One of the theories of conservative economics is that income inequality drives down unemployment. For example, they argue that eliminating minimum wage laws would increase employment, because owners of businesses could afford to hire more workers. (Or, conversely, that increasing minimum wage increases unemployment, because owners have to fire workers.) Or, they argue that lowering taxes on the rich creates jobs, because then they can afford to purchase more goods and services.
In his book, Inequality and Instability, James Galbraith shows that, empirically, the theory is just not true.
Whether measured geographically (between places) or across time, greater inequality is linked to higher unemployment, and higher employment is linked to greater equality. For example, countries with the most income equality (the Nordic countries, for example, or Germany) also tend to have low unemployment. Countries with high inequality, on the other hand, tend to have high levels of unemployment.
Galbraith also shows that income inequality is not mostly a function in differences between pay for work (despite stories of highly paid celebrities and CEOs), but mainly a function of the amount of income that flows to people for owning things, rather than for working.
(Almost all of the income of the richest people in the US, for example, comes from owning things, not from working.)
My argument here, is that almost all that income (income from owning, rather than working) is created and facilitated by the government; and that further, the power that flows from all that income allows the very rich (the ownership class) to protect and further its interests, at the expense of people who work.
Copyright law was invented in England, in 1710. The first copyright law in the US was imposed in 1790, and was modeled after the law in England. It provided authors a copyright of 14 years, with an opportunity to renew for another 14. After that, the work passed into the public domain.
Today, copyrights can last over a century. For corporate (rather than individual) copyrights, the time is the life of the creator, plus 75 years. (The law is sometimes called the “Disney law”, or the “Mickey Mouse” law, because some early Disney cartoons were about to fall into the public domain, and Disney lobbied hard for the keep that from happening. In 2003, copyrights were increased, retro-actively, again.)
Copyrights, of course, are ownership rights. They protect the income stream of owners, against everybody else. They have become, in effect, perpetual, to the extent that copyright owners have the power to change the law, whenever their copyrights are about to expire. This, despite the fact that the US Constitution says the copyrights are only allowed for a “limited” time. (And also, that they’re supposed to serve a “public” purpose - not just the enrichment of the few.)
Patents are also created by government. They allow patent owners to extract fees from anybody who uses their idea. Because owning patents is so lucrative, Apple, for example, spends more on patents than it does on research and development. It’s also locked in a $2 billion lawsuit with Samsung (in a tax-payer funded courthouse), over a patent originally filed covering the “shape” of the iPhone. (***Oops, I see Apple just won, $120 million. Less, I guess, than they were expecting.)
Corporations are another example. The modern corporation was created by the government, in 1844, in England. All the rights and abilities of a corporation - such as protection of shareholders from lawsuits, the right to be treated as a legal person, the use of the courts, and the ability to pay dividends) are created and enforced by government. People whose wealth flows from ownership of stock have the government to thank, because without the government, there would be no corporation.
The list can go on, of course, but the point is that ownership rights - whether it’s the right to own land, or the air above the land, or resources below the land , or other ownership rights - are created by, and enforced by, the government.
The fact that those ownership rights are so valuable - that they produce so much income for their owners - in turn gives them a special incentive to use that wealth (that government provided in the first place) to turn the levers of government in their own favor. For example, securing a lower tax rate for capital gains, than for ordinary labor.
Finally, to the exact extent that some are better off because of ownership rights (because of their ability to consume without producing) others are worse off: because it means they have to produce without consuming.