Because the gap indicates unfairness and people care about that. If you are poor, raising the floor will be good enough, you primary worry will be sufficient income. Once you reach a comfortable life, your priority will - or at least may - shift, now you are in a position that allows you to worry if the situation is fair.
Also narrowing the gap is a way to raise the floor including in absence of growth while raising the floor without narrowing the gap depends on growth. But I think this is not too relevant in practice because taking a lot of money from a few wealthy people will often result in rather small changes as the money has to be spread among a lot of people.
Because needs and preferences of lower level are less and less reflected in policies and production. They are becomming permanent underclass with no future. They dont matter for politics nor for economics. Preferences of super rich are overwriting them, while super rich become richer, while super rich offload all risk they take on others.
That still doesn't explain why the gap needs to narrow if the min/median are rising. The pie can increase, everyone can be better off without shrinking the gap.
Because the gap is the percentage of society's resources that are controlled by wealthy stupid people. Think about all the power companies that are cutting off power to homes to power AI data centers. That couldn't happen if the DC owners had less wealth and the homeowners had more.
Wealth inequality doesn't cause ills, envy does. Envy should be regarded as a character defect, a sin, not something to be elevated to policy. You're not poorer because someone's richer than you, and indeed policies aimed to reduce wealth inequality will actually make you poorer, that's why average European salaries are much lower than US ones.
The classic reply to this is that inequality reduces the agency of people to make decisions in the society - IOW it causes _power_ inequality.
But the reply to that is that it is orthogonal to the discussion. Power should be distributed in a way that increases efficiency and not just for the virtue of doing so.
>The classic reply to this is that inequality reduces the agency of people to make decisions in the society - IOW it causes _power_ inequality.
The only agency it reduces is the agency for people to make decisions about what should be done with other people's wealth. Which is not a productive agency for them to have as they've got an incredible conflict of interest to just waste it on themselves.
I have changed my opinions on this. Land reform initiatives have been carried out globally at different points and it has been seen as broadly useful and necessary. Why?
Medial and pre-medieval times, debt cancellation was also broadly necessary and done. Why?
All human relationships have inequalities. Attempting to use the government to destroy hierarchies is utopian bullshit. It always leads to worse outcomes than intendent because humans are imperfect. Intentions should never be the measure of success, only outcomes.
> Attempting to use the government to destroy hierarchies is utopian
yes, "destroy hierarchies" is utopian. But that's a complete straw man version of "reduce very high levels of inequality that have highly visible political impacts".
Non trivial number of people believe that everyone is equal in abilities. Non trivial number of people believe that communism is a preferable end goal - a goal that excludes hierarchies from forming.
Envy is the completely wrong framing, it is about fairness. If you design widgets and 99 people build them and everyone works the same number of hours, then the fair share is 1 % for everyone. One percent of the work, one percent of the profit. If you take 2 % [1] while everyone else only gets 0.99 %, that is unfair. And look, the difference for each individual is tiny, 0.99 % or 1 %, that makes it easy to dismiss despite being the source of the unfair inequality.
He will get the same as the others if he works the same number of hours to run the company. The dept would ideally be company debt and not personal dept, after all one reason to found a company is to separate personal and business risks. But if you invest personal money in the company, you get that money back plus some risk and opportunity premium just as you would pay back any other loan. What fraction that is will of course depend on the amount, premium, and payback period. Just investing some money will not provide you a perpetual income.
I generally agree that if it was true that the inequality would lead to consistent floor raising it would be fine, but it doesn't.