Inequality fuels social unrest
Economic inequality risks creating social discontent, which can boil over into political conflict, according to Zia Qureshi, a Senior Fellow at the Brookings Institution.
Similarly, a study published in the World Development journal found that “persistent inequalities amongst and between socio-economic groups may increase social discontent and, eventually, the propensity of individuals and groups to engage in social and political unrest.”
In other words, when economic prospects are grim, many people turn to political action to turn things around. Political action can be non-violent, such as the Progressive Era reforms that emerged from the Gilded Age in the early 20th century. But political action can also become violent — take the French Revolution in the late-18th century, for example.
In the U.S., income inequality has been on the rise for decades. According to the Peter G. Petersen Foundation, the top 20% of wealthiest households in America have seen their income rise 165% from 1981 to 2021, while the middle and lowest quintiles have seen income growth of only 33% and 38%, respectively, over the same period.
The evergrowing gap between the haves and the have-nots is spilling over into unexpected political outcomes, according to Galloway.
“The reason that we put an insurrectionist and a rapist in office is because, for the first time in our nation's history, a 30-year-old man or woman isn't doing as well as his or her parents were at 30,” Galloway said on Morning Joe. “Why? Because the majority of households are having the oxygen sucked out of the room such that a small number of individuals and a small number of companies can be worth more than nation states. Income inequality is out of control. Our tax policy has gone full oligarch.”
To avoid a revolution, Galloway suggests raising taxes on the wealthiest individuals and reviving the American tax policies of the “60s, 70s and 80s.” However, in previous interviews the professor has also prescribed ways that young Americans can shift the odds in their favor, despite the economic system putting them at a disadvantage.
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Learn MoreBuild wealth while you’re young
Despite the systemic challenges they face, Galloway believes young Americans can still build wealth in today’s economic landscape. In an interview with financial influencer Codie Sanchez, Galloway said the first step was to “find something you’re good at” and “focus” on it.
With the right skills, Galloway believes young Americans can boost their earnings potential above the median wage. At that point, he recommends turning your attention to preserving capital.
“The one thing that’s in your control is spending,” Galloway explained to Sanchez. “If you’re young, you’ve got to figure out that savings muscle.”
These potential savings should then be deployed into a diversified pool of investment opportunities with a robust track record. Over the long term, this disciplined saving and investing approach should help younger Americans secure economic freedom and stability.
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