Josten, S. (2013). Middle-Class Consensus, Social Capital and the Fundamental Causes of Economic Growth and Development. Journal of Economic Development , 38 (1).
Josten’s study demonstrates that the middle-class is the most influential group in economic growth and development. The author argued that by using Keynesian and post-Keynesian theories, it is evident that consumers and investors enhance the growth and development of the economy. Before the 2008 economic downturn, the government enhanced infrastructures to enable investments. Job creation and industry aiming to reduce free riding and enhancing the community social capital. However, the study argued that since the recent depression, the middle class is shrinking thus resulting in depressed community social capital (Josten, 2013). These factors reduce the economic growth in the end. The study argued that the number of middle class is decreasing which is different from other studies reviewed. It was clear that the middle class influence the economy due to their number and their spending probability.
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OECD (2016). The squeezed middle class in OECD and emerging countries –myth and reality. Issues Paper. Retrieved September 30, 2018, from https://www.oecd.org/inclusive-growth/...for.../Issues-note-Middle-Class-squeeze.pdf
The paper demonstrated that the middle class in OECD is about two thirds whereas it is about one-third in emerging economies. However, the percentage of the middle-class citizen is 5% less than it was before 2000. The essence that most of the middle-class in America and other OECD economies are older citizens than they were before 1990 means that most of the middle-class citizens are no longer productive to enhance the growth of the economy. The report demonstrated that the middle-class incomes have been increasing at a slower pace than those at the top compared to the income growth in the 80s. These changes mean that the gap between the middle-class wealth and that of the upper class is continuously rising (OECD 2016). The widening gap led to the loss of influence on the political scenes as the rich began influencing everything in their given economies.
Wilkinson, R., (2011). How economy inequality harms societies. TedTalk . Retrieved September 30, 2018, from https://www.youtube.com/watch?v=cZ7LzE3u7Bw&pbjreload=10
Richard Wilkinson video argues that two countries such as Portugal and USA there are different economic power in the country but that does not affect the social community issues. However, when comparing the people in the same country such as the USA, it is evident that the low-income earners suffer more health issues, mental disorders, among other negative social factors due to the level of service and social factors. The video noted that economic factors such as the widening gap of the 20% upper class and 20% at the other extreme of income, means that the gap determines the social issues with OECD not dependent on the per capita income (Wilkinson, 2011). Inequality results in OECD suffering major issues such as value among other issues but if people become closer to economic value, they are likely to have 60% trust and other issues. The study noted that social relations, health, and human capital improves in societies that have relatively equal incomes compared to countries where the gap is wide. Hence, the higher trust level in Norway compared to the U.S.
Dabla-Norris, E., Kochhar, K., Suphaphiphat, N., Ricka, F., & Tsounta, E., (June 2015). Causes and Consequences of Income Inequality: A Global Perspective. International Monetary Fund (IMF) .
The authors analyzed the influence of income inequalities such as the gap between the 1% of the rich and the others in the community is increasing rapidly. Therefore, the wealth accumulation of the 1% of the wealthy in the world is twice that of the others combined. This issue means that income increase of the top 20% does not result in the growth of the economy. This increase reduces the sustainability of the economy. The upper 20% are likely to save their money rather than invest whereas the 20% in the other end or the middle and low-class influences the growth and suitability of the economy (Dabla-Norris et al., 2015). The study notes that income gaps are the main cause of the socio-economic problems but that does not mean that the middle class is declining.
References
Dabla-Norris, E., Kochhar, K., Suphaphiphat, N., Ricka, F., & Tsounta, E., (June 2015). Causes and Consequences of Income Inequality: A Global Perspective. International Monetary Fund (IMF) .
Josten, S. (2013). Middle-Class Consensus, Social Capital and the Fundamental Causes of Economic Growth and Development. Journal of Economic Development , 38 (1).
OECD (2016). The squeezed middle class in OECD and emerging countries –myth and reality. Issues Paper. Retrieved September 30, 2018, from https://www.oecd.org/inclusive-growth/...for.../Issues-note-Middle-Class-squeeze.pdf
Wilkinson, R., (2011). How economy inequality harms societies. TedTalk . Retrieved September 30, 2018, from https://www.youtube.com/watch?v=cZ7LzE3u7Bw&pbjreload=10
