I am willing to admit that extreme wealth inequality might be undesirable in building a stable society. Extreme inequality could create unnecessary tension in a society that could in turn bring about disregard for property rights. In spite of that, I am unconcerned with the current state of wealth inequality in Malaysia. Regardless of my take, whenever the Gini coefficient for Malaysia changes by an infinitesimal amount, some would make mountains out of molehills. These people are being overly concerned about inequality. Some wealth inequality is still okay.
Many factors could cause such inequality. From the way I see it, the most common cause is the incentives to be better; the strive to be better. A system that rewards success and punishes failure causes inequality. There is no doubt that some deterministic factors — like being lucky enough to be born into a well off family — play a role but I would like to concentrate on a factor; abilities.
A person’s abilities, controlling for luck, determine how successful the person would be in his life. By successful, I mean wealth accumulation. Inclusion of individual preferences would further excite inequality. On top of that, there are uneven returns across different fields; different occupation offers different returns. For instance, an average teacher would probably earn less than an average engineer despite both are equally able in their respective field, given everything else is the same.
If a person wants a totally egalitarian society in term of wealth, the simplest way to achieve such end is to ensure that everybody has the same abilities, preferences, etc. With exactly similar attributes, the path that everybody follows would be the same; everybody would share successes and failure and hence, being rewarded and punished together. Consequently, everybody’s returns would be exactly the same. Voila! Wealth equality.
If such method is unpalatable because it leads to authoritarianism, the other way is the Robin Hood method: forced wealth redistribution that is ever so popular under welfare state arrangement.
Robin Hood or not, to me, instead of wealth inequality, a more pressing matter is poverty. Instead of forcing those at the top and those down below to converge at an average to achieve better Gini coefficient, I would rather lift the median up; fight poverty through economic growth.
You may ask why poverty is of greater concern than inequality to me?
Well, what is the point of having a Gini coefficient of zero — perfect wealth equality — when all of us earn below a dollar a day?
Equality in poverty is not in my list.
