Wealth Inequality: Implications and Overview

By: Grace Fling

In the United States, wealth inequality is higher than almost every other country. Many financial crises such as the COVID-19 recession and the 2008 financial crisis have only increased wealth inequality. This inequalty has created a hot debate nationally.

Wealth inequality in the US is the unequal distribution of assests among US citizens. 77% of the wealth in the US belongs to the top 10% of Americans. The bottom 50% of Americans only own 1% of the wealth in the US.

There are multiple causes of this inequality, that affect a number of life aspects. In this article, I will be focusing on 3 major implications: social, economic, and political. It is important to understand both sides of this debate to fully recognize the need to decrease wealth inequality.

Social Implications

Many social impacts arrise from wealth inequality, that tend to affect lower-income individuals far more than rich individuals. Much like a science experiment, wealth inequality is the independent variable and social implications are the dependent varaiable.

Due to a lack of wealth, many low income individuals tend to experince more mental illness, lower life expectancy, higher infant mortality, more obesity, more teen births, and more. Conversely, people with high wealth do not face these issues as much because their wealth allows them more opportunities. More wealth means better jobs, education, health care, etc. In turn, these opportunities allow for rich individuals and families to never face a lot of the hardships low income families do.

If wealth inequality were to lessen, then many of the social factors mentioned prior, would decrease. Another benefit would be improved educational performance and access. Overall, this would create an equal opportunity for any individual to be affected by these social impacts, and not just target people who don't have an equal amount of wealth.

Economic Implications

Wealth inequality shifts a large share of income to rich households who tend to save their money rather than spend it. Due to this, there is a lack of aggregate demand because the people who have money to spend are saving it, and the people without money can't spend it.

In the past, wealth inequality has been compensated through methods such as lowering interest rates. These methods are not likely to last which means more permamnetn fixes need to be put in place.

Some of the proposals put forward in recent years aim to gauranteed a general basic income, support taxing corporations and the wealthy at a higher rate, and raising federal minimum wage. An additional tool for addressing this inequality is increasing education access for both college and early education.

Political Implications

As wealth inequality continues to grow, one of the main political concerns is the middle class dissapearing. This potentially poses a threat to democracy. Democracy includes freedom, equality, and autonomy. In a democracy, individuals are equal before the law, have equal influence on government, etc. So if the rich and the poor are equal under government, then why does money have to sway political standing and equality? The less equal the society, there will likely be a demand of democratization.

Different political parties views on this differ dramatically. Majority of democrats in all income groups agree there is too much wealth inequality. Republicans on the other hand are more likely than Democrats to say there is the right amount of wealth inequality in the US. Interestingly, low-income Republicans are more likely to say there is too much wealth inequality, while high-income Republicans are more likely to say there is the right amount.

Either way, 61% of Americans agree there is too much wealth inequality in our nation. While most Democrats argue there needs to be major changes to fix this issue, most Republicans argue there are only minor changes neccessary. Considering that over half of Americans agree there is too much wealth inequality, it is important to make long-term plans that can lessen wealth inequality and protect against furture financial crises that greatly impact wealth inequality.

Conclusion

By demonstrating the social, economic, and political effects of wealth inequality it is easy to see that it is an extremely large issue in the United States. Majority of the nation is negatively impacted by wealth inequality and is fighting for fairness to combat this long-time issue.

It is important to note that although wealth may not ever be completely equal among US citizens, decreasing the gap even a little bit would have a profound impact on the lives of Americans. It is crucial to begin working towards closing the wealth inequality gap to increase access to education, improve health, and be prepared for future financial crises.

Referenced Sources

https://www.pewresearch.org/social-trends/2020/01/09/views-of-economic-inequality/

https://www.cfr.org/backgrounder/us-inequality-debate

https://www.e-ir.info/2016/12/10/how-inequality-undermines-democracy/

https://www.epi.org/publication/secular-stagnation/

https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/inequality-income-social-problems-full.pdf