Jim Dieugenio: Article Summary

In the United States, high standard of living is not equally shared with in the Americans. The 1970s and 1990s was period where economic inequality began to grow. Emmanuel Saez, an economics professor at UC Berkeley has been doing a research for the U.S. income inequality. He states that there has been an increase since the 1970s, and has reached levels that have not been seen since 1928. “In 1928, the top 1% of families received 23.9% of all pretax income, while the bottom 90% received 50.7%. But the Depression and World War II dramatically reshaped the nation’s income distribution, by 1944 the top 1%’s share was down to 11.3%, while the bottom 90% were receiving 67.5%, levels that would remain more or less constant for the next three decades. But starting in the mid- to late 1970s, the uppermost percent income share began rising dramatically, while that of the bottom 90% started to fall.”(DeSilver) Ever since then, economic inequality continues to increase, especially in the last three decades.

Along with globalization market forces has had the greatest impact on income equalities in the United Sates. Thomas Piketty says that “by definition, in all societies, income inequality is the result of adding up these two components: inequality of income from labor and inequality of income from capital. The more unequally distributed each of these two components is, the greater the total inequality ... [a] decisive factor is the relation between these two dimensions of inequality: to what extent do individuals with high income from labor also enjoy high income from capital? Technically speaking, this relation is a statistical correlation, and the greater the correlation, the greater the total inequality, all other things being equal” (Piketty & Goldhammer, 2014, p. 242). In the U.S. the correlation between the two dimensions has become so astonishing that “President Obama called economic inequality “the defining challenge of our time.” But while Americans acknowledge that the gap between the rich and poor has widened over the last decade, very few see it as a serious issue. Just five percent of Americans think that inequality is a major problem in need of attention” (Fitz,

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.

Americans today live in a distinctly unequal society. Inequality is now wider than it used to be in the last century, and the division in income, wages, and wealth are broader than they are in other developed economies of the world. Wealth inequality is the imbalance of wealth or income within a society, and it is one of the most vital economic challenge the US is facing today because the distribution of wealth is more dispersed, making the inequality in wealth distribution at its highest. While the matter has been discussed for many years, the actual income disparity in the U.S. has heightened and is now verging on an extreme gap that portends to impede long-term economic growth. The huge gap between the wealthy and poor is squeezing the U.S. economy, the wealth gap threatens economic growth by diminishing social mobility and producing a less-educated workforce who are not able to compete in the global economy. unrestrained level of income inequality causes political pressures, it discourages trade, investment, and hiring. The present level of income inequality in the U.S. is shrinking GDP growth, and the world's largest economy is struggling to recover from the Great Recession.

In “Confronting Inequality”, author Paul Krugman explains how bad income inequality is for the American economy while suggesting what to do to fix this growing problem. Krugman covers topics such as the cost of inequality, how the middle class is over extending themselves, education and health care all while appealing to all three rhetorical elements. Krugman’s article has an overall effective and persuasive argument because of the topics he covers and his appeal to the reader with pathos, logos and ethos.

. In the Gilded Age the economy was dominated by the wealthy corporations, “And so it went, in industry after industry---shrewd, efficient businessmen building empires, choking out competition, maintaining high prices, keeping wages low, using government subsidies” (Zinn 257). This is seemingly what is happening again in the 21st century; the level of inequality has peaked once more with, “…inadequate wages, poor social mobility, lack of access to universal healthcare and basic social safety nets, limited labor rights and attacks on unions, a tax system that benefits the rich in general and unearned wealth in particular” (Morning's Minion

“Growing Apart: The Evolution of Income vs. Wealth Inequality” written by Michael Cragg and Rand Ghayad is an article about how wealth distribution in America has dramatically changed within the last three decades and how it has become one of the most political and economic trends in this nation. The main priority of the article is that it talked about how the wealth and financial statues in the United States has favored in the upper class and has opposed the middle and lower class within the last three decades. The first subdivision talked about how income inequality and wealth inequality are both different and how wealth inequality has a bigger negativity on the United States economic growth. The second subdivision talked about how if the

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

The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.

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

David Leonhard is known to be a credible source due to the fact that he won a Pulitzer prize on his commentary as well as being the author of an online e-book. Now the main argument of this article is that inequality is and will always be a problem in society’s to come. The point of the article is to tell about how inequality is a problem. It once was severely bad, but did get better. Yet it is now starting to decline back to the older times. The information is reliable since it provides credible facts and that it comes from a credible man. The chapter is more objective than biased by stating the problem and then a way to correct it. The article begins by david explain a story of him talking with a man named Thomas Piketty about his ideals

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.

These critiques are supported by a 2013 study challenging Piketty’s work. The study used a more comprehensive definition of income as offered in the above paragraph above. Column 1 of Table 1 shows income growth from 1979 to 2007 using the Piketty methodology. In each column to the right, the study provides a more general definition of income so all factors are accounted for. Although it shows greater growth for all groups it also shows much greater growth for the higher levels (Armour, 2013). Imagine a recent college graduate. He would likely be in the poorest twenty percent of Americans and let us say they are earning thirty thousand dollars a year. If we moved forward twenty-eight years, and all else being equal, they would be making forty thousand. At the same time, another college graduate who comes out richer would start out in the middle, earning fifty thousand a year. In the same period of time, and all else being equal, she would be earning seventy thousand. In real life, like this example, the rich person was getting rich faster than the poor person was getting rich but both were getting richer.

In “Capital in the Twenty- First Century” (2014), Piketty investigates the question of; what do we really know about how wealth and income have evolved? How can prejudices and stereotypes define equality? How is it possible to have debates without actual data? Piketty stresses the importance that inequality is brought to everyone’s attention as people see different aspect of it and thus democracy should not be left in the hands of the expert only. Conflict can however emerge when people have different views on inequality, for example some might view it as naturally decreasing or that it will automatically result in equality over time. This is where the importance of accurate information comes in.

The explanation for income inequality has been a controversial topic for economist. In effort to explain this Thomas Piketty wrote his New York Times best seller “Capital in the Twenty-First Century”. In the nearly seven hundred-page book he analyses the past events in the Europe and United States Economies and using that data to create new methods for explaining current economic events. With this he concluded that if rate of return on capital were greater than real economic growth there would be significant income inequality (Holcombe 2015). However, there is some controversy on his evaluation and interpretation of the information. This essay will discuss how Piketty came to this conclusion, the arguments against his interpretations, and