In the real world, wealth is (except for a few specialists like thieves and speculators) something you have to create, not something that's distributed by Daddy.

That makes it sounds like those who are wealthy created that wealth, and those who did not, did not create wealth. That would require a perfect meritocracy. Do you really believe that what we live in, in this world? Of the Forbes 400, around 70% inherited more than a million or came from wealthy backgrounds.[1] (So for the vast majority, they actually, quite literally, got it from Daddy.)

You get paid by doing or making something people want, and those who make more money are often simply better at doing what people want. Top actors make a lot more money than B-list actors.

Are top actors better actors than B-list? Sometimes, but often not. They usually were in more popular films. And that's often a consequence of what other films came out when it opened, the editor, the opening-day weather, etc. There are a thousand factors that go into making a film and an actor doesn't have a lot of control over them when signing on to a project.

It's called luck. Actors are on an upward spiral or a downward spiral and it almost never has anything to do with their acting or "giving people what they want". It would be nice if the world was less complex place, but it's not. So are they getting paid vastly more because they're worth it, or because there can only be so many top actors and they happen to be one. Natural monopolies are more than just dams and bridges, and for the fortunate in them, there's nothing meritocratic about it.

When we say that one kind of work is overpaid and another underpaid, what are we really saying? In a free market, prices are determined by what buyers want.

But in a free market, with no oversight, we would get dangerous chemicals in our food, kids pajamas that explode from a spark, etc. You know all those crazy regulations we have? A lot of them are because companies tried to violate those exact rules. A market may say it's OK to sneak imflammable chemicals into those pajamas. A market may say it's OK that a clerk can make $2/hour -- but we can then say, no, that's not enough for the clerk to live on. You can vote with how you spend your money, but you can also vote at the polls. They're both valid ways of getting things done.

The difference is like that between hard and soft skills. Managing a group of great hard-skill guys who can't work together and can't be managed is high-performance/low-control. A bunch of guys who communicate and work well together, but don't get anything done, and you have high-control/low-performance. The trick is to mix hard and soft skills to get both. Both market and social concerns are valid and need to be monitored, tuned. A baseball player is payed a lot? People are willing to pay a lot to see him. Good for him; he got dollar votes. A woman is working two part-time minimum wage jobs because neither company wants to make her full-time to avoid paying benefits and she still can't feed her family? Not good for her, or us to allow it; we need to vote at the polls.

One often hears a policy criticized on the grounds that it would increase the income gap between rich and poor. As if it were an axiom that this would be bad.

At a certain extreme, in either direction, it can be devastating. I don't tink I have to defend that the "no income gap" is a calamity. But at a certain point the other way and you also get devastating results. It's a fine balance. With a large disparity in income, you get lower economic mobility and society as a whole suffers tremendously. It creates huge problems that are well documented and easy to see if you simply travel. There's been a lot of work done on this [2], and the best I can put simply is that if the gap gets too big, instead of increasing motivation it decreases it, much as with an extended duration of being unemployed.

You need rich people in your society not so much because in spending their money they create jobs, but because of what they have to do to get rich.

Again, you're fantasizing that this is all a meritocracy. Most wealthy people were born that way. We all hear of large leaps of economic mobility based on merit, but that's unfortunately the exception. I'm not saying, "Don't let people get rich." I'm saying, "There is nothing that the incentive of $50 million at a 35% tax rate will give you that $50 million at 45% won't." And yet if that 10% is spent on education and other enablers of economic mobility, your pool of Henry Fords who can build that tractor just got bigger.

[1] http://www.faireconomy.org/press_room/1997/born_on_third_bas...) [2] http://www.mentalhealth.org.uk/media/news-releases/news-rele...