having distinct groups that compete with each other. (Group inequality is an inevitable outcome of this but not the root issue). Group competition is bad simply because it is less efficient if your goal is for the maximum good for all people.
Say you have a valley and two tribes in it. If they fight for control of the valley they are expending resources in that competition. If they merge into one tribe then all resources can be spent on the good of all people.
Of course then there is the argument of 'but you can't get everyone to work together in the one group!' but with modern technology I think this is a solvable problem.
> Group competition is bad simply because it is less efficient if your goal is for the maximum good for all people.
Humans are lazy and self interested. They work hard when they need to and competition provides the need. That goes for individuals as well as groups.
Would people try as hard to woo their future spouse if they were matched and promised to each other at birth? Why did my comcast service get faster and cheaper as soon as verizon entered my community?
Competition is painful, but it motivates us to be better.
With the right system though competition between individuals is sufficient. Humans will try and get ahead to woo their spouse by whatever means are available. Having individuals compete for prestige and salary is enough to engage humans to strive for excellence.
Group competition doesn't relate to this aspect though. In a one group system individuals incentivized by individual reward won't be lazy or they lose out so group competition is not necessary.
For example, take a series of tribes in one area competing for resources. If all but one tribe die out due to disease, the individuals of that tribe won't suddenly become lazy. Why? Because they still need their personal acclaim to attract a mate and be successful.
In a multi group system (capitalism) there is no incentive for groups to compete (as in increase consumer value at the expense of profit) without competition, so yes in this system group competition is necessary. However, this attribute is not true of all systems.
> Ignoring [the mental state of the people being optimized for], what is wrong with inequality between groups?
A bit cheeky, I know, but I don't think you can just write off emotional results of systems.
But to answer in better faith: I think [Rawls's Veil of Ignorance thought experiment](https://en.wikipedia.org/wiki/Veil_of_ignorance) is a good response here. In short (skipping how he arrives at the conclusion): when judging the quality of life a system produces, measuring by maximums (or even averages) is probably not the way to go. Median and mode are also very important dimensions to pay attention to.
Also worth noting: if we did live in some future utopia where "inequality" really meant the difference between "all my needs are easily met with little stress" and "I experience nearly constant bliss"... yea, we can have some inequality. But, pockets of the developed world aside, we're not there yet. Not even close. So long as we have around 50% of the world in poverty, and more than 1 billion children in extreme poverty, aiming to "lift all boats" faster than the amount a "rising tide" does is a discussion worth having.
...which is why I spent my entire last paragraph discussing why addressing inequality is often considered as a way to tackle inequality. We don't get to pretend they're separate things for at least another few centuries.
Say you have a valley and two tribes in it. If they fight for control of the valley they are expending resources in that competition. If they merge into one tribe then all resources can be spent on the good of all people.
https://opensocialism.com/open-socialism/arguments/the-free-... goes into these negatives in regards to capitalism.
Of course then there is the argument of 'but you can't get everyone to work together in the one group!' but with modern technology I think this is a solvable problem.