In The Virtue of Riches, Megan McArdle (aka Jane Galt) reviews Benjamin Friedman’s The Moral Consequences of Economic Growth, which explains “How wealth makes us more moral”:
For many Americans, riches are so disreputable that taking them away is a goal in itself. The left used to offer the misery of the poor as a reason for redistribution, but these days an increase in inequality is just as likely to be the rallying cry for higher taxation. In a savage New York Times column this past March, the economist Paul Krugman turned rising inequality — a trend that has persisted for decades under both Republican and Democratic presidents — into a frontal assault on the hated Bush tax cuts. More generally, the chief plaint of Democrats about those cuts has been not that they are economically inefficient, or even that they are leaving wonderful programs starved for funds, but that they primarily went to “the rich.”That same suspicion is often applied to the vast wealth we enjoy as a society. Spend time at an anti-globalization rally, and you’ll inevitably hear someone complain that Americans are less than 5 percent of the global population yet consume 25 percent of its output, as if we were somehow stealing the difference from the world’s poor. Such critics also cite the social, economic, and environmental dislocations caused by a vibrant free market. We’re too rich, the activists are basically saying, and our wealth has too high a cost; it’s time to stop thinking about making money and start thinking about all the suffering in the world.
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When earnings are growing, Friedman says, people are more tolerant of minorities, more welcoming to immigrants, more solicitous of their fellow citizens, more supportive of democratic institutions, and just plain better specimens of humanity.
This is not as simple as it sounds:
People judge how well they are doing in two ways: against how well they think other people are doing and against their own (and their family’s) recent earnings. That’s why an American postal worker might not be particularly happy with his income, even though in terms of transportation, health care, and personal comfort he has a better standard of living than Cornelius Vanderbilt and other past plutocrats. Ironically, globalization therefore has made ordinary citizens in many countries unhappier with their lot, even as it has made them objectively better off. The more information people have about higher living standards elsewhere, the less content they are with their own lifestyles.