“Wealth Concentration”
The “Rich-Get-Richer” phenomenon is an example of a cascade that effects practically every person in the world. Another name for this process is defined as “Wealth Concentration” – a process by which newly created wealth under some conditions, can become concentrated in the possession of wealthy individuals or entities. Basically, those with some wealth initially are able to invest in newly created sources and or structures of wealth, like IPO’s, real estate, or alternative investments, or leverage the accumulation of wealth, and are thus the beneficiaries of even greater wealth. One caveat with this scenario is that the initial condition is that there must be some wealth distributed somehow amongst the population. In U.S. history this can be traced all the way back to the initial settlers of America, who were able to generate wealth given the opportunity they had.
This parallels to the “Rich-Get-Richer” phenomenon we learned about in class. Basically a small amount of initial wealth or small advantage is sometimes all that is necessary for a cascade to occur. This cascade being the accumulation of wealth towards a very few amount of individuals. as stated in the article: Wealthiest 0.0025% (Forbes 400) Own 2.75% of all trackable privately-held wealth. The current state of wealth concentration in the U.S. is continuing to cascade in this way. The middle class is continuing to shrink and the wealthiest of the wealthy continue to gather more and more.
http://voxeu.org/article/measuring-concentration-wealth