Massive Income and Wealth Inequality in the United States

Income  and Wealth Inequality is about deserving and fairness. In a democratic society, income  and accumulated wealth have to be unequal because effort and captured good fortune are not equally distributed. So by definition income and consequent wealth will not be even – call this expected  inequality of earnings and consequent wealth.

However this expected small bulge in the distribution of income and  wealth has become distorted by  What the next two videos do is a)show how much income and wealth inequality there is right now first in the US and in the second video, around the world and b)what are the expectations for earnings inequality in the US versus the reality.

The first video is based on a study done by Duke University professor Dan Ariely and Harvard University’s Mike Norton on desired wealth distribution vs  expectations of wealth distribution  vs the actual wealth distribution in the United States:

The second video shows that worldwide, the income and wealth  inequality are persistent and pernicious problems:

Now the counter argument to this income and wealth inequality  is income mobility. This idea says income inequality may be staggeringly real, but traditionally in America people have transitioned up and out of lower income to higher income groups.  People and family incomes over a lifetime time move upward and into new, higher income levels. But the evidence is that income mobility has declined in the last 10 years as income inequality has risen. Here are the key studies:
– Income mobility declined by a “statistically significant degree” between 1995 and 2005, especially compared to the 1970s and 1980s, when mobility hit its peak, according to a recent study from the Boston Federal Reserve.
– Homeownership turned downward dramatically in 2007 and is at lowest level since the Great Depression. Yet most Americans still consider it part of the American Dream.
Freakonomics shows a study  that finds that  income inequality reduces intergenerational  income mobility.
TheWashington Post examines income mobility from an international perspective and shows the US has a poor level relative to other developed economies.
In sum, income and wealth inequality are closely linked to income mobility. That linkage means that income mobility, the ability to move up in the income world, has declined notably with the accelerated rise of huge income and wealth inequality not just in America but around the World.  But what is  most  surprising, people’s  knowledge and expectations of  how much income and wealth inequality currently exists in the US is woefully short of the reality.

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