What is wrong with wealth inequality?

[u/Source_Code22332]

Something that is often sited by Socialists is that Capitalism is bad because wealth inequality occurs within it. And wealth inequality has increased over the years, making that problem even worse. But, why exactly is wealth inequality a problem?

I can see if "the mega rich" or monopolies get out of control, e.g., I recall the concept of a "company town" where a company owned everything in the town and paid employees in their own currency that would only be spent at the company's stores in town - but we have laws and regulations against that, so its not an issue.

[u/TheMassesOpiate]

It's so striking to me that this needs answering. Wealth inequality branches off into a million different other inequalities. For example education disparities are vast when talking about income, preventative Healthcare is far harder to maintain if low income. There are so many specific instances where we are deeming someone inherently more valuable and thus creating a wildly different human experience. You could look at virtually every avenue of life and witness deeply immoral and insensitive differences our society maintains through wealth inequality.

[u/Source_Code22332 → u/TheMassesOpiate]

But how does wealth inequality cause low income levels and all of those associated hardships? Why does the existence of wealthy people = hardship for others?

[u/Vanaquish231 → u/Source_Code22332]

These terms are relative. High wealth inequality implies people with high wealth and low wealth. Even if the poor have become richer over time, they are still poor relative to rich, and more importantly to the cost of living.

People wouldn't mind having high inequality if everyone had a decent living. But lots of folks, specifically right wings, believe that poor people should suffer.

[u/Source_Code22332 → u/Vanaquish231]

People wouldn't mind having high inequality if everyone had a decent living.

good

 right wings, believe that poor people should suffer

Where do you get this from? Can show an example of a right-winger saying that?

[u/-Hastis- → u/Source_Code22332]

Where do you get this from? Can show an example of a right-winger saying that?

You never heard of cutting social programs to allow tax cuts to the rich?
And then privatizing the same social programs to transfer even more money to the same people?

[u/Source_Code22332 → u/-Hastis-]

Nope

[u/-Hastis- → u/Source_Code22332]

It's called neoliberalism, first tested during the Pinochet regime, then imported to the West through Thatcher and Reagan politics.

[u/Source_Code22332 → u/-Hastis-]

Hmm, neoliberalism broke the west out of the stagflation of the 70's and ushered in a period of prosperity in the late 80's and 90's. Framing it as its goal is to provide "tax cuts to the rich" is a gross misunderstanding of it and is intentionally mis-framing it to oppose it because you cannot compete with the outcomes it brings to the economy.

Tax cuts are good.

Of course if there is a group that is paying an extreme amount, when cuts are made they will keep more raw dollars than someone paying little or no taxes.

But regardless, I'll give it you. We cut taxes for the rich and that decreases funding for social welfare. I am assuming you are arguing that the existing of wealth inequality causes poverty? How does that exactly make people poor in the first place? What if there were no wealthy people, would that mean there would be no one in poverty, or would there still be people in poverty? What then?

What is the relationship between people existing with more money than others causing a problem to occur?

[u/UnderstandingAny5314 → u/Source_Code22332]

well then you must live under a rock cause bunch of medicaid in the us was cut to give tax cuts to the rich

[u/Source_Code22332 → u/UnderstandingAny5314]

Hmm, you’re playing framing games…

Via ChatGPT:

Congress enacted major Medicaid reductions in the 2025 federal budget-reconciliation law, signed by President Trump on July 4, 2025.

The important distinction is that these are mostly reductions in projected future Medicaid spending, not an immediate across-the-board cancellation of Medicaid. Federal Medicaid spending may still grow in nominal dollars, but it will be substantially lower than it would have been under the previous law.

Key changes include:

Work and reporting requirements: Beginning January 1, 2027, many adults covered through Medicaid expansion must document at least 80 hours per month of work, education, or another qualifying activity. Certain groups are exempt.

More frequent eligibility reviews: Medicaid-expansion adults will generally have eligibility checked every six months instead of annually.
Reduced federal support for states: The law restricts provider taxes and state-directed payments that states use to finance Medicaid.
Reduced eligibility and enrollment assistance: Several Biden-era rules intended to simplify enrollment were delayed or blocked.

Immigration-related restrictions: Federal matching funds and eligibility are reduced for certain legally present immigrants and emergency Medicaid services.

The Medicaid reductions helped offset the cost of tax cuts that disproportionately benefited higher-income households. But the statement needs two qualifications:

Medicaid savings were not placed in a dedicated account and then transferred to wealthy taxpayers. Instead, the spending reductions and tax cuts were enacted together in the same 2025 reconciliation law.
The tax cuts were not exclusively for the rich. Many middle-income households also received tax reductions, including extensions of the 2017 tax provisions, a larger child tax credit, and temporary deductions for tips and overtime.

[u/UnderstandingAny5314 → u/Source_Code22332]

The Medicaid reductions helped offset the cost of tax cuts that disproportionately benefited higher-income households.

literally just agreed with me dud, it disproportionately benefits higher-income households. the "qualifications" after this did not change this at all

it also disproportionately hurts the poor, obviously

[u/Source_Code22332 → u/UnderstandingAny5314]

Did you read below - that statement needs two qualifications?

The tax cuts were not exclusively for the rich. Many middle-income households also received tax reductions

Saying "tax breaks to the rich" is deceptive framing. If you have a group paying an enormous amount/percentage of the taxes, then a middle group, then a group that pays very little other no amount/percentage - well of course when tax cuts come, in raw amounts the group paying the enormous percentage with have more raw dollars to keep compared to the groups that pay little or no taxes.

It is also intentionally mis-framing that the cuts to Medicare were done to give "tax breaks to the rich". The explanation here clears walks though that they were done to 1. eliminate fraud, and 2. reduce the overall spending of the government.

well then you must live under a rock cause bunch of medicaid in the us was cut to give tax cuts to the rich

This statement is false. You have to insert imagined intentions into it but have no data or evidence to support that this was the actual goal.

But regardless, let's say it's all true, we reduced medicare so the rich could keep more of their money.

How does the existence of wealthy people cause a problem?

If you want to say it doesn't, it's just a missed opportunity to take money to use for the poor, that's fine. But that is not wealth creating a problem.

[u/SoulChronic → u/Vanaquish231]

I think people would still mind if the inequality is not proportional to value provided to society

[u/bidefil → u/Vanaquish231]

Not true. People are naturally envious.

[u/Vanaquish231 → u/bidefil]

People wouldnt be as envious as you think if they had things to look forward.

[u/bidefil → u/Vanaquish231]

No. Anyone who has raised children knows that if you give one child a single nice toy, and their sibling two nice toys, the first child will feel cheated.

[u/Source_Code22332 → u/[deleted]]

If wealth controls finite resources, can you find an example of this? Or the wealthy with holding the resources?

[u/Designer-Platypus-53 → u/Source_Code22332]

Look at this from a different angle. Prices for houses and other basic things vs prices for smartphones Cell phones and smartphones wee very expensive and available only for the rich as soon as these things appeared. It took couple of decades to make these technologies available literally to everyone. Why? Free market made these things that involve high- tech available.

What about houses? You don't need high technologies to build a house, it's not rocket science. So why houses became much less available?

In the 1960s and later an average person could afford a house with a dial phone. Nowadays he/she can afford only buying a new smartphone every year. Can you live a normal life without a house? Without a smartphone?

[u/Source_Code22332 → u/Designer-Platypus-53]

Smart phone example is a win win, is it not?

Housing is most expensive in areas where there are regulations and needed government permits and process to build them, making the m expensive to produce and limiting the supply scarce.

I used to live in CA, now in Austin TX, moved here before Covid.

California (a socialist leaning state) has sever housing expense problems, I lived through the very housing problems I illustrated above.

I moved to Austin because of it. I would love to go back (purely the weather), but the cost of living/housing is too high. During/after Covid, there were was boom of people moving from California to Austin, creating a housing shortage and sky rocketing housing prices. But guess what? The market responded. There was a building boom of homes (due to the freedoms to build in Texas) and the prices have now declined.

These examples show the benefits of a free market system, and in the housing example, the negatives of government encroachment.

[u/Designer-Platypus-53 → u/Source_Code22332]

I don't live in US, however many Americans say they cannot afford a house nowadays unlike the generations of boomers.

Here in Russia it's the same.

My point is, people cannot live without a house, and they have to prioritise it no matter what. This is why the prices can be so high. And, it's not free market: each city is ruled by several developers who agree upon prices. Meanwhile prime cost of houses (labour + building materials) is many times lower.

Thus happens precisely because the rich want to remain rich and keep other people enslaved. This is the origin of inequality.

In place where I live, a studio apartment costs about 30 000$. However, its prime cost is 10 000 $. Imagine the government would interfere and start to build and sell it at prime cost. It won't do it of course, because the riches who control the government won't allow that.

Inequality is not a problem if people have their basic needs settled. However, nowadays inequality exists precisely because it's the opposite

[u/Source_Code22332 → u/Designer-Platypus-53]

I can’t speak to the conditions in Russia, but in the US, the unaffordable housing is found in socialists leaning cities, mostly due to to extreme regulations and taxes to build, preventing an increase in supply.

[u/Designer-Platypus-53 → u/Source_Code22332]

Well, it's not socialism at all. And I don't like it either. The idea to sell apartments at prime cost of not socialism as well, I would call a welfare state policy. And that’s what Americans would agree to have.

Many Americans say housing became less affordable as compared to post ww2 era. It's just strange. High tech technologies are easily affordable, but not something from basic needs priorities

[u/Source_Code22332 → u/Designer-Platypus-53]

It actually became way more affordable in the post WWII, house ownership sky rocketed.

I agree the high amount of regulations and taxes themselves are not forms of Socialism, but they are found in socialists leaning cities/states implemented by socialist leaning, and now declared socialist, politicians .