The notion that inequality is ok as long as everyone is getting wealthier is based on the fallacious assumption that people reason about wealth in absolute term

The notion that inequality is ok as long as everyone is getting wealthier is based on the fallacious assumption that people reason about wealth in absolute terms. Wealth is purely relative. It's probably more useful to think about the problem in terms of social cohesion. As wealth inequality increases, social cohesion decreases---the wealthy dehumanize those less wealthy, and the less wealthy lose faith in the fairness of the system. Eventually you get to a point where the "poor" (who may in fact be quite rich, historically speaking) don't feel any investment in social order, and find it more efficient to take from the wealthy than to create new wealth, since the greater proportion of any marginal wealth they do create goes to the wealthy anyway. See for example the Ultimatum game for a similar micro-economic effect, where individuals reject unfair outcomes even if it means losing money (https://en.wikipedia.org/wiki/Ultimatum_game#:~:text=It%20was%20first%20described%20by,accept%20it%20or%20reject%20it https://en.wikipedia.org/wiki/Ultimatum_game#:~:text=It%20wa....).