Income Inequality
By Carson Abrahamson
Income inequality is an issue that dominated, or plagued, the last election cycle. It had to compete with emails, climate change, and ISIS, but it was up there. Income inequality refers to the difference in income distribution amongst the general populous. In the United States, the gap between rich and poor has been growing; the rich make more compared to everyone else, proportionally. However, income inequality is not necessarily always a bad thing, and many of the drastic, oftentimes socialist, proposals to combat the difference between those on top and everybody else are oftentimes damaging and would provide more harm than they would provide benefits.
Upon first glance, a distinct gap between the fortunate and the less fortunate may seem like a bad thing. Sometimes, in truly extreme cases, where one or two individuals do own the majority of the wealth, there are disastrous results. America is not such an extreme case. In fact, America is oftentimes seen as the innovation hotbed of the world where those with the right mindset can create revolutionary products. Destroying the gap is not necessarily a good thing either. An economy where no one earns anything is an economy where there is no gap. Most will find one problem or another in that.
In America, as the wealth gap widens, the lifestyle gap shrinks. That might seem counter-intuitive, but look at a case like Apple’s. With the introduction of the iPhone and iPod, Apple had created a monopoly for themselves where their unique products like the iPhone and iPod, have, in effect, given them a sense of monopoly. Apple figured that the best way to preserve their position of dominance was to lower prices rather than increase them, as demand would increase more than price would drop. Monopolistic profits signal to other ambitious entrepreneurs the wealth they could garner from entering new markets. Thus, as those at the top grow wealthier, luxury goods become common goods. For example, the price of a 50-inch plasma has fallen from $20,000 to less than $500 over the course of 15 years.
Senator Bernie Sanders would be the first to point out the income gap in any conversation, often exclaiming rhetoric about “the top 1%” or even “the top 1% of 1%”. In fact, he was one of the first figures to bring this issue to the mainstream attention. Sander’s main claim is that those on top are hoarding the wealth. Like a dragon hoarding his gold, the wealthy hide the money in their safe, never to be seen by the common folk again. That is simply not the case, as most of those with wealth actively search for ways to increase their wealth by investing in ways that actually stimulate the economy, not detract from it. Furthermore, Sanders speaks of the economy as if it were a pie where everyone deserves “their fair share”. In reality, our capitalistic economy is not a zero-sum game. That is, the pie can grow and new slices can be created.
In conclusion, it is true that a case can be made against the income inequality between the rich and the poor and everybody else. However, in our current state of living, I believe that the income gap is a much less pressing issue than other fundamental human right type issues.
"On the Issues: Income and Wealth Inequality." Bernie Sanders. N.p., n.d. Web. 11 Dec. 2016.
“How Income Inequality Benefits Everybody.” George F. Will. Washington Post., 25 Mar. 2015. Web. 11 Dec. 2016
"Capitalism Is NOT a Zero Sum Game!" Investor Junkie. N.p., 2014. Web. 11 Dec. 2016.
"Income Inequality | Inequality.org." Inequality.org. N.p., n.d. Web. 11 Dec. 2016.
This is a very interesting topic since this fact is clearly evident from the graph in your post. I feel that this occurs due to different people being marginally productive at different amounts. Those in the top 1% are in theory more productive since their earnings are the highest and since they grow at increasing rates. This isn’t to say that they are the hardest working, because that isn’t true. Many of the people in the lower brackets of income work just as hard, or even harder, as those in the top 1%, but the reason they get to soak up the benefits is because their work impacts a larger scale of people in the world due to the products they make/sell and the people in which they work with.
ReplyDeleteWe talked about this issue in class and the graph you used represents it very well. I do not think it is fair for less than 1% of the country to be hoarding a large amount of the money. There are middle class people working just as hard and they make up a very small part of the countries total. Although those in the top 1% are considered to be more productive because they have the highest earning and grow at an increasing rate, it does not mean that they are the hardest working. Those in the middle class or even below work just as hard, but it is all a matter of the type of benefits the work entails. Given that those in the top 1% make so much money, it means that their work impacts more people around the world and has to deal with the specific type of people with whom they work with. Although I do not think we should destroy the gap, I do think there needs to be a little more equality between each class.
ReplyDeleteAs too many people seem to forget, there are two sides to every coin. Yes, it stinks that 14.5% of the population is below the poverty line. It’s truly awful. But people need to be mindful of the other side of the coin. As Carson said, the money supply in America isn’t a finite number, a zero-sum game. More wealth can be created, and although the middle class is getting obliterated nowadays, the wealth of the CEO’s isn’t horrible. We can still boost the middle and lower classes while making sure that the iphones, the tv’s, the Fords we buy are all cheap. Harder taxes on these companies would increase the price of those everyday items, making everyday people pay more for those and have less money to spend and spur the economy. I agree, the middle and lower classes are struggling right now, but the ways proposed by Bernie Sanders are not the ways to boost them.
ReplyDeleteI will start off saying this, it is absolutely crazy to see how big of a difference in wealth we really have. The thing is most of the wealth made its way to the top by getting put back into the economy. It isn’t logical to believe that the gap is increasing because the rich are holding onto their money. They have to be doing something to increase their wealth, like I don’t know investing in new money making superpowers. The common misconception is that investing will cause the rich to take a loss and redistribute wealth, but no smart business person strives to take a loss. Investments of the rich keep our economy moving, but the money funnels its way back to the top because of the common person buying more and more luxury goods. I almost like seeing a growing rich section because I think it is a sign that many are making their way to the top. If the gap was so suppressive we would not hear the rags to riches stories that seem so common.
ReplyDeleteI appreciate a different view, attempting to debunk the problems of income inequality. However, some of the things you present, such as the argument about Apple's monopoly and large TVs raises some questions. Prices aren't lowering because corporations are becoming more wealthy. They're getting cheaper because not only have the figured production tactics, but it's because these items are being manufactured in China, where the wages are abysmal. A good entrepreneur would never lower the prices because he has more money. Corporations goals are nothing but to make money. They'll support tax cuts for their businesses so they can provide for employees, but trickle down economics have shown not to work, as seen in America during the Bush Administration. While indeed CEO and wealthy people have worked for their earnings, the motive of greed has limited the powers of the majority of Americans. It's a facade to prevent a movement for a minimum wage hike, which, according to adjusted inflation, is due for some kind of raise.
ReplyDeleteThroughout the entirety of the United States, inequality in pay has been a major problem. Whether it be because somebody is a different race or a woman. After the years however, the pay inequality has been changing a little bit. More people are being paid equally as education requirements for jobs continue to increase. With more college degrees in the world the pay is increasing. The one problem is still that women are under payed compared to men usually. In general the pay in the workforce will most likely never be equal, however, it is better than it was 30 years ago and it will continue to get better slowly as time moves on.
ReplyDeleteEverything you said is very true, as the middle and lower class are a significant amount below the top 1% in today's society. It is truly awful how much people live under the poverty line. But the suggestions made by Bernie Sanders will simply not better this pressing problem we have. Although this is a big problem in our country, this should not be the problem that we should be putting all our focus to, because I hate to say it, but we are not as impoverished as other countries. Most of the United States, compared to other, more rural countries, are living the life, and addressing the middle class is not something that should be on the fore front of our minds.
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ReplyDeleteYou seem to argue that the large amount of income inequality we have now is not a problem. This is not at all true. As more wealth is accumulated by the rich and powerful, while the middle class and poor receive less, people start to become angry. This year we saw it in the Sanders and Trump campaigns. Both sides shouted at how terrible this problem was and it is a significant problem. Some people scoff as you continue to do at the people affected by this inequality. However, this is the just tip of the iceberg in how bad this could get. Bernie Sanders is not a real democratic socialist but rather a social democrat and Trump is fascist-lite. If people continue to hurt like they are in this country, they may become more radicalized into actual revolutionaries and fascists. If that happens it will be horrible problems to deal with as these ideologies are in their nature violent and disruptive. In order to prevent this, we must reform and expand the social safety net. If we don't we may fall victims to the ghosts of the past. Failure to reform will result in the failure of the state. The shades of the Wiemar Republic, Russian Empire, Spanish Republic, and Kingdom of Italy are calling to us to remember and not repeat the mistakes of the past.
ReplyDeleteThere are multiple major differences between the United States today and the failures we see in the Nations you have listed. First there is a running trend in your examples which is War and global instability, the reason the Weimar Republic and the Russian Empire fell was due to WWI and WWII respectively, the reason the Kingdom of Italy fell was due to the instability caused by WWI and the reason the Spanish Republic fell was due to massive funding from ideologues from both Fascist and Communist nations trying to spread their systems in a massively unstable land. America today, in contrast, we don't see massive instabilities due to economic crisis, and we don't see ourselves at the losing end of a war, we see ourselves as the most powerful and prosperous nation on Earth. There is no dire need for an American revolution, nor do we have enough reason for one, though, i'm sure, you'd like to see a communist revolution take America, it is just a far too stable nation for it to take hold.
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DeleteThe context behind the failure of these states that you mentioned is true. In addition, it is also true that we are not close to the collapse of the state. However, if there is a great economic crash, we may find ourselves in conditions that could facilitate the rise of fascist or far-left revolutionary parties. We are as immune to instability as we think we are. That is why we must expand the social safety net, so that if this happens people are not drawn to the political extremes. I have also never advocated for a communist revolution as a violent resolution is the antithesis of my strict-nonviolent beliefs.
Delete*We are not as immune to instability as we think we are.*
DeleteIncome inequality has always been an issue, since it was discovered that there was a gap. Since there is such a large workforce in America, or even globally, there are many people who have a wide variety of opinions on the subject. No one wants to believe that there is an issue, however there always has been one and there have always been many angles from which to analyze it. There is a difference between quality of life and income. The issue surfaces when those who are 'less fortunate' are not able to provide the bare necessities for living to their families or even themselves. There are many people who are well off that have many houses and cars that are creating this inflation in the markets. Such as buying Apple products and increasing demand for more expensive items. The less fortunate are only worried about providing what is necessary for living, not buying the latest iPhone or Range Rover.
ReplyDeleteI love that you pointed out, how the rich aren't just hoarding their money. It's funny that so many people think that the wealthy do nothing with their money and gets kept locked away never to be seen. They use their money in investments and stimulate the economy like you said. There may be a problem where some people are living in total poverty where they can't provide bare necessities, but it isn't a case where the wealthy are just keeping money hidden from the poor.
ReplyDeleteWhile income inequality does stimulate the economy and does have some general benefits, there are also many problems. People in the bottom 50% struggle more than those in the top 1% can comprehend, and while I don't think perfect equality is the solution, we need to find a solution that helps the people that are struggling right now. The top 1% should be able to do something to help out those in need compared to where they are. This topic is tricky, and there probably is no perfect solution, but in my opinion, the best solution is to try and make the gap at least a little bit tighter.
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