One might have a social welfare function that favors less inequality.

Different people have different views on what distribution of resources makes them feel happy with the world. Radicals on one side might say "the closer to equal distribution, the better" while others say "as long as the game is fair I have not bone to pick with who 'wins' in the distribution of resources." So the short version of this explanation is "some people just like the world better when it's more equal."
You might think there's a "conspicuous consumption externality"

Some people (e.g. Cornell economist [Robert Frank](http://www.amazon.com/Luxury-Fever-Weighing-Cost-Excess/dp/0691146934/ref=ntt_at_ep_dpt_8 "I think this is the right book of his")) think that when someone with a lot of money spends it in a way that shows how rich they are, it actually harms the rest of us. The idea is: take a world where everyone is poor or middle class. Now add a 0.1% richest who buy sweet houses, better cars, and have TV shows made about their awesome master bathrooms and vacation homes. In this "consumption externality" view, their consumption of these goods hurts the rest of us when we find out about it because it makes everything we have kind of seem like it sucks. The greater the inequality, the more a middle class person will feel crappy about their material standard of living in comparison to the people much-much-much richer than they are.
Past a certain threshold there may be social stability reasons. Basically, it might be the case that once inequality stays so high for so long, radical ideas like anarchy, communism, and fascism start to seem like good ideas to more people.

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