Wealth redistribution

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Growing cake analogy

To represent the distribution of wealth or social equity, the economy of a society is often simplified as a growing cake. In such a standard view of the economy, economic growth benefits to everyone since all the cake (i.e. the economy) is growing, even the white piece representing the part of wealth that belongs to the lower class. Although the distribution of wealth was approximately following this simplification at some point during the 19th and 20th centuries, that is not the case in the economy of the early 21st century.

Raisin cake analogy

In the last few years, the cake has mostly continued to grow. However, the inequalities has increased in the developed countries as well as in the developing countries. Therefore, the current economy cannot be simplified using the growing cake analogy which benefited to everybody. Instead, the economy can be rather simplified using the raisin cake analogy of the universe expansion, where the universe is expanding while the galaxies themselves (raisins) are not. In that view, the current economy is still growing but the point is that economic growth does not benefit to everyone anymore as the raisins represent the part of wealth that belongs to the lower class.

Conclusion

In terms of redistribution of wealth, the economic growth had enabled to improve the conditions of living of the lower class of the developed countries in the past 2 centuries. However, the current economy although it continues to grow does not improve well-being anymore, and even more it increases the inequalities in these countries.

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