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The wealth gap -

Over the past 40 years, wealth inequality has increased dramatically. This trend threatens economic stability and fairness, and makes it harder for lower-income individuals to climb the financial ladder, all while the richest continue to accumulate more wealth at an alarming rate.

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Wealth and inequality -

A person’s wealth is determined by subtracting their debts from assets like property, savings, and investments. Wealth inequality is the uneven distribution of wealth, where a small elite controls a disproportionate share, leaving less for the rest of society and limiting economic mobility.

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Income inequality -

While incomes grew at similar rates for all economic groups after World War II, this changed in the 1970s. The highest earners saw their salaries skyrocket, driven by policies like lower union membership and deregulation, while lower-income wages grew slowly.

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CEO compensation -

Since 1978, CEO compensation has surged by 1,085%, while the average worker's salary has only risen by 24%. This means corporate executives now earn hundreds of times more than their employees.

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The top 1% -

Since 1979, the wealthiest 1% of earners experienced an 182% increase in wages, compared to just 44% for the bottom 90%. This growing divide means that the benefits of economic expansion have largely gone to those who are already at the top of the income hierarchy.

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The bottom half -

The Federal Reserve Bank of St. Louis reports that the bottom 50% of US households have an average net worth of only $51,000. Collectively, they control only 2.5% of the nation’s total wealth, leaving them with minimal financial security or economic power.

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Racial wealth disparities -

On average, Black and Latino families hold significantly less wealth than white families. For every US dollar owned by a white household, Black families hold just 23 cents, while Latino families have only 19 cents.

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Class conflict intensifies -

Class warfare emerges when the interests of different social groups diverge significantly. As economic disparities grow, resentment builds between workers and elites, which often manifests in protests, labor strikes, and, at times, violent conflict. Has this happened in history before?

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Ancient Rome -

In ancient Rome, extreme wealth concentration contributed majorly to social turmoil. By the late Roman Republic in the 1st century BCE, plebeians were burdened by debt and land had consolidated in elite hands, which fueled resentment against the ruling class.

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French Revolution (1789) -

Widespread inequality between the aristocracy and commoners in France sparked a mass uprising. Facing heavy taxes, hunger, and exclusion from power, the French populace revolted against societal inequities and royal corruption, ultimately toppling the monarchy in violent upheaval.

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The Great Railroad Strike of 1877 -

During this historic strike, railroad workers rebelled against repeated wage cuts. The conflict escalated and led to violent clashes with the National Guard and private militias. The strike was eventually crushed, but about 100 people were killed in the process.

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Chinese Communist Revolution (1949) -

In China, deep inequality between landowning landlords and landless peasants contributed to a class-based revolution. The communist movement, led by Mao Zedong, mobilized impoverished peasants to seize land and wealth from elites.

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The rising oligarchy -

In his farewell address, former President Joe Biden cautioned that the US was becoming an oligarchy, where political power is concentrated in the hands of a wealthy elite. This trend has been exacerbated by legal rulings that allow corporations to pour unlimited money into elections.

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Billionaire dominance -

When Donald Trump, a billionaire, was sworn in as president at his second inauguration, he was surrounded by numerous other billionaires and millionaires. On that day, the combined wealth of those present at the Capitol exceeded $1.2 trillion.

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Elon Musk -

Since Donald Trump returned to the White House, he has handed significant power to Elon Musk, the world's richest man. Musk is now influencing government operations, yet he is not required to adhere to typical ethical standards imposed on federal officials.

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Backing candidates -

Musk’s influence is partly a result of his substantial financial support for Republican candidates in the last election. Through significant contributions to political campaigns, he has gained notable access to government decision-making processes.

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Government regulations -

Unlike elected or appointed government officials, Musk is not necessarily bound by the same standard guidelines and restrictions. His capacity to operate outside traditional structures is a byproduct of his wealth, which allows him to navigate a different set of expectations.

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The media -

The control of major news outlets by billionaires has further distorted public discourse. For example, Jeff Bezos, owner of The Washington Post, reportedly influenced the newspaper’s opinion content to align with his pro-free-market stance, while limiting the visibility of viewpoints that might conflict with his business interests.

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Marxist theory -

German philosopher Karl Marx famously argued that class conflict is the engine of history. He believed that as capitalists accumulate wealth and exploit labor, inequality will worsen until workers develop class consciousness and overthrow the capitalist class. The end result, Marx predicted, would be a revolution that abolishes private ownership of production and creates a classless society.

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Socialist and conflict perspectives -

As early as the 18th century, philosopher Jean-Jacques Rousseau observed the exploitation of workers by the rich and asserted that governments must side with the poor to prevent the rich from “converting the poor into their slaves.”

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Class war is not imminent -

While America alone isn’t on the brink of a violent class war, frustration over inequality is growing. Interestingly, Trump’s voter base now includes more low-income individuals, which shows a shift in political alignments that could reshape future elections.

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Historical patterns -

Between 1800 and 1920, inequality in the US grew rapidly. But in the 60 years that followed, the wealth gap shrank as economic policies became more favorable for the middle class. This offers hope that a similar correction could occur in the future before tensions buckle.

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Unsustainable -

If history is any guide, today’s extreme wealth concentration is unlikely to persist indefinitely. Eventually, economic pressures and public demand for reform may lead to policies that forcefully redistribute wealth and level the playing field. But how can class warfare be avoided entirely? Let’s take a look.

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Progressive taxation -

One of the most direct tools to reduce wealth inequality is a fair, progressive tax system. By taxing higher incomes and large fortunes at greater rates, governments can redistribute resources and fund social programs. Historically, mid-20th-century Western economies had very high top marginal tax rates (70%–90%), which coincided with shrinking inequality and a growing middle class.

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Social safety nets and welfare -

Robust social welfare programs help buffer the extremes of capitalism and ensure even the poorest have access to basics. Policies like public health care, unemployment insurance, food assistance, and Social Security redistribute wealth in society and reduce poverty.

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Education and opportunity -

Expanding access to quality education and job training is a long-term strategy to reduce class inequality. Improving public schools, making higher education affordable, and funding vocational programs help people climb the economic ladder. For instance, education was key in Brazil’s efforts to fight inequality: by massively investing in schools and literacy programs, Brazil began to bridge the gap between rich and poor.

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Land reform -

In agrarian or developing societies, land redistribution has been a powerful tool to address inequality. By breaking up large estates and giving land to landless or tenant farmers, governments can prevent rural class exploitation and rebellion.

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Good governance -

Class resentment can also be mitigated when institutions are held accountable. When people see that the wealthy are subject to the same laws (paying taxes, facing justice for crimes, etc.) and that government isn’t only serving moneyed interests, it reduces the 'us vs. them' mentality that usually results in class warfare.

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Overreaching -

While billionaires continue to amass wealth and power, they may push their luck too far. When inequality reaches a breaking point, history has shown that societal pressure and policy changes will emerge to challenge their dominance.

Sources: (Vox) (Britannica) (Royal Museums Greenwich) (Investopedia) (History.com) (Pew Research Center)

See also: Beyond the billions: who's leading the race to trillionaire status?

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