The Effects of Wealth Inequality

The Effects of Wealth Inequality

Historically speaking, the countries with the highest income inequalities were mostly developing countries. Lately, some of the most developed countries with the highest GDP's have the highest wealth inequalities. How healthy is this for the economy and what are the effects?

During the 1950's and 1960's, when there was a strong middle class, the U.S. had very strong income growth across the board. Since then, not so much. These were different times from an economic perspective. We faced less foreign competition. However, we did good with a lot less disparity. What are the long term effects of running on big income and wealth gaps? Is this good for competition, or will it move us back toward less developed countries?

Some of the effects include increased crime, increased security, increased insurance costs, increased social programs, unequal education opportunities, corruption, and declining upward mobility. The "american dream" is based on upward mobility. One possible effect is greater recessions or a depression. An abundance of social programs could have unforeseen economic consequences. Sometimes it's best if you don't need the programs in the first place.

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