A reply to Paul Graham's Economic Inequality.
The simplest way to show that your basic statement is wrong is to check its outcome:
the U.S.A and all the other countries buying in the unlimited economic inequality model, can't afford free education and free health care for all their own citizens, that is, your model can't even create enough wealth for the basic needs of the society it applies to. Socialist countries could, I grew up in one.
Those who don't believe this should show the proof, this model is just a simple solipsist joke until then.
I think I'm done with the refutation here. (see below on how to attack poverty) ***
Beyond the main result above, and meanwhile, this model is like a death star, presuming that people do worthy things because they want to get wealthy irradiates obscurantism and ignorance:
No scientists I met, or know about, were driven by wealth. Mainly they were doing science out of curiosity, avoiding poverty in the process as a side effect only. In fact, a scientist driven by wealth would be looked upon with suspicion. But your death star is changing even this: empty wealth creation forces science, through channels involving ultimately the State, to become some sort of productivity game; it also forces knowledge to extinction: because empty wealth is generated out of marketing thin air, copyright on "knowledge" is the way to go, so knowledge is no longer shared, just appropriated, and knowledge is no longer created but "produced", that is, the result is "knowledge", something we already knew but now it's packaged, has a tag price and an owner.
The unlimited inequality model is a pernicious abstraction overall, and perhaps one of the fallacies you commit in praising it is that wealth is orthogonal to | independent of power. For example Zuckerberg's X empty billions, just by sitting in some banks, activates hordes of sociopaths set to multiply and leverage it and get their share out of that, the consequence is a monstrous zombie wealth wondering the earth, using and disposing of people, lives and ecosystems altogether, not to mention politicians and the State itself.
If these musings did not tell you anything yet, try a simulation: collect a bunch of successful start-up stars, or super-wealthy guys, and move them on Alpha Centauri, you (or they) will suddenly discover that they needed the rest of us, the muck out of which real wealth is produced and the muck for which real wealth really matters, physically and politically.
The alternative solution to your model is rationally limited inequality: 1. from above:
personal wealth has to be limited to ensure political power comparability among all citizens, aka democracy. And that limit can be defined only by a statistic of the real society, say, the average income. Therefore personal wealth should be limited to an amount equal to a max lifetime (~130 years) of average wages in the economy under discussion, adjusted yearly, automatically; this way the negotiation is already performed by the whole society and no one individually may reasonably interfere with the limit in its own narrow interest.
This way is the only way you can ensure that wealth is orthogonal to political power and, at the same time, it's the optimal estimate of what is enough for someone to live an average life even if s/he does nothing after acquiring it.
However, this only changes the scale: the abuse is possible now only on a human scale but absolute poverty is still possible.
Therefore: 2. from below: an unconditional basic income is provided by the society to ensure for each citizen basic shelter, education, health-care, food and energy enough to survive in dignity.
Now we have (real) freedom: people can effectively avoid any abuse due to economic inequality, they can evade any monopoly of power.
These two limits define the economy that may give a meaning to your children's lives. I see no other way.