Conservation of Inequality

ature is built on inequality. Without inequality, electric potential would not exist in a wire, and there would be no such thing as electricity. Without inequality, the chemical composition on the inside and outside of the membranes in our cells would be the same, and we would be dead. And in a living economy, if everyone had exactly the same amount of money, no one would hire anyone else; everyone would be unemployed and we would have to barter for our food. Our economy would be effectively dead.

Harry G. Frankfurt runs through the philosophical arguments for inequality in an outstanding new book titled On Inequality. They are utterly compelling; Frankfurt's short book is destined to become as essential for political literacy as Bastiat's The Law. Frédéric Bastiat said where there is more legal power, there is less freedom.

The sob stories about inequality we keep hearing from certain famous economists have little to do with economics, sharing, fairness, or generosity, and everything to do with increasing the power of the state. Progressives are demanding a sort of affirmative action program for wealth: those with the least ability to acquire it will become the biggest beneficiaries, thereby guaranteeing the most inefficient possible use of capital.

Of course, this is not going to happen spontaneously; the government would have to impose it by force. They would have to engineer a financial crisis to justify it. You will know it's about to happen when they start appealing to your patriotism while they talk about all those trillions of dollars sitting in savings accounts doing nothing. The government is the biggest source of greed in our society. One can think of government as a vast reservoir of inequality which is stored in the form of power in their military, their police, and their bureaucracy.

If the state were to do as the progressives demand, that power would increase because government would have to take away the freedom people need to improve their economic condition. The only way to eliminate economic inequality is by creating an equal amount of inequality of liberty. We would merely exchange one form of inequality for another.

The Fokker-Planck equation

There's a new branch of science called econophysics. One amazing book, Econophysics and Physical Economics, has chapter titles like “The Brownian motion model of asset prices” and “Generalized diffusion processes and the Fokker-Planck equation.” The mathematization of economics brings us closer to that glorious day when we get a mathematical proof that Keynesianism = Statism.

Fascinating stuff, but it doesn't mention inequality. So in the spirit of science I propose the principle of conservation of inequality: inequality can neither be created nor destroyed, but only converted from one form into another.