This is not true. Wealth is choices: how many different things can you choose to do? The average person today has a multitude of choices that were not available to the richest person in the world a century ago, and for that reason is wealthier than the richest person in the world a century ago.
Relative wealth is very important because it distorts the market. Even if you are well-off compared to a larger population, if many others around you are even better off, it’s going to suck for you. See Bay Area housing prices for a concrete real world example.
> Relative wealth is very important because it distorts the market.
No, that's not correct. What distorts the market are artificial constraints on the market. You mention Bay area housing prices, but you fail to point out that those prices are skyrocketing because of enforced scarcity: the supply of housing in the Bay area is not being allowed to grow in response to growing demand, but instead is held fixed by local laws and regulations. That is what is distorting the market.
Relative wealth does give an advantage in this kind of situation, but that doesn't mean fixing the wealth disparity will fix the market. It won't; it will just mean that the scare Bay area housing gets rationed by some other method than who has the most money. It will still have to be rationed because demand far outstrips supply; and no matter how it is rationed, many people will be left out and will complain that the system is unfair. The only long term fixes for that are to either expand the supply of housing (by letting it respond normally to market forces), or for a lot of people to stop feeding the monster and abandon the Bay area for someplace that offers them better opportunities--which again is a normal response to market forces. And what empowers people to make those choices is absolute wealth, not relative wealth.
There are always going to be limited quantity goods, and inequity will drive up the price of those goods. Land is a fantastic example of this, and the Bay area housing problem is made worse by laws and regulations, it is not created by laws and regulations.
Harvard only produces a limited quantity of lawyers every year, and those lawyers are paid a premium in large part because of the limited supply. A Harvard education isn't a process that can be infinitely scaled.
Income inequality drives up the prices for limited quantity goods.
> There are always going to be limited quantity goods
Some limited quantity goods are unavoidable, yes. The quantity of land in the Bay area is limited.
But the quantity of housing in the Bay area does not have to be limited by the quantity of land. If it is, that's a choice people have made to impose scarcity. And decreasing relative wealth inequality won't fix that problem; you have to fix it by taking away people's power to impose scarcity to further their own ends at the expense of other people's.
> Harvard only produces a limited quantity of lawyers every year
Yes, which is another example of a choice to impose scarcity. See below.
> Harvard only produces a limited quantity of lawyers every year
But you don't need a Harvard education to become a lawyer. A Harvard educated lawyer might be better able to handle certain legal matters, but most people who need lawyers don't need that level of expertise.
In fact, most people these days who need legal documents prepared don't even need lawyers; the free market has created plenty of services that provide such products at a much lower cost. The only reason why many people still need lawyers is artificial scarcity: lawyers write most of our laws, and of course have written laws saying that you have to have a licensed lawyer to prepare various legal documents, even though the lawyer doesn't actually add any value to the process. You can't fix that problem by reducing relative wealth inequality. You have to fix it by taking away people's power to write laws to benefit themselves at the expense of other people.
And that richest person a century ago is totally irrelevant in most conversations about wealth except as a counterexample that economics is not zero-sum.
> that richest person a century ago is totally irrelevant in most conversations about wealth
I agree that this is true as a practical description of how most conversations about wealth go. But to me, that is a bug, not a feature: it means most conversations about wealth are ignoring the huge increase in absolute wealth that has occurred as a result of advancing technology. In other words, people are being encouraged to ignore this huge positive impact on their lives, which, if they only realized it, empowers them to do all kinds of things, and are being told to focus instead on relative wealth disparities that, in a sane world, would have negligible impact on their lives.
> You're still talking about wealth like it is relative and not an absolute. You're just comparing modern wealth to early 20th century wealth.
Nobody in this discussion is using "relative wealth" to mean comparisons over long periods of time. Everyone is using it to mean comparisons between different people's wealth at the same time. If what you're concerned about is the advantages that relative wealth gives you in competing for scarce resources, that makes sense; but nobody today is competing with people a century ago for scarce resources, so using the term "relative wealth" for that kind of comparison makes no sense.
This is not true. Wealth is choices: how many different things can you choose to do? The average person today has a multitude of choices that were not available to the richest person in the world a century ago, and for that reason is wealthier than the richest person in the world a century ago.