Wealth inequality affects the economy in many ways. Wealthier individuals tend to save greater amounts of their income, which decreases the availability of cash and liquid assets or cash on hand. This causes the middle class, those who purchase goods, to have less money in their pockets. The rich have more money but there are not many of them, which is proved evidence for by Christopher Ingraham who is quoting from the Organization for Economic Co-operation and Develop (OECD) expressed that, “the richest 10 percent of American households earn about 28 percent of the overall income pie” (Ingraham para 5). This result shows that too much wealth is handled by too few of a number. With such few a concentration of wealth left to spread among the lower class, obtaining it will be a struggle. Another reason why wealth inequality is bad for the economy was mentioned by John Oliver in his video, " Wealth Gap: Las tWeek Tonight with John Oliver (HBO " on the wealth gap. The premise is that wealth inequality hinders economic growth (Oliver …show more content…
Trickle-down economics is the way that wealth can help benefit others. Trickle-down economics, according to Kimberly Amado, is “a theory that says benefits for the wealthy trickle down to everyone else” (Amado para 1) and the benefits usually include tax cuts and capital gains. But trickle-down economics does not work. This is because trickle-down economics assumes too many ideas that seem too unrealistic and is not likely to cause any change any change in the economy and benefit growth. Krugman has mentioned in his article that “We’re a much richer nation than we were in 1964, but little if any of that increased wealth has trickled down to workers in the bottom half of the income distribution” (Krugman 7). Krugman, in his article, is indirectly talking about trickle-down economics and the reality of about its action. According to Kimberly Amado, “Trickle-down economics assumes investors, savers and company owners are the real drivers of growth” (Amado para 2) and that tax cuts will help expand businesses and will incorporate gains. Trickle-down economics uses something called the Laffer Curve. The Laffer Curve, according to Kimberly Amadeo, “is the theory that says lower tax rates boost economic growth” (Amadeo 2 para 1). Kimberly Amadeo’s explanations about the Laffer Curve can be broken down to say that the Laffer Curve is what economist imagines and hopes the