Inequality v's crony capitlism

At his Stumbling and Mumbling blog, everybody's third favourite Marxist, Chris Dillow says Yes, Inequality Matters. Dillow writes,

A free market society in which high incomes arise from the free choices of consenting adults – as in Robert Nozick’s Wilt Chamberlain parable – might have the same Gini coefficient as a crony capitalist society. But they are two different things. A good reason to be worried about current inequality – even if it hasn’t changed – is that it is a symptom of market failures such as corporate welfare, regulatory capture or the implicit subsidy to banks.

Here I think Dillow is right .... and wrong. He is right that crony capitalist societies are bad, but he wrong to tie this to inequality.

The reasons for disliking crony capitalism is the inefficiencies, via things like rent seeking, corporate welfare, subsidies to favoured industries etc, that such a system invariably results in. But these outcomes are independent of the level of inequality.

Even if inequality was low under a crony capitalist system, that system would still be in need of change and if a (truly) free market society has greater inequality it would not justify the transformation that the crony capitalist system would. Inequality is not the reason for worrying about crony capitalism, there are many other, better, justifications for doing so.

Not everything that is thought wrong in this world is due to inequality, no matter what some people will tell you.