Wednesday, December 20, 2017

Why The Rich of the USA Should Reduce Wealth Inequality

Inequality in the USA has doubled over the past 20 years according to the Congressional Budget Office (see graph below).  The richest 10% have doubled their share of wealth since 1995.  Good for them, why should they care about the other 90% and their reducing share of the nation's wealth?  The big losers are the middle class, who are sinking towards lower middle class or poverty.  

The middle class has a strong interest in the rule of law, reducing crime, a clean environment, functioning roads and other infrastructure, a strong military, and a generally orderly society.  They own good homes, want their children to go to good schools, want to feel safe, and take pride in their country and community.

The poor do not have as strong an interest as they are too busy surviving and they don't need some of these orderly society characteristics.  They may also need to break the law to survive and may resort to drugs to tolerate their situation.

Now let's look south for what happens in a country with a small and poor middle class.  Some examples are Mexico, El Salvador, Peru, and other central and South American countries.  Their middle class is expanding, but is nowhere near as big and wealthy as the American middle class of the 80's and 90's.

What is it like to be rich and live in Mexico or these other countries?  You must live in a walled fenced house with alarms and maybe armed guards, as crime is high and you are an obvious target.  You must pay off the local police and government to get protection and to ensure you are not hassled or shaken down, because the government is corrupt and their employees are poorly paid.  You cannot wear expensive watches or other items when you go out as you will be a target.  When you are forced to travel outside your home, you are at risk of being kidnapped or robbed, so you keep travel to a minimum.  Your kids cannot go to the park or easily participate in sports, other than at their private school.  You cannot count on clean drinking water, garbage removal, sewer service, or clean air as these are luxuries that the government will not provide as the majority of people cannot afford them.  You should be careful to have your family vaccinated against most known communicable diseases as the population around you lives poorly and is prone to hepatitis, cholera, parasites, dengue fever, etc. 

Not a great place to be rich, right?  This is why the rich of the US should be working to ensure a strong American middle class.  The trend is in the wrong direction.

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