“But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy?”
– Francisco d’Anconia, Atlas Shrugged by Ayn Rand
We constantly hear that income inequality is evil.  We hear it in the media, we hear it from the politicians, hell, I’ve been told by geography teachers that high income inequality is one of the simplest ways to identify a nation as evil.  They couldn’t be more wrong.  Of course, it’s easy to see why so many people believe this.  They accept that wealth is not created, but simply transferred, that one man can only succeed at the expense of another.  Once you accept this fallacy as truth, the rest comes logically.
“If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.”
– Milton Friedman

This misconception originates from the rejection of the subjective theory of value.  That is, everything is worth something different to different people.  To you, a dollar coin is probably worth a dollar.  To a collector, it could be worth hundreds.  This means that no trade is conducted so that one party gains and one party loses.  When their subjective gains are considered, both parties have gained.  This holds true in all trade engaged in by two consenting parties, the basis of capitalism.  Only when force, more often than not from the government is brought into the equation, can one be disadvantaged by free trade.Instead of the subjective theory of value, the left-wing adheres instead to the masochistic labour theory of value, that everything is worth the amount of pain and suffering caused to the labourers who made it.  By this standard, human blood would be the most valuable commodity on the planet, simply because it is painful to obtain.  It would be worthless to the purchaser, but they are forced to pay an exorbitant price, simply because it was painful to produce.

Once you accept the logical subjective theory of value, it is clear that one man’s success is not another man’s failure.  In fact, to the contrary, it is his success as well.  The opponents of income inequality are not judging from the viewpoint of those involved in the transaction, but those who watch and do not profit.  These are people who measure their riches not in terms what they have, but in what their neighbours have.  The man who measures value by such a standard soon realises that rather than making a profit of his own and rising to the level of others, it is far easier to simply confiscate the profits of those who earn more than he.  In short, equality.  Communism.

What these people do not realise is that he they are indeed profiting from the work of the rich.  People below the poverty line in free nations live in conditions far superior to the men living in the “People’s States” of the world.  Why else was East Germany forced to build a wall to prevent it’s own citizens from fleeing their equal utopia to the decadent land of the west, where income inequality abounds?

Income inequality is not evil.  Far from it.  Income inequality is the recognition that a man earns what he produces, no more no less.  To demand that the industrialists who created this world be held as equals to the dole bludgers who leech off the rest of society, living on only what the government steals for them, is an evil far greater.

“The worst form of inequality is to try to make unequal things equal.”
– Aristotle