Is Wealth Inequality Actually a Problem?

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The wealthiest among us today live a life unparalleled by any other human throughout history.

The greatest Kings and emperors could only dream of the life afforded to today’s billionaires.

It doesn’t end there, even mere multi-millionaires are living through a time where they have access to limitless information, unhindered mobility, and personal comforts.

But this is all taking place at a time where a swelling population of people are struggling to make ends meet.

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[EconomicsExplained]

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[APaleDot]

You missed the most dire drawback of wealth inequality:
A handful of people having massive influence over governments all over the world.

[parinamkc]

I think one point you forgot to mention was how wealthiest people have a greater say in the political decisions. I guess that is one reason that drives opponents of capitalism crazy.

[phatpigeonii]

"The bottom dredges of society, like grad students." This line made me laugh so hard I almost fell out of my chair. THANK YOU!

[czechmeoutbabe]

I think this video completely missed a very important nuance about wealth accumulation and innovation; it's not wealth that creates innovation, it's wealth invested into innovative institutions that *facilitate* that innovation. It's hundreds of thousands of dollars in education and research, both public and private, across hundreds of universities across all of academia. It wouldn't make us more efficient if we just pooled all the resources to one dude because concentration =/= innovation. That innovation comes from the sensible *distribution* of resources into *institutions* that facilitate that sort of learning. He mentioned the Italian renaissance which yes is famous for it's economic boom but it was an economic boom amongst the nobility and urban middle class, *not simply making the richest people in Northern Italy even richer*. It involved dozens of cities and individuals investing that newfound wealth over the long term into artistic, cultural and learning institutions, not just hoarding.

[tuseroni]

you forgot the the most reliable investment: politicians. you got all this money, you need to spend it on something, why not lobbying, the roi is amazing.

[salokin]

As an Australian, as well as watching China rise to become a juggernaut, people won't ever revolt or really start getting upset about inequalities as long as their needs and wants are being met. It's why Australians totally forgot about the brutal fires in January and why the Chinese don't care about the uyghur camps; as long as we have our holidays, steady jobs and netflix, we're good fam

[oliverizzard]

Spoken like a man who hasn't invested in guillotine manufacturers.

[mehdi_mbh]

Great video as usual man, thank you.
One point I disagree with towards the middle of the video and on which I wanted to share some thoughts: "All these innovations would not have been possible without wealth inequality." -> When you look at some more innovations beyond the steam engine, you find that innovations are not just driven by wealth but also by spare time of some individuals and their intellectual skills - these individuals were not always wealthy (e.g. Nikola Tesla, Niels Bohr, Albert Einstein...). Today, it is driven by companies, and the most innovative companies are the ones trying to attract the most skilled workers, offering them big pay and better work-life balance (the modern equivalent of more "spare time"). In these companies, the top directors running the business and making millions / billions are not the ones innovating most of the time, but rather their employees, at various levels. So one could argue that, if there were less inequalities and if people around the world had more spare time to educate themselves and imagine new things rather than spend their days worrying about how to make ends meet, we would have many more brains working across the globe on solving problems, and thus we would see more innovation.

[liamtahaney]

Ah yes, my washing machine, or as most people call it *laundry slave*

[irfxuvj]

I think when one digs a bit further, the criticism of wealth inequality stems from two forces which aren't being represented well in this video. The first is often that economic analysis and the markets we have created are not properly capturing costs that have been built up from industrialization and modern society. For one, we face a slow-motion existential crisis in the form of global warming and the general ecological collapse we are seeing around the world. Some people are getting quite rich off that destruction but it is everyone who will eventually pay that cost. The other side to this is that wealth at the billionaire level isn't just increasing one's purchasing power, but weighing in on topics of government regulation and judicial impartiality. The wealthy can afford good lawyers to get them out of trouble when they drunkenly get into a car accident and kill several people while the poor often find themselves better off admitting to crimes they didn't commit rather than face a trial based on the ten minutes of time they were given with a public defender. Further, the wealthy have access to policy makers that the average person doesn't have. This means when deciding on regulatory reform that could determine the extent to which we, say, continue to tolerate the release of green house gasses into the environment, the wealthy tend to have an overstated role in determining those outcomes. When so many of the wealthy make their money through the release of green house gasses, this provides at the very least the image of corruption. A key problem many will have watching this video is that economics is not an all-encompassing view-point and certainly doesn't solve all our problems.

[CockatooDude]

To everyone saying he was out of touch:
1) This video was not about regulatory laws but about wealth accumulation. A lot of people are saying that those with great wealth influence those in positions of power. While this is true, it is outside the scope of economics and thus a channel called "Economics Explained" did not touch on it, which makes sense to me. Yes obviously we should have more robust laws that limit how much you can influence politicians with lobbying, especially in countries with high rates of corruption.

2) The presenter regards Scandinavian economic systems as very good, and people there pay very high taxes and as a result have low income inequality when compared to other countries.

3) In my personal opinion, wealth inequality in and of itself isn't an issue as long as long as the base standard of living is high enough to where everyone can live comfortably doing what they like to do. Take Sweden for example, they have some of the highest standards of living in the world, everyone can afford housing, food, and to not be overworked and live comfortably at the same time, yet the country has some of the highest wealth inequality in the world.

[shakshukioflibya]

There's something I would like to add, workers compensation compared to their production, since 1989 people have become 200% more productive on average, but compensation only increased by 100%

[rasmysamy]

The issue with wealth inequality is not necessarily material, but an issue of power. I'm afraid you overlooked that.

The mother struggling to pay bills is in fact deprived of power and being forced to act in a certain way by those that have more power than her. Generalize this at the level of populations, and there you go.

[Anatolij]

"Inequality motivates people and drives innovation." Shortly after: "Innovations in the past were driven by the rich nobility as a hobby". It's not either or but money is certainly not the unique nor primary factor motivating people, we just live in a world which doesn't know how to function without assuming that it is.

[theoveranalyzingcinephile]

The part about prosperity reminds me of a joke from my former communist country
"Is it true that everybody is equal here in Romania?"
"Yes, everybody is equally poor"

[amandap]

So.... if more of us had more money we would have more time to spend on "hobbies" that have the potential to create "innovations" that would better all of society?
Isnt that more an argument for more equitable wealth distribution rather than one for wealth accumulation?

[dlifedt]

I wish this made some attempt to answer how MUCH inequality is good or bad, including things like welfare/education via taxation which reduce inequality but can also fuel economic growth.

[mg]

Interesting, then the US must have grown significantly poorer 1940-1985 as the share of wealth owned by the richest 10% decreased from 82% to 64% in that period. Then the country obviously got super-rich during the second Reagean term and after, when the inequality skyrocketed. Now go and pitch that idea to the auto-workers in Detroit and coal miners in West Virginia ;)

[xanderjames]

New tv show. Bear grylls drops 20 billionaires on an island with limited tools and wonder how quickly hunger games kick in