Why care about wealth inequality as a first-order concern? The periods you identify as decreasing wealth inequality also correspond to periods of decrease in real median income [0]. If my median income is going up, why should I root for periods that decrease it, even if it means that the wealthy are being hurt more than I am? Seems a bit like cutting off the nose to spite the face.
Do you understand now?
Because, markets behave in a zero sum manner when limiting constraints are reached (ie room for growth has run out), and many economies aren't really growing all that much right now.
As a simple example, there is only so much land in Manhattan (all of which is already owned; some of which might be for sale). That means if you ever wish to own land in Manhattan and currently do not, you must take it from someone else who already owns land in Manhattan (making it their loss). This makes owning land in Manhattan a zero sum market. Granted you wouldn't take it in a literal sense, but trade for it. The point here is that you can't just magically make yourself some land in Manhattan. Rather you must trade for it, and beat competing offers from other market participants.
Which brings me to my next point...
>If my median income is going up, why should I root for periods that decrease it, even if it means that the wealthy are being hurt more than I am?
In short, focusing solely on your own income is too short-sighted. As the price of everything is dictated by the collective market (ie other market participants who also have disposable income). If you don't acknowledge this, then there's potential for you to be priced out of markets even if your income is growing, but growing slower relative to everyone else. Hence, if your income falls, but at a slower pace than everyone else, you will be better off in markets, because effectively, your earnings will trade relatively for more despite your income having decreased.
Also, during a supply-driven recession, then both your income falls and the price of goods increases.
It actually doesn't account for what I'm talking about. It dismisses it without much substance and avoids the topic that we're talking about which is:
>Why care about wealth inequality as a first-order concern?
If you equalize income inequality, it's impossible for real median income to fall when it's below the real average income. If you can't see why, keep reading.
>Also, during a supply-driven recession, then both your income falls and the price of goods increases.
This is a straw man which I'm not going to address, but let's relate it back to the topic. If we're running out of supply, you're running out of something (and are closer to a zero sum scenario). If you are to ever acquire something in a zero sum game, you must take it from someone else (the wealthy owners of said supply). That's why you should be concerned about wealth inequality in such a scenario. If we take from the wealthy who have that supply and equalized it, real median wealth wouldn't actually fall.
To further demonstrate why, let's take my Manhattan scenario. Median ownership of Manhattan land is 0 Manhattan land. If we take all that Manhattan land from people who own Manhattan land, and equally distributed it amongst everyone, median ownership of Manhattan land would actually rise (not fall) to a minuscule, but non 0 amount. The previously wealthy Manhattan land owners however would lose tremendously.
Because we’re really concerned about utility, not wealth, and except at extreme levels of absolute deprivation, relative material deprivation is a bigger source of disutility than absolute deprivation.
(Technically, that makes wealth inequality a second order concern, though.)
Like I'm all for decreasing inequality when it boosts utility, and given diminishing marginal utility of money, oftentimes transfers from the wealthy to the poor are beneficial there.
But a recession does not improve utility for the poor, even if it does decrease inequality.
