Impact of Economic Inequality
Economic Inequality undermines the productivity and morale of working people, and limit the number of people who could participate in the market and thus a country deprives itself of the contributions the lower section of its society could make to its economic development.
Inequality of incomes leads to some other very serious economic and social consequences:
(i) Class-conflict & Political Abuse:
It has created two sections in society—the ‘haves’ and the ‘have-not’s—which are ever on the war path. This has resulted in ever mounting social tensions and political discontent.
The rich dominate the political machinery, and they use it to promote their own exclusive interests. Political equality is a myth without
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These powerful monopolies and industrial combines charge unfair prices from the consumer and crush the small producers. This leads to a redistribution of income from consumers to the shareholders of monopolies.
(iii) Suppression of Talent:
It is said that ‘slow rises merit by poverty depressed’. It is not easy for a poor man to make his way in life, however brilliant he may be. It is a great social loss that brainy people without money are unable to make their due contribution to social welfare. (iv) Economic Slowdown:
A widening income gap can impede the development of a country's consumer markets as purchasing power becomes concentrated among a small elite. Higher income inequality can also result in non-income disparities such as health and education, thus hindering a government's effort to invest in these areas
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Robust and lasting growth requires reducing inequalities, which otherwise undermine the productivity and morale of working people, and limit the number of people who could participate in the market. Indeed public investments like in MNREGA not only extend social protection to India’s impoverished populations: they also place more disposable income in millions of more hands which spurs growth, but equitably, from below.
Mere leveling up will not bridge the gulf between the rich and the poor. It will also be necessary to raze to the ground the high mountains of privilege. A lot has been done under the 20-Point Economic Programme to help the poor and lift them economically, such as abolition of bonded labour, scaling down or writing off of debts, provision of house sites, etc.
Another important measure is the introduction of a comprehensive social security scheme guaranteeing to each individual a minimum standard of economic welfare. India spends less than 5% of its GDP on social protection schemes as compared to Brazil's more than
As Andrew Jackson once said, “many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by acts of Congress”. This fits the classism model, or the systematic oppression of subordinated class groups to advantage and strengthen the dominant class groups, the lower class’ injustices allowing the upper class to thrive and be bettered. The elite’s mindset that they are more important than the average citizen allows them to hold the idea that they deserve more rights or protection than the average citizen as well. Huston expands on this application while expounding on the political economy of aristocracy, advancing that “in lands characterized by political monopoly, rulers, monarchs, or aristocrats used governmental policies to enrich themselves and their retainers, thus producing a maldistribution of wealth” (Huston 1089). This political monopoly model holds true in America today with the upper class taking advantage of governmental processes to better themselves above regular tax-paying citizens with the idea that they are deserving of it. James Huston again validates this reasoning by stating “the rich and powerful too often bend the acts of government to their selfish purposes” (Huston 1098).
What is wealth inequality? “It is the difference between individuals or populations in the distribution of assets, wealth or income.” [1] In sociology, the term is social stratification and refers to “a system of structured social inequality” [2] where the inequality might be in power, resources, social standing/class or perceived worth. In the US, where a class system exists (as opposed to a caste or estate system), your place in the class system can be determined by your personal achievements. However, the economic and social class that an individual is born into is a big indicator of the class they will end up in as an adult.
Though the world economy as a whole has grown in recent years, a factor that is not taken into account is that the number “of the poor in the world has increased by 100 million” (Roy 3). In other words, the gap between rich and poor is widening. For India, this has startling implications. Though it is a nation that is developing in many ways, it also is a nation blessed with over one billion citizens, a population tally that continues to grow at a rapid rate. This population increase will greatly tax resources, which can create a setback in the development process. The tragedy, of course, is that the world is full of resources and wealth. In fact, Roy quotes a statistic showing that corporations, and not even just countries, represent 51 of the 100 largest economies in the world (Roy 3). For a country struggling to develop, such information is disheartening. However, there is also a more nefarious consequence of the growing disparity between rich and poor, and power and money being concentrated in the hands of multinational corporations: war is propagated in the name of resource acquisition, and corruption can reign as multinationals seek confederates in developing countries that will help companies drive through their plans, resulting in not only environmental destruction but also the subversion of democracy (Roy 3).
There is also the damage that the inequality does to the society and the government. Thomas Jefferson once said, “The small landholders are the most precious part of a state.” Today that would mean that the middle class is the most important part of our society, however, the farther we move into the future the weaker the middle class becomes (Krugman, 587). The America that we live in is unequal in income and social aspects. The rich do not live the same lives as those that are less fortunate, and the less fortunate do not get to enjoy the perks that come with the lives of the rich people.
Economic inequality is ingrained in our society. Because of this fact, many would argue that “that’s just how it is,” but in reality this is not how a community is suppose to function. As Michael Sandel writes in his book Justice, “As inequality deepens, rich and poor live increasingly separate lives.” Sandel makes an excellent point. As economic divisions, such as the ones present in the United States, worsen, the classes diverge on every level. Wealthy people attend different schools, purchase luxury cars, and live in gated communities. Meanwhile, the poor live in squalor, use public transportation, and attend failing schools. Aside from the lack of a quality education making it harder to escape poverty, the poor are from birth at a disadvantage to those on the other side of the economic scale. The United States is not a land of guaranteed equality of result, that is...
“The world holds enough to satisfy everyone’s need but not everyone’s greed,” Mahatma Gandhi once astutely observed. In a few carefully chosen words, Gandhi pointed out the reason behind economic tension. For example, “Poverty, hunger, homelessness, illiteracy, preventable disease, polluted air and water, and most of the other ills that beset humanity have the same root cause: the inequitable distribution of the planet's wealth and resources” (Canadian Centre for Policy Alternatives, All social and economic problems caused by an unfair distribution of wealth). Additionally, our economic system—unregulated capitalism—advocates and defends a wantonly unequal distribution of wealth. For instance in 2010, “The top 400 people (.0000013% of the population) held more wealth than the bottom 60% combined” (Brian Rogel, Unequal Distribution of Wealth). The top 1 percent has grown richer while inversely affecting the general population. “From 1983-2009 the bottom 60% have had a decrease in both their perce...
The problems of high poverty and income inequality exist due to apathy and disengagement with reality. This disparity needs to correct because if not, it will lead to the destruction of society. The problems are best corrected through teaching efforts focused on job training, furthering education, delayed gratification, emphasis on marrying later in life, and control of consumption.
Recently, studies have shown that income inequality has many connections that have caused the gap in the United States. According to the research I found, income inequality is connected to corruption, trade, wages of workers, and education. The world income inequality had declined since the twentieth century according to the studies found (Clark). Corruption falls increasing on low income individuals more than higher income individuals. Additionally, the trade theory suggests that the free trade might have level up the income inequality higher within countries by the different patterns of wages and demand for workers who are skilled and unskilled (Silva and Leichenko). Moreover, the education of wealthier people has it easier because the learning efforts of education are unbalanced. Besides, income inequality in the United States is hurting our economy due to the all the issues of corruption, trade, wages, and education. Suggested by Robert H. Frank article called “Income Inequality: Too Big to Ignore,” the income inequality is bad for our economy (Frank).
America 's economy is dependent on the middle class. Slowly, the middle class is beginning to decrease. Soon enough there will be only the wealthy and the poor. Economic inequality is the gap between the upper class and the lower class. It is a problem that is growing everyday. Technology, education, race, gender, and globalization are the main causes of economic inequality. Each one of these causes contributes to the vicious cycle of economic inequality. The battle for our country 's financial wellbeing is upon us.
Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The income gap in America has been increasing steadily since the late 1970’s, and has now reached historic highs not seen since the 1920’s (Desilver). UC Berkeley economics professor, Emmanuel Saez conducted extensive research on past and present income inequality statistics and published them in his report “Striking it Richer.” Saez claims that changes in technology, tax policies, labor unions, corporate benefits, and social norms have caused income inequality. He stands to advocate a change in American economic policies that will help close this inequality gap and considers institutional and tax reforms that should be developed to counter it. Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality e...
The decrease of the lower class would eventually open in the capital market and would give more opportunities to the lower class. Although there are many flaws in the system and people often do take advantage of the system, there still
India, the second highest populated country in the world after China, with 1.27 billion people currently recorded to be living there and equates for 17.31% (India Online Pages 2014) of the world's population, but is still considered a developing country due to it’s poverty and illiteracy rates. As these nations continue to grow at rates that are too fast for resources to remain sustainable, the government’s in these areas wi...
...an HDI of 0.36. These discrepancies in levels of development have led to an exodus of people, from less developed areas to the areas that have been benefitted by development. This situation seems to depict that predicted by the Dependency theory in which the developed countries progressed due to the exploitation of peripheral nations; the same seems to be happening in India. The states that are wealthier are exploiting the poorer states. It would be difficult to imagine India having the economic status that it now has, if it was not for the terrible working conditions and wages at which the Indians are willing to work and the massive work force available in the country. Now that India has seen economic growth the government should start taking care of its citizens by implementing policies that protect the labor rights of the workforce.
If income inequality continues to grow, the economy will break down. For example, if the housing price continues to rise because of the rich people, poor people will not have a place to live since they cannot afford to buy these expensive houses. When this happens, it will create another housing bubble because the houses are not worth buying, which means the market value of the house exceeds the house’s value; therefore, nobody will buy the house including the riches since they already have houses to live. Moreover, poor people do not believe they can get access to wealth because they cannot afford anything, and they cannot afford the tuition fees for a good education, which is the traditional route to success.
Many thing can have an impact on poverty. Some of these thing help to continue poverty and create more problems within poverty. Social stratification creates social classes that helps to divide society. The economy, as well, helps to create these classes. These classes then can create inequality, which helps to continue poverty.