How could anyone think that an entire population of muggles could stand up to even one magic-user. They use magic.
As for the issue of economy, we see disparities in class, Weasleys vs the Malfoys, for example, but it's a little unclear why such disparities exist in the first place. There must be some reason why Mrs. Weasley can't just magically construct a huge mansion that doesn't look like a piece of crap.
I figure it's best not be thought of too deeply. Irrelevant stuff like that is just not elaborated upon. I mean, there are scarce resources, like gold, food, and magical goods and services, and a bank to manage currency and property, but how it all works isn't really crucial for an appreciation of the story.
I sort of just shrug it all off like I do for Star Trek, since they also have "magic" in the form of replicators that can replicate whatever they want. The Federation exists in a moneyless society, but they still have to deal with scarce resources like dilithium and what not.