[spellbanisher]

To my point I already made, there is nothing wrong with the concentration of wealth, just the concentration of wealth in the hands of unproductive individuals. Concentrated wealth is actually essential to creating new industries and expanding existing ones, because it enables long term and massive investment.

But it also must be understood that wealth is created when there is demand for services; a countries central bank tries to ensure through a variety of mechanisms to ensure that the amount money in the economy is equal or in slight excess to the demand. Too much money and you have inflation, which when spread out over a large population means most individuals don't have quite enough purchasing power to buy anything. Too little money and you get deflation, which hurts the economy in two ways; first, it causes a downward spiral in prices because the consumer will not spend until prices bottom out (no one wants to buy something only to find out its cheaper a weak later). The decreased demand creates a cycle of decreasing prices, and you end up with a price spiral. Cheaper goods means that businesses can't afford to pay their employees as much, and since it is usually very difficult to lower wages you end up with mass layoffs. The unemployment further depresses demand thereby worsening the price spiral.

Concentrated wealth can also contribute to inflation, however. When individuals who don't invest or produce end up with large amounts of wealth, you end up with less currency among the general population. Central banks cannot pump any more money into the economy because it would spike inflation. You end up with a stagnant economy with massive divides between rich and poor.

Entertainment industries can be especially pernicious for an economy. Modern economics is based on ever increasing consumption; wealth does tend to be distributed disproportionately, but it does not matter as long as their is always increased demand (and thereby more wealth). But there is only so much shit you can buy, only so much media that you can consume. As demand plateaus wealth begins to concentrate, but since the market is saturated there is no area for investment. Eventually, the purchasing power of the populace diminishes.

In the late 90's the music market hit its first saturation point. A booming economy (the 90's was the richest decade in human history) fueled unprecedented levels of consumption and spending in entertainment, but as I said, there is only so much shit you can buy. The rise of napster while music sales declined was only a coincidence. Napster came to the fore in 1999, the economy slumped in 2001, and the music industry went after napster in 2001. Both times the music industry saw dramatic declines in sales in the last 15 years, 2000-2002 and 2007-2009, where during severe economic recessions. The disappointing growth in the 2000's was more due to the stagnant recovery than it was due to piracy. The 2000's saw a stark decline in purchasing power. Whereas the nineties was characterize by the growth of middle class incomes, the 2000's actually saw a decline in middle class income, but it was offset by credit. The music industry was actually saved by developments in digital technology, such as ipods and other mp3 players, which created new demand. But once again the music industry has reached a saturation point, and that will mean more concentrated wealth, less purchasing power among the populace, and more misguided arguments by entertainment companies that piracy is hurting their bottom line.

I should also add that one way to deal with market saturation if there is no new markets to expand into is to raise prices or to lower costs of production, neither of which are desirable. Raised prices, especially in entertainment, can have unexpected consequences, such as driving people to piracy or to other things. Lower costs of production drives down wages, lowering purchasing power.