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Inequality and macroeconomic instability

 
 
Reply Wed 23 May, 2018 03:38 am
Hello all,
some scholars consider emerging inequalities of income as a factor for macroeconomic instability. Now my source posted that comparisons of status and sorrow about the relative status in society are a very important part of this. Can you explain me the link between inequality of income and macroeconomic instability? I consider debts of private households and imbalances of the balance of avtivities as the link (since they are a result of inequalities of incomes). But I do not get a proper argumentation out of this.
As second point how do comparisons of status and sorrow about the relative status fit in here?
Thank you for your help
Maxi
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cicerone imposter
 
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Reply Sun 22 Jul, 2018 05:09 pm
@Maxi1780,
You can look at the extremes that exist in the same city and country. We live in Silicon Valley in Northern California where the per capita income is one of the highest in the country if not the world, but we also have a high level of poverty. The reason we can "afford" to live here is that we moved here when housing costs were reasonable, and I paid off our mortgage in the same year I retired in 1998. Many of the homes in this area now sell for over $1 million and closer to $2 million. Even people earning six figures in this area have difficulty buying a home because the cost of living is prohibitive. There's a shortage of housing, so many people rent out rooms. That's the micro and macro of our economy in Silicon Valley. https://www.zillow.com/research/living-costs-silicon-valley-seattle-12314/
Average income. The best company to work for in the beginning of a tech career based on this pay data is Facebook, which pays people with less than five years experience $116,800 at the median. After 10 years of experience, it pays more to work at LinkedIn, which pays mid-career employees a median of $159,600.
When I ended my working career in 1998, I made less 50% of the $116,800.
However, my investments have returned over six figures for the past 12 months, and $55,500 average per year for the past ten years with Vanguard.
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