Jan-Frederik Abbeloos wrote:  
  
'In his post James Ahiakpor defends the vision that "governments should   
worry about absolute poverty rather than inequality of incomes." The   
arguments he uses are classic. Who would object to the rich getting   
richer when the poor get richer too? Simple, only sentimental   
researchers that play too much on emotions and jealous people that envy   
their wealthier fellow men. There are however more valid arguments that   
do justify that we pay attention to the problem of income inequality. At   
this point I would like to refer to the note by Branko Milanovic, "Why   
we all do care about inequality (but are loath to admit it)"   
[http://ssrn.com/abstract=530363]. In this short note Milanovic, who is   
chief economist of the World Bank's Development Research Group, puts   
forth one central remark: "The key point is that income of others enters   
our own utility function. And once we allow for it, inequality affects   
our own welfare and the arguments regarding irrelevance of inequality   
come to naught." In my opinion, Milanovic illustrates this view in a   
provocative but convincing matter. A lot of research on this point has   
also been performed by Richard Easterlin. A very interesting article of   
his in this discussion is "Will raising the incomes of all increase the   
happiness of all?" [Journal of Economic Behavior and Organization, Vol.   
27 (1995) 35-47].'  
  
  
In the first place I'd like to note that I'm not the first to have noted   
the tendency of people who have less tend to envy those who have more.   
Moses would not have brought back from the mountain one of the items in   
the ten commandments (or suggestions?), "Thou shalt not covet thy   
neighbor's property," if this were not part of human nature.  Adam Smith   
put it this way: "The affluence of the rich excites the indignation of   
the poor, who are often both driven by want, and prompted by envy, to   
invade his property.  It is only only under the shelter of the civil   
magistrate  ... [the rest of the quote I gave yesterday] The acquisition   
of valuable and extensive property, therefore, necessarily requires the   
establishment of civil government."  
  
Second point: Those who feel bad about the destitution of others give   
alms or donations -- private charity.  One doesn't even have to be rich   
to do that.  But most people resist handing over their wealth or incomes   
to the state to redistribute to others less well off.  They include even   
people who would claim to be working on behalf of the poor: Income tax   
preparers (at least in the United States) get clients from a wide   
spectrum of ideological leanings, all trying to minimize their tax   
liabilities.  In the end, the rich give more [in absolute dollar   
amounts] than the less well-off to charity.  
  
Third point, and here I bring in the contributions of Matt Forstater and   
Michael Perelman:  Happiness is a state of mind.  Thus, a rich person   
can be miserable whiles a poor person would be "happy," depending upon   
how each reacts to their life's circumstances.  Even the same person   
experiences different degrees of "happiness" at different times, without   
any change in their levels of income or wealth.  The same music played   
over and over again soon ceases to bring pleasure, just as the same type   
of meal.  Thus, I think those who resort to happiness studies as a means   
of arguing state-sponsored egalitarianism are on rather "thin ice."   
This is why people should not mix up or confuse happiness with material   
well-being.  Recall the adage, money doesn't buy happiness!  
  
Fourth point: Life expectancy tends to be positively correlated with per   
capita income across countries.  Meier and Rauch (2005), "Leading Issues   
in Economic Development" (Exhibit I.A.2) has data confirming this.  And   
a little bit of introspection should anticipate the outcome.  When   
people have more income to purchase food, clothing, education, and   
healthcare, they are more likely to create the conditions for their   
children's survival.  And in adulthood, higher incomes enable people to   
purchase those things that sustain longer life.  
  
I don't know which data Michael refers to in which Sri Lanka has a   
higher life expectancy than South Korea.  The data in Meier and Rauch   
state otherwise: 72 years for Sri Lanka and 75 years for the Rep. of   
Korea in 2001.  Chile, with a much worse index of inequality (56.7) than   
Sri Lanka (34.4), has a higher life expectancy (76 years) than Sri Lanka.  
  
Finally, it easy to make too much of life expectancy.  What is the point   
of living long, if in misery or destitution?  Thus, life expectancy in   
Cuba is 77 years, the same as in the U.S., but where would people rather   
live?  People risk their lives constantly to escape Cuba.  
  
So, I appreciate the citation from Milanovic, the chief economist at the   
World Bank's Development Research Group.  But I don't think his argument   
is well-founded.  I may cite him in my class, but only to illustrate how   
some analysts confuse issues.  Historians of economic thought shouldn't   
forget what became the fate of Jeremy Bentham's Utilitarianism or   
Felicific Calculus as guide to public policy.  
  
James Ahiakpor