The Times today provides one answer to Sam Bowman's question: does inequality matter? It reports how Glencore's profits arise, in part from "exposing thousands of Zambians to dangerous levels of sulphur dioxide emissions." The firms is also accused of profiting from inside information obtained from an EU bureaucrat and using stolen land in Colombia.
These are all examples of how income and wealth inequality - Glemcore CEO Ivan Glasenberg is a multi-billionaire* - arises in part from inequalities of power: Zambian and Bolivian villagers have no power to insist that the costs of pollution are internalized; Colombian peasants had no power to protect their property rights, and so on.
These, of course, are not isolated examples. As Rick says, "All pay is, ultimately, a function of power."
Some of this power is innocuous: Wayne Rooney earns a fortune because his rare skills give him the power to demand a high wage. But other forms of power are more questionable. For example:
- top bankers are rich because they hav the power to privatize gains but socialize losses.
- technical change has weakened the power of unskilled workers whilst raising that of bosses.
- profits and profit-related incomes have risen at the expense of wages because capitalists have power conferred on them by mass unemployment and declining militancy.
- workers have low pay because they lack bargaining power whilst capitalists can extract favours from government because they do have such power, as they can threaten to relocate.
And herein lies one of the blindspots of the free market right. It seems unable to see that in actually-existing markets, there is power and unfreedom; some of the more tedious passages of Hayek's Constitution of Liberty are where he tries to redefine coercion as something that hardly happens in a market economy.
If the Left is sometimes guilty of caricaturing the rich as evil exploiters, the right has its own caricature of them as heroic Howard Roark types. They are not.
However, it's not just the right that is at fault here. So is the non-Marxist left.
It sometimes gives the impression that more progressive taxes are a sufficient response to inequality. They are not. Such taxes fall as heavily upon the minority of the rich who are genuine public benefactors - entrepreneurs and talented sportsmen and artists - as it does upon exploiters and rent-seekers.They do not address inequalities of power.
Worse still, it's not clear that the soft left even has much idea here. It's not obvious whether the state is part of the solution or part of the problem. Those allegations against Glencore, for example, could all be seen as examples not (just) of corporate malfeasance but of state failure.
* It's a minor point, but it peeves me when the media reports that Glencore's flotation will make Glasenberg a billionaire.This is not true. It's owning a big part of a valuable business that makes him a billionaire, whether the firm is publicly or privately owned.