What is The Concentration of Wealth
Wealth concentration or concentration of wealth is a process where the newly produced wealth is distributed but goes in the possession of only those people, who are already rich and established individuals/entities. The concept does not entertain equitable distribution among citizens of a particular nation but follows an ideology where only the rich become richer. With the new wealth, the wealthier citizens of a society have added say in all matters, ranging from investment and money related matters to political influences.
Although it is hard to explain the causes of inequitable wealth, the main condition for it to occur in the first place is irregular patterns in distribution.
This has long been the case in various economies, which despite following a free-market pattern, are bound to concentrate the wealth in the hands of the already wealthy.
According to a general estimate, it is reported that almost 90% of a nation’s total wealth is occupied by the upper 5 % of the population in US. The argument simply states that with time, inequality will become greater among individuals due to the power-law function.
Many external forces provide fuel to this concept and the advancements in technology has aided financial wealth to remain in the hands of the ruling class, filtering out the impact of the working class, which simply earns wages.
Moreover, the process is supported by governmental policies which aid the wealthy in regulating the market and in return earn substantial financial gains.
When studying concentration of wealth, one must not confuse it with income. Wealth is simply the economic value of items in an individual’s possession, where as the income is the inflow of items. For most countries, it is the distribution of wealth which will be more disproportionate when compared to income. The changes in wealth will be determined by the difference between income and expenses.
There are various social causes which have caused greater focus on this concept. People tend to compare their standards with each other and feel underprivileged, if they fall in the lower income bracket. This gives rise to social unrest and anger between the upper and lower class.
In the current economic scenario, inflation has played an important part, which has greatly impacted the business assets of a nation. These essentially include housing, stocks, and bonds, which have gained prominence over the past two decades as compared to consumer goods.