| It is not, in itself, a problem. A certain amount of inequality encourages economic growth and innovation. Zero wealth inequality would be perfect communism. A lot of people--myself included--presume that would retard growth due to a lack of incentives. The maximum amount of wealth inequality would be for one person to own the entire world, and for everyone else to have nothing. This is practically impossible, of course. We can only approximate it, such as by 1% of Earth's population owning 99% of its wealth. This generally encourages the other 99% of the people to take some of that wealth by force, without regard to any increased productivity the current owner may be able to squeeze out via economies of scale or capital investment, or whatever. A medium amount of inequality encourages people with less wealth to do neat and interesting things in order to become more wealthy (economic mobility), and for those with more to make capital investments that increase productivity, purchase luxury goods, and finance megaprojects (concentration of capital). So the problem is when the amount of wealth inequality moves away from the optimal profile, which remains undiscovered. My perception is that we are moving away from the optimum, rather than toward it. |
No need to presume anything, we have a number of examples to look at throughout history. Actually, stunted economic growth is the best case scenario for socialist systems. Most of them achieve no more than mass starvation and death of millions of citizens.