Critical Analysis Of Paul Krugman's 'Confronting Inequality'

Paul Krugman, in a recent article has eloquently discussed the issue of unequally distributed income in the United States (Krugman, 2015). He alludes to a number of general economic principles in this article. He talks about how a major misconception about the effect of taxes on income inequality in the United States has been addressed through a recent research carried out by Branko Milanovic and Janet Gornick.

In “Confronting Inequality” by Paul Krugman he tries to show how inquailty in the united states has been getting worse and how it s affecting the united states. He provides many reason to why iniquility is the way it s and how he belives it can be helped. He also states the positive effects in helping the inquility in the united states will have.

From 1938-1969, in America was in a period called the great compression, a time where the difference between the richest and poorest Americans was very small and economic growth was explosive. Due to past and current economic policies and events, income inequality has exploded in America, which is why in 2015 America had the highest level of wealth inequality in the world at 80.56 gini[1] . In the future this inequality will slow down economic growth, increase debt for middle income Americans, make America less democratic, and reduce economic mobility. This problem, however, does have solutions and this paper will lay out some of the solutions and the effect they will have on the economy, but first I will explain the history of income inequality in the US.

The land of freedom, the United States, is the Promised Land for all. Its citizen can be much as prosperous as they want. Nonetheless, a phenomenon has occurred gradually that has changed the economy, social levels, income, and wealth of all Americans. This is called inequality. Inequality has become a social problem since people has not raised their voice take advantage of voting, large corporations as CEOs who take instead of give.

Wealth inequality in the United States has grown tremendously since 1970. The United States continuously reveals higher rates of inequality as a result of perpetual support for free market capitalism. The high rates of wealth inequality cause the growing financial crisis to persist, lower socio-economic mobility, increase national poverty, and have adverse effects on health and well being.

In his article "Confronting Inequality" Paul Krugman is asserting the fact of high socioeconomic inequality in the United States, while demonstrating its consequences and the variety of statistic evidences upon it. He is depicting modern American society where we have a huge gap between economic elite and lower-and middle-income classes. There is a time for ''a Great Moderation" reforms that will bring a socioeconomic equality.

Today in America, income and wealth inequality has continued to grow at an unsettling pace. The rich continue to get richer, while the number of people categorized as lower class grows exponentially. As Joseph Stiglitz has explained, many theories that are seen as strongly Republican, such as the trickle-down effect, has caused the rich to take money from the poor, and as a result the lower class grows and the middle class disintegrates. The top 1 percent of America’s households currently holds 30 percent of America’s economy, which is much more than other first-world countries and helps to emphasize the extremity of inequality currently in America today. This increased inequality has in turn caused America to become a much more divided society; those born in poverty typically stay in poverty, with little to no chance of self-improvement due to a lack of education provided in their areas. In contrast, those that are born wealthy typically go to better schools, have better health care, and are all but spoon fed information on how to remain wealthy. These two sides of society almost never cross, and this causes the country to be more divided than ever. In order to limit this inequality, drastic changes must be made, such as large corporations paying their fair share of taxes and giving back to the lower class, and minimum wage should be raised. If everyone in America works together, we can raise social mobility and re-unite what has become an increasingly divided country.

In “inequality for all”, a documentary presented and narrated by Robert Reich, Reich discusses what is happening in terms of the distribution of income and wealth in the US, why it is happening, and is it a problem. “Inequality for all” is directed by Jacob Kornbluth, it premiered in 2013, and it runs for 90 minutes. Reich studied at the University of Oxford in during the late 1960’s, where he befriended future president Bill Clinton. Subsequently, they kept in touch, and in 1993, when Clinton was elected president, he reached out to Reich, to be secretary of labor. Reich was in office for the following four years, and today he is a professor at the University of California, Berkeley. For about three decades now, Reich announced that out of all developed countries, the US has the most unequal distribution of wealth, and that inequality is getting even greater in the US. In the documentary, the most compelling topics covered by Reich, are the changes that started happening in the late 1970’s, the fact that 42 percent of Americans born into poverty stay poor, and that nowadays, money controls politics.

Economic inequality seemed to be in a decline or general phasing off starting from the mid-1930s. However, in part due to the Reagan presidency and regime changes, starting 1981 we have seen a steady rise in economic inequality in America between the haves and the have not’s. Economic inequality is only emphasized as data shows severely concentrated gains as those in the top .1 and .01 percent “earn[ing] four and a half, and nearly seven times, respectively, that of their counterparts of three decades earlier” (234). McAdam and Kloos only emphasizes this growing inequality over a multitude of statistics that offers compelling evidence that convinces me that not only economic inequality has been on the rise for some years now but also shows that there is a possible connection to the slow-release revolution of the Reagan administration. While I do not believe that all economic inequality can be traced back to the Reagan administration, I do believe that it had a key part in changing the political landscape that would only seek to provide a prime breeding ground for economic inequality to flourish in America. Poverty also has a way of rising health inequality, as those with lower income do not have the discretionary spending

“One reason to care about inequality is the straightforward matter of living standards. The lions share of the economic growth in America over the past thirty years has gone to a small, wealthy minority…”(Krugman 586).

In Robert Reich documentary “Inequality for All” he makes a compelling discussion about the serious crises that the United States faces due the widening economic gap. He looks to raise awareness of the U.S. economic gap between the rich and poor. According to Reich the widening divide in America is real and growing. Income levels at the middle and labor class is stagnant and are at it’s lowest levels compared to upper class incomes since the beginning of WWII and is growing wider each year. Reich suggests that the economy runs more smoothly when the middle class has jobs with fair wages, when unions are strong, and when middle class workers have some extra money to spend if possible when the government uses the tax policy properly and when it raises the minimum wage regularly to control the income gap between labor and management. In other words Reich argues that economically healthy middle and labor class equality is the foundation of a thriving economy and is necessary to maintaining a sound national infrastructure and educational system within

Capitalism has been the central force behind the growth of the United States’ progressive economy. Within such advanced economic system the chances of economic disparity are significantly high. In fact, over the past three decades there has being a steady increase in unequal wealth distribution among the economic classes. To sustain the current unequal wealth distribution among the classes of the American population, there are numerous factors that influence and shape this trend. For some members of the population it is alarmingly disturbing to know that recent statistics have shown that, “In the US [alone] the wealthiest 1% of its population owns more than the bottom 95 %” (Gutman). As for the difference in economic wealth, it resulted

America is one of the world’s largest and prosperous developed countries in the world, but take a closer look and you realize that the great United States of America has an alarmingly large amount of poverty. Where there once used to be an “American Dream” there now lies the cold hard truth, there is less and less opportunity every day and growing inequality every second. Joseph E. Stiglitz how America has turned into a country that would be unrecognizable to any of the founding fathers. In The Price of InequalityStiglitz visits this problem and searches for the source of the economic inequality that the United States is faced with today. Stiglitz came to the conclusion that America is declining and turning into a society like the one

A major social problem in America today is its inequality of the distribution of income. "Income inequality refers to the gap between the rich and the poor. The United States has the most unequal income distribution in the industrialized world, and it is growing at a faster rate than any other industrialized country" (Eitzen & Leedham, pg. 37). The main reason as to why income is distributed so unequally is because of the gap between social classes.

Income inequality is a phenomenon that is undeniably real in our current world, and more specifically, the present United States. Canon describes how the gap between the elite and the poor has been consistently growing for many years and continues to widen (189). Whether the differences between the top and the bottom are a threat to current society is another story. Does income inequality undermine a democracy? Ray Williams argues that societies are strongest when they have a higher rate of equality while George Will challenges that inequality is the very basis of what make democratic processes. A. Barton Hinkle takes a Libertarian approach to the idea that inequality is threatening to democracy and how it can be fixed. Some threats that each article addressed were economic impacts, civility, and fairness. Overall, there is a definite need to evaluate whether the United States democracy is being threatened due to the continuous rise of the elites and the fall of the working class.