When I was a kid, the United States of America had a strong and vibrant middle class. This led to lots of innovation and growth.
Here’s a report that provides a decent look at the data. The key take-away is that income and wealth inequality has risen significantly since the 1970’s.
In practical terms, this means most people in the USA are finding it more difficult to accumulate wealth today than fifty years ago. More people are living paycheck to paycheck. More people are racking up lots of credit card debt. Fewer people feel like they’re able to “get ahead”.
Our ability to make money (adjusted for inflation) is not constant throughout our lives. We do not tend to make much money when we’re younger than twenty years old. This is a time of learning. While teenagers can make some money, their earning potential tends to rise as they get older. Before this happens, they must rely on others to care for them.
There are times in our lives when we get sick or need to care for others. These times limit our earning potential. As we get older than about seventy years old, our earning potential goes down, even if we decide not to retire. In this case, we want to rely on the wealth that we’ve accumulated during the years when our earning potential was higher.
Of course, this approach breaks down if we are not able to accumulate much wealth!
In our society, everyone benefits from having discretionary income. The easier it is for us to earn a decent wage, the more money we can pump into growing the economy (along with growing personal wealth).
When only the top 1% of individuals have much spending power, they don’t buy enough goods and services to keep the economy growing.
These are just a few reasons why having a strong middle class is good for our society. We owe it to ourselves to make “the rigged system” work better for more people!
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