Why Inequality Starts Becoming a Problem Now

The global wealth disparity has been greatly exacerbated by the pandemic, and there is a concentration of wealth among the top 1.2% of people. We explore factors causing inequality, the role of debt, and finding an optimal level of inequality (because you do need some).

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[Tobi-cins]

No mention of rent seeking, which I believe is the real issue. More and more, the money of the rich is not going towards investments in producing value, but instead into investments into creating monopolies via acquiring land, lobbying for anti-competitive legislation, and aggressive business tactics to shut down competition by undercutting prices or buying out any competitors. This isn't producing value for anyone, as it's draining money away from the productive parts of the economy and into an increasingly swollen parasitic rent seeking class.

[jonhudson]

Resentment towards income inequality in Western nations is about the stagnation of the median wage, not the existence of multi-billionaires. Most people are fine with a few getting fabulously wealthy as long as they're moving up too. But when the top is the only segment with wealth growth, the average folks feel exploited.

[GabrielSantosStandardCombo]

The biggest issue with inequality has to be residential property, which is horded by the wealthy and effectively extracts the wealth from middle class. The hypothetical example of investing in industry sounds fine, but outbidding for extra residential units is also seen as an investment, with deteriorating outcomes in the current economic system. Property for farming might have been the important thing in the past, but now, having a room to sleep in is a struggle for many. I'm surprised this was not addressed in the video.

[Ves]

As far as i understand it, the point is: If there is too much concentration of wealth on the top, it will lead for investments also to be concentrated in areas where high profit margins can be achieved, which are then likely luxurious goods or expensive real estate e.g.. This seems to lead to a situation where the economy becomes more and more focused on the needs of the few wealthy while ordinary people only get as much as is needed to produce these goods, while the surplus or profits go again to the wealthy to finance their lifestyle. So over time investments into stuff that would help ordinary people become less attractive overall.

[laughingman]

Something has bugged me about this channel for a long time and I finally found it. I imagine it's a by product of the way economics is taught but EE point blank endorsed trickle down economics. Didn't use the name but flat out described them in a positive light

[diegovideco]

Talking from the perspective of "billionaires adding value to the economy" (by consuming or investing) sidesteps completely the problem of inequality. Just because more profits are produced doesn't mean that they will be distributed equally, on the contrary, that mostly happens under the principle of exploiting workers as much as possible (and in doing so paying them as little as possible). Yes, a billionaire might incentivize thousands of jobs by buying a jet, but the fact that profits go to the (already wealthy) employers and not the employees is not taken into account in the example.

[SarahLivne]

How you always manage to present interesting questions, then break everything down, explain the very basics, distract us with a pinch of nicely graphed data and stock images, then skirt around the actual big questions you have raised and before we know it - end the video and we are none the wiser - that's real talent there.

[zch]

He did everything to defend the status quo besides say "trickle down"

[Teracosa]

An important consideration missed here is that the Anglophone economies with high consumption and high national debt are not investment constrained but rather consumption constrained, which means that inequality directly slows down the economy.

[DPPZ]

The primary issue with inequality is downstream from politics. The economic impact is felt when a small percentage of the country owns soo much of the nation's wealth that any form of taxation is basically just a tax directed at them. When this is the case, they tend to use their wealth to pass things like tax cuts at increasing frequency. Eventually, policies designed to suit their interests start to hurt the working man, and this also starts impacting their bottom lines. When this occurs, rather than using their power to pass policies that would fix the problem, they call it a failing nation and move their resources and labour to greener pastures.

[nathanielroach]

If you look at the data, almost all social problems track with with relative poverty, not absolute poverty. When you look at statistics like crime, life expectancy, infant mortality, obesity, mental health outcomes, substance abuse, youth delinquency, social cohesion (and on and on) you are better off in a poorer, more equal country than a rich unequal one. Inequality within communities matters more than how rich each individual in the community is. That's why you see so many social problems in a wealthy country like the US.
Source: Richard Wilkinson & Kate Pickett, 'The Inner Level'

[adrs]

Reality check: getting enough to eat is still the main preoccupation of billions of people. A few billionaires buying planes (or whatever else) won't solve it because those millionaires own the plane factories and make sure to pay miserably small salaries to the workers.

[bjhale]

I realize this is an economics channel, but it could have used more discussion on the political and social consequences of inequality. Many political scientists, for example, think it poses a threat to democracy.

[Mikearice]

In the US, I think the end of the Soviet Union in the early 90's basically gave capitalism free reign to be its true self. When communism was seen as a valid threat and alternative, capitalists felt some pressure to try and convince people that our system really was better at making everybody more prosperous. ( 1950's America at the peak of the cold war tension was when we had the greatest income equality. ) But starting in the 90's we started seeing CEO pay increase astronomically while everybody else's pay stagnated. Capitalism ditched the benevolent mask and became its true gilded age self, because it's only benevolent and socially responsible when it has a gun to its head.

[jgp]

betterhelp forces you to sign up for multiple sessions before even trying it. the lowest they go is about $60 per session, but you need to sign up for at least 4. so you do the math. most people are depressed and stressed because they are poor. we cant afford rent. we certainly can't afford mental health treatment.

[kekero]

It isn’t about wealth it is about owning the means to create more wealth. Unless you have those means you have no real power and no real means of attaining a much greater degree of wealth.

[nyxehxt]

It is good we acquire as much wealth as we can, most people fail to understand what it takes to become wealthy, they want to become wealthy overnight by thinking their savings will help them attain that, they fail to understand that investment is what truly builds wealth. I advise you all key into investing and earn side money than depending on your savings if you truly want to be wealthy

[rosehazel]

Beyond billionaires being the only category with wage growth since the 80s in industrialized nations, there's a massive case of equity and ethics involved in allowing people that are not beholden to the majority to control such a massive chunk of global resources. It's non democratic, usually unethical and almost always self fulfilling

[superduper]

One of the things that freezes the inequality gap n place is that we don't have real capitalism. We have 'crony capitalism' where those with extreme wealth (not someone who has managed to save $1mln their pension) are able to influence the rules of the game to limit competition.

[vsnkqfo]

Showing the inequality (Gini) index of the US trending up, while saying it's been going down. "We've been going in the right direction until recently". What do you even mean? Inequality has gone down in recent years on the very chart you're showing. Do you even know how the Gini index works? A higher number means more inequality. Very thoroughly researched, as I've come to expect from this channel.