Wealth inequality can be worrying. That does not mean all wealth inequalities are worrying. The concern for inequality in this sense is overblown. Up the Gini coefficient and the trumpet is blown to sound the alarm without accounting for its context.
One out of a few ways wealth inequality can be worrying is when a small fraction of the society owns almost everything while the rest lives under abject poverty. For the majority, they are threatened by starvation almost every day. They have limited access to education and medicine. Their chance to escape poverty is close to zero.
This is a case when there is something in the economy preventing the rest from having their welfare improved. It could be poverty itself twisting the incentive system to encourage individuals to focus on current consumption rather than investing for the future (it is hard for kids to think about ABC when the stomach is growling), dictatorship (it might be the interest of the leadership to suppress the masses through heavy taxation), slavery or really, anything.
In this case where wealth is monopolized by the very few, total and average wealth of a society does not reflect the actual welfare of the society. If one wants to be precise, perhaps the welfare of the median member of the society. Take the rich outliers out and only then total and average wealth begin to reflect societal welfare.
Note that what is worrying here is not the inequality itself. It is the factors that make such inequality possible in the first place. The solutions can be interesting but that is not the reason I am writing this.
What I want to demonstrate is a situation when wealth inequality is not a concern. It is a case where the top fraction of the society disproportionately owns more than the rest of the society, but the rest lives rather comfortably — they can afford to own cars, they can afford to obtain a certain level of education, they eat well, etc. The median lives a comfortable life.
The wealth inequality of the society, however unequal wealth is distributed, does not say anything about the welfare of the society. Take the rich outliers out and total and average wealth will give a message that the society is doing pretty well. In this sense, inequality is not a concern.
The point I wish to highlight is that inequality by itself is not necessarily a concern. What makes it matters, or not, is the context.
For those who place too much concern on inequality, especially on the Gini coefficient, I have a feeling they are not accounting for the context.
