Possible structural changes led by widening wealth gap

Yesterday I talked that if the wealth gap around the world keeps widening, a structural change could happen in the banking sector that more resources would be redistributed from commercial banking to private banking, as when the wealth gap becomes wider, the private banking sector becomes more profitable than the commercial banking sector. Today I want to talk about other structural changes could be led by widening wealth gap.

Firstly, when the wealth gap is widening, investment markets could become more isolated from the general public. This is because when the wealth gap is widening, more people do not have the abilities to access to the financial markets. When the number of potential investors becomes smaller, the need for an open financial market becomes much less necessary. In addition, having more individuals have the access to financial markets could be a good thing and a bad thing, because it could create a great opportunity for some individual to earn more incomes from financial markets but it could also make some individuals lose more of their incomes and poorer individuals are more likely to lose wealth in financial markets than wealthier individuals.

Secondly, when the wealth gap is widening, providing welfare could become a kind of business. In Germany, some firms and organisations have been doing businesses in the social welfare sector. Providing more social welfare could make disadvantageous people fall into a welfare gap. When people could live in relatively comfortable lives by being provided with social welfare without working, they will lose their incentives to work hard to earn more incomes. In addition, they could also lose incentives to give their children education and make their future generations not have any abilities to work or earn more incomes.