Hmm. Surely another important reason is political. Many forms of redistribution require additional power to be vested in the state in order to accomplish them. That in itself may be enough to make the redistribution program undesirable.

By analogy, consider regulation. There’s a lot of federal regulation as to which I simply don’t have strong views about whether it’s pro- or anti-competitive, but that I view with suspicion because it gives bureaucrats in D.C. discretionary control over important aspects of American life.

Domestic politics is not solely about maximizing social utility (“economic growth”), regardless of what utility function one would prefer to see maximized. It’s always also relevant to ask: “who decides?” Frank’s post touches on this sort of concern when he talks about political donors.

Inequality may offend some people’s sense of fairness. But inequality is at the heart of capitalism. And capitalism, as we now know from centuries of experience, is the far superior at creating wealth than alternative economic systems. Thus, we endure some amount of inequality in the hope that in the long run every one will be better off because of it.