Does Wealth Inequality Itself, Actually Matter?

[Kasierith]

A side question but what is the role of the middle class? A lot of politics is spent on talking about the "middle class."

Who are they in America and why are they so important economically?

They engage in numerous transactions and are able to participate in the economy on multiple levels, such as housing and high quality goods and tourism, while not accumulating significant amounts of wealth to pull away from society. In other words, a successful middle class presence bolsters the economy across the board, whereas large lower class numbers really only bolster portions of it.

[sarahtasher]

Wealth inequality in itself will always exist : in North Korea, the guy that have real chinese cigarettes is the envy of the 100 that have to do with ersatz ones.

This sais, if all the 67 richest people in the world gave all their money to everyone else in the world, it would not change the life of anyone significantly.

[nyc81991]

It matters when there are people that don't have the basic things in life.

In a world where everyone has at least a home and the basic needs of life, I think wealth inequality wouldn't be as much of an issue as it is currently.

[melodramocracy]

Of course it matters. At a high enough disparity level, commerce can more or less cease completely.

[Luxxor]

They engage in numerous transactions and are able to participate in the economy on multiple levels, such as housing and high quality goods and tourism, while not accumulating significant amounts of wealth to pull away from society. In other words, a successful middle class presence bolsters the economy across the board, whereas large lower class numbers really only bolster portions of it.

So the middle class are the consumers in a consumer driven economy? What are the demographics of this group in America?

[Kasierith]

So the middle class are the consumers in a consumer driven economy? What are the demographics of this group in America?

Middle class are not the sole consumers; they are flexible consumers.

A good example is the auto industry. In the USSR, we pretty much had one car type. There was competition, of course; Japanese cars were still available and purchased by richer individuals, but were largely not a part of the market. The heart of the Russian auto market was the lada, which was featured in largely in its original form for almost 45 years. There was really no need to change, because there was no demand for it... people got the car because they needed the car and they could not afford more, so there was no need to improve. Competition died down because paying extra for an extra feature really wasn't a thing.

In the US, however, there was a dominant middle class that forced competition because there was flexible spending. Large groups of people able to get new or near to new, to pay extra for extra features, causing the auto market to constantly improve and innovate to keep ahead because the capacity to engage in a competitive market was ready. We're not talking a top level sports car, but things like paying extra for automatic windows, electronic keys for unlocking and locking, security features, GPS, cup holders... all of this has come to be an industry standard because throughout the course of the industry's history, the capacity to engage in a competitive market was present because people had the funds to do so.

[Nadiru]

In a vacuum? Not really, outside of some extreme circumstances. But nothing in economics is in a vacuum, and income inequality implies certain things which are not generally good for the economy at large. That said, the people who bring it up as a political talking point tend to overstate the issue, or worse, conflate its economic ramifications with its political ones. People seem to use income inequality as shorthand for "rich people buying political influence" even though the two things are not one and the same.

The short of what income inequality means: The unequal distribution of household or individual income across the various participants in an economy. In the US, this generally refers to the gap between the top quintile of income and the bottom four.

Why is it important? Rich households consume less as a percentage of their income and as a function of accounting definitions, save more as a total percentage of their income. Again referring to these accounting definitions, savings equals investment, thus income inequality favoring the rich is correlated with a general investment glut.

When you have a glut of investment dollars chasing ever-scarcer sound investments, you see a natural rise in speculative investments. So, income inequality is also associated with rising market speculation and the inherent risks of, well, making risky investments.

[Barnabas]

No because not everyone needs a Lamborghini.

[Gestopft]

So the middle class are the consumers in a consumer driven economy? What are the demographics of this group in America?

Not only does the middle class put more money back into the economy, it tends to diversify the economy better than the lower class. At the low end, most of what people make goes to necessities. As people have more disposable income available to them, they spend more money on luxuries. When a sizable segment of the population can afford some luxuries, it opens up numerous possibilities for economic growth.

[alexw]

In a vacuum? Not really, outside of some extreme circumstances. But nothing in economics is in a vacuum, and income inequality implies certain things which are not generally good for the economy at large. That said, the people who bring it up as a political talking point tend to overstate the issue, or worse, conflate its economic ramifications with its political ones. People seem to use income inequality as shorthand for "rich people buying political influence" even though the two things are not one and the same.

The short of what income inequality means: The unequal distribution of household or individual income across the various participants in an economy. In the US, this generally refers to the gap between the top quintile of income and the bottom four.

Why is it important? Rich households consume less as a percentage of their income and as a function of accounting definitions, save more as a total percentage of their income. Again referring to these accounting definitions, savings equals investment, thus income inequality favoring the rich is correlated with a general investment glut.

When you have a glut of investment dollars chasing ever-scarcer sound investments, you see a natural rise in speculative investments. So, income inequality is also associated with rising market speculation and the inherent risks of, well, making risky investments.

Correct. There is a strong argument to be made that the 2008 bubble and its resulting collapse was a result of rising inequality. Lots and lots of rich people having more money than they could ever spend, seeking investment opportunities into which they could place their money and earn a return. And when they ran out of sound profitable investment opportunities they placed their money into unsound ones. This parallels the great depression which in a similar fashion saw a huge rise in inequality in the 1920's bubble phase, and the rich pumping their savings surplus into the then stock market bubble. Similarly, inequality has continued to increase after 2008 and our economic bubble problems have got even worse with bubbles in multiple global real estate markets, bubbles in stock markets, and bubbles in corporate junk bonds.

Of course you hear nary a whisper about these things in the mainstream media, because it leads to the logical conclusion that the solution to the worlds current economic malaise is to reduce inequality, and that would be our mainstream medias owners essential telling everyone that most of their wealth needs to be taken away.

Turkeys DO NOT vote for Christmas.

[LilSaihah]

Provided the people who have that exorbitant amount of wealth aren't using it to do bad things, like forcibly take other people's wealth, I couldn't give a shit. Sadly, money in politics means that isn't the reality of the situation.

[xChurch]

The inequality only becomes a problem when people have vastly more than they can spend. Money needs to be spent to keep an economy working well.

[Fugus]

Wealth inequality in itself will always exist : in North Korea, the guy that have real chinese cigarettes is the envy of the 100 that have to do with ersatz ones.

This sais, if all the 67 richest people in the world gave all their money to everyone else in the world, it would not change the life of anyone significantly.

I don't think it is just about how much they have now, it is a case of what they have done over the decades to get it actually hurt the rest of us more than it has helped them given how money circulates till it reaches them.

While their recorded income is showing in and of itself, you also have to look at how much damage the policies that allowed that income did as they went.

Plus you have to look into how much money they have hidden as well. I remember a leak a few years ago which showed someone between 8 and 32 TRILLION dollars in cash stashed and hidden in bank accounts to avoid taxes and launder money. That was money that was owned but not known about till the leak happened, and that was just one leak. Last I heard it spurred an international investigation. Funny how the US media never said shit about it.

[Theodarzna]

Does wealth inequality actually matter on its own? I dont think so. It is the symptoms that are the real issue, which is political influence. If there is limits on that type of influence, and a high enough standard of living, wealth inequality on its own is not an issue

What do you think?

When the gap becomes outrageously high, political corruption is inevitable, or political corruption is inevitable when money is involved.

[Roostercogburn]

I agree.

There will always be rich and poor. Nothing can prevent that.

What is the issue is that more and more of us apparently lack the skill and influence to gather a small sum of wealth to live on. Add to that the fact that some places are priced out of the range of common folk.

It's complicated. It also won't change without something drastic. I'm talking major shift in human thought drastic. Raised min wage won't be enough.

[Rukh]

When we decide that money is free speech, extreme inequality means we have oligarchy.

It is bad for the economy. While wealthy spend more than nonwealthy, wealth is a marginal resource. i.e. if you don't have very much, you spend it all on food and shelter. if you have a bit of surplus you save a little and spend the rest on good like television, services, maybe some entertainment. If you have a whole lot, you spend on food and entertainment, but the amount you spend goes down and the amount you save goes way up. So extreme wealth inequality means less cash circulating.

It does have a relative impact on demand for goods, because the wealthy can afford way higher prices for food and shelter.

[Deleted]

Wealth's existence relies on inequality, its nature differs the quantity therefore, its not a matter of inequality. Where wealth gets the meaning of power, where wealth means having or not having a Social service, there it has gone to an immoral taking. Wealth does not equal any rights, the Right to live must overcome wealth.

/10char #OccupyLeninStreet

[Sevyvia]

Not, it really doesn't. But there's a lot of envious, petty, selfish people in the world.

[Noradin]

Does wealth inequality actually matter on its own? I dont think so. It is the symptoms that are the real issue, which is political influence. If there is limits on that type of influence, and a high enough standard of living, wealth inequality on its own is not an issue

What do you think?

Yes it matters, because you cannot seperate it from the symptoms and unless it is counteracted wealth always has a tendency to drain more wealth from the less wealthy, becaue wealth really means "more options".

Some wealth inequality is tolerable - and unavoidable - but not something for society to strive for.
Measures must be taken to keep it in check of society as a whole loses ressources.
Beyond a certain point wealth just sits there without improving the life of anyone.

[Deleted]

Autocracy isn't a problem, it's the fact autocracy has gotten out of hand with the gap in equality. Regulating salaries by putting in salary ratio limits would help society become more mobile and have more spending power. I've read economists talking about having a ratio of 1:6 for lowest paid workers in a business and the CEO of the business.

Having a socialist society that still adopts autocracy as a social ideology will work. Money is devaluing itself at the moment and the only reason the system is still alive is due to America continuing to breath more air into it's lungs. A global economic crisis is around the corner, the value of money will return to gold standard and debts will default.

History is great to look back and watch the patterns emerge. America's empire as we know it is about to crumble and a new way of living will emerge. We are already heading towards a jobless society that has pretty much anything at our disposal thanks to technology such as AI, machine learning, 3d printing and more. Every empire falls at some point, the age of decadence is coming to an end. The truth will come out.