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What role growing "Income Gap" plays in slugishness of economic growth around the word in general and emerging economies in particulr?

Question asked by masoud moallem on Mar 4, 2016
Latest reply on Mar 5, 2016 by Eric Chiang

As the growing slice of the pie goes to very few at the top of income chain who have already satisfied their needs and wants, therefore, most of that income gets saved rather than being spent which does not necessarily add to economic activities. Since this lopsided distribution comes at the expense of income stagnation for people in the middle (who have been the engine of economic growth), it dries up the fuel necessary for that engine and very much similar to "Paradox of Savings" will lead to more and more income stagnation at all levels.

I suspect the growing income gap very acute in US and China (number one and two economies in the world) fueling the sluggishness of growth for the whole world and creating a vicious circle that might become impossible to escape from if no appropriate measures are taken. News out of China that the government is tampering with  Reagan like economic policies (trickle down economics) and the government persuasion at all levels in US toward conservative supply side policies are the measures that tend to exasperate the world economic slowdown.

 

I am just wondering to what degree my assessments of the present economic conditions are correct?

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