Wealth inequality is a problem because it deprives median citizens of limited ressources; consider urban housing as an example. There are two factors at play:

- Average people have to compete on price with the wealthy (which becomes harder as inequality rises)

- Wealthy people are incentivized to use their wealth to acquire things and extract rent, which drives up total costs and makes inequality worse

A lot of the resulting problems stay negligible or hidden or as long as there is enough overall growth, but as soon as that growth slows down these kinds of problems become very apparent.