While the distribution of wealth reflects the structure of the economy, the distribution of wealth does affect the overall welfare of the society and if the net effect is adverse, then there is a case for the structure of the economy to be modified to improve overall welfare.
Social welfare is affected by the distribution of wealth as follows:
1. Extreme Wealth, Extreme Poverty
This is not an uncommon condition of human society.
The very rich are very very rich, and the very poor are very very poor.
In this extreme case, everybody is unhappy.
The very rich has reached their diminishing marginal returns on their wealth and have to resort to other non-wealth means to derive happiness and, if not, then satisfaction, however momentarily.
The very rich become the very power and bullies everybody else.
The very rich then enter into long rhetoric - self-righteousness to justify their lack of compassion.
The very poor are subject to the daily chore of scrounging for scraps of food and having to live with whatever illness that may befall them.
The only consolation I can imagine from such an appalling condition is that an individual may actually be above to rise above the abject condition and have a good laugh - and out of his mouth comes words of so far out and far reaching that they become words of enlightenment.
From the mud comes a beautiful flower.
But, otherwise, life everywhere is a misery.
2. Equal Distribution Of Wealth
This has actually been imagined to be an achievable ideal - that everybody can have the same - and this can actually create great unhappiness.
Different people enjoy different things - one man's meat is another man's poison.
Even of the same thing, different people have different capacity to enjoy that same thing.
Some people may be burdened by too much wealth - and then are very happy to constantly unload their wealth on their friends and neighbours.
Some people may have an insatiable desire for wealth - so matter how much they have, they would rather not consume and keep saving.
Some people may enjoy more of ideas rather than of things; some more of things than ideas.
To insist on sameness on the whole society may actually create unhappiness - unless we are dealing with a society of sufi or monks or zen masters - but even then they compete on the level of their enlightenment.
The tendency for people to search for their own identity and lengthen their lives is but an unfortunate consequence of the sameness and mortality of humanity.
Equality of Opportunity & Freedom of Choice
It is therefore the role of an enlightenment government and policymakers to design policies that ensure that there is equality of opportunity for everyone - that everybody has an equal chance to climb up the economic ladder and to get out of the economic hole that they have found themselves in.
It is the availability of this upward economic mobility that makes for a dynamic society, when every dog can have his day if he works hard enough.
For this to happen, there must be the freedom of choice - to do the things that make one happy without preventing others from pursuing the same.
We have to emerge from the Darkness of Intellectual Oppression and stand in the Light of Clarity and Understanding, from which will emergy Creativity and Innovation - with the courage to be different, if I may add, pleasantly different - ain't we all waiting to be pleasantly surprised?!
Flexibility & Dynamism
We should not fear the unknown. At the frontier, we are necessarily staring at a blankness which is the canvass for a new vision.
Imagine the dynamism in society that will emerge from everyone from all corners of the nation busily engaging creating their own sense of identity only to discover their inherent similarity which must inevitably be their inert humanness. How wonderful that will be.
Giving Back To Society & Social Safety Net
I always want to qualify my enthusiasm for the dynamism of the mainstream with the need to provide for the less fortunate who through no fault of their own design are somehow left out by the design of the game of economic competition that which the best players find so exciting to play.
Help them to have a fighting chance by teaching them well and giving them confidence.
I leave the consideration of this unfortunate quality of human beings to the last.
Jealousy is a very easy ill-feeling to trigger - by a sense of unfairness or injustice.
One may be blissfully ignorant until someone comes along to suggest an unfairness or injustice - and that thought is sufficient to upset one's otherwise happy equilibrium.
To be cast into disequilibrium is a curse - for one then will have to continue to search and to fight until one either has lost one's physical strength or one's will.
I will always suggest trying to find happiness in whatever situation one finds oneself in, while working consistently on improving oneself - so that one can be happy with even less.