Economic Inequality And Its Effects On Economic Growth

Decent Essays
“The rich get richer, and the poor get poorer” is an aphorism elicited from the topic of economic inequality. Over the past decades, economic inequality has been rising and at an increasing rate, expanding the gap between the rich and the poor. The direct relationship between inequality and poverty has shown that while inequality increases, so too does poverty. Increased inequality is harmful for economic growth and its effects also bear social implications. Although there are arguments on the consequences of wealth redistribution and its unintended impact on economic growth, wealth should be redistributed to reduce inequality and poverty, sequentially leading to more economic development and a higher standard of living for society.
Economic inequality occurs in two forms: income inequality and wealth inequality. There remains a dispute between whether income inequality or wealth inequality should be the focus to reducing economic inequality. Considerable attention has been given to income disparities, however, it is important to realize that simply addressing income inequality will not adequately address the gross disparity between the poor and the ultra rich. For example, Bill Gates is estimated to earn around $7 billion per year (estimates vary wildly depending on how his income is calculated). However, even if this income was taxed at 100%, Gates would still have in excess of $70 billion in accumulated wealth. Gates could continue spending a million dollars per day,
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