What are the negative long term effects if the middle class is not rebuilt? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Chris Hughes, Co-Founder of Facebook, Co-Chair at Economic Security Project, author of Fair Shot: Rethinking Inequality and How We Earn, on Quora:
Democracies do not last long without strong middle classes. I believe unless we make significant changes today, the income inequality in our country will continue to grow and call into question the very nature of our social contract. It is such a fundamental idea behind America that if you work hard, you can get ahead -- and you certainly don't live in poverty. But that is increasingly less true today. Many scholars smarter than me have looked at how democracies slide into authoritarian rule, and growing class resentment and the emergence of nativist or populist leaders is a recurring theme. (This is the concern that I share with many about Donald Trump's dangerous lack of respect for the rule of law.)
Economically speaking, the biggest driver of growth in our economy is consumer spending. If we want to grow our economy, we have to put more money in the hands of working people. If you put a $100 in the pockets of the poor or middle class, they'll naturally spend the vast majority of it on products and services they need, spurring economic growth. That same $100 put in the hands of the wealthy will mostly go into the bank for savings. The Roosevelt Institute has looked at the effects of this practically speaking: a guaranteed income of $500 a month to all Americans could add as much as 7 points to GDP growth over the next eight years.
History has proven that the "trickle-down" economic worldview may be good for America's corporations, but it is not good for Americans. Just because economists tell us the economy is healthy again does not mean the American dream is strong.
I spend a lot of time discussing this exact topic in my book, particularly in the last couple chapters.
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