Obama: Income Inequality Threatens ‘Our Way of Life’; Causes Recessions

“And the idea that so many children are born into poverty in the wealthiest nation on earth is heart-breaking enough. But the idea that a child may never be able to escape that poverty because she lacks a decent education, or health care, or a community that views her future as their own, that should offend all of us. And it should compel us to action. We are a better country than this. So let me repeat. The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American dream, our way of life, and what we stand for around the globe. And it is not simply a moral claim that I’m making here. There are practical consequences to rising inequality and reduced mobility.

For one thing, these trends are bad for our economy. One study finds that growth is more fragile and recessions are more frequent in countries with greater inequality. And that makes sense. When families have less to spend, that means businesses have fewer customers. And households rack up greater mortgage and credit card debt. Meanwhile, concentrated wealth at the top is less likely to result in the kind of broadly based consumer spending that drives our economy, and together with lax regulation may contribute to risky speculative bubbles. And rising inequality and declining mobility are also bad for our families and social cohesion. Not just because we tend to trust our institutions less, but studies show we actually tend to trust each other less when there's greater inequality.”