The law of attraction says that focusing on positive or negative thoughts will bring either those positive or negative thoughts into positive or negative experiences. Most people wouldn’t believe that such a theory could possibly work in their lives, but I personally believe that this theory is one of the main reasons that America has such a large gap in income. In the USA today, the gap between the rich and the poor has steadily increased to the point where there the middle class has all but disappeared. People are either getting richer or they are getting poorer. To a lot of people this may seem like a horrible thing and initially I also thought such income inequality was outrageous. However, as I researched the issue and discussed the …show more content…
Over time, income inequality promotes growth in many areas and anyone pursuing an education receives an income reward for their efforts. Hongyi Li, an Ohio State University graduate with a PhD in Managerial Economics and Heng-fu Zou, a Harvard University graduate with A PhD in Economics, give a precise mathematical explanation of how income inequality promotes economic growth. They argue that: “by dividing government spending into production services and consumption services—the former enter the production function while the latter enter the utility function….With this extension it is found that, within a typical political-economy mechanism on income taxation, more equal income distribution can lead to higher income taxation and lower economic growth.” (Li and Zou, 325) Li and Zou explain that by dividing government spending into equal amounts of production services and consumption services, it is found that this equilibrium of income will overall increase the general population’s taxes, and lower the economy 's growth rate. Becker and Murphy illustrate Li and Zou’s theory by showing that throughout history, when income inequality increased, the rate of technological advancement also increased, and incomes for the average household also increased. Becker and Murphy focus on the importance of education when they discuss income inequality, which supports my hypothesis, but the main point is that
A cause of income inequality could be the jobs that people have. “In the United States, income inequality, or the gap between the rich and everyone else, has been growing markedly… (Income Inequality, para 1).” There have been no signs of income inequality changing for the lower classes, or getting better, therefore, it has become a very concerned issue upon Americans. “America’s top ten percent now average at least nine times as much income as the bottom 90 percent (Income Inequality, para 2).” Many people who have a big dream have jobs that pay minimum wage, which makes it hard. With the rich getting richer, it makes it hard for the lower classes to get a shot at being at the top with them. This also makes it hard to close the gap between the three classes.
Gary Becker’s and Kevin Murphy’s “The Upside of Income Inequality” analyzes the correlation between overall economic development, the importance of education and the effects it has on increasing income inequality. Becker’s and Murphy’s article presents a study taken in China that shows the increase in income inequality raising at similar rates as economic growth. This ultimately leads to a decrease in the amount of people facing poverty and better living conditions for the poor. During China’s rapid rate of economic development “inequality rose, [but] the number of Chinese who live in poverty fell from 260 million in 1978 to 42 million in 1998. Despite the widening gap in incomes, rapid economic development dramatically improved the lives of China’s poor” (Becker and Murphy 581). The authors also state that income inequality is in fact a natural result of economic development because it “raised the standard of living for both the rich and the poor” (Becker and Murphy 582). Education also effects the average earnings of Americans. The importance of receiving an education has
Income inequality can lead to an increase in the productive capacity of resources and so an increase in real GDP per capita. Economic benefits are mainly derived from the incentive effects of inequality. Firstly, inequality encourages the labour force to increase
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.
Presently the United State 's income gap between the middle class and wealthy is undoubtedly significant. Some say that income inequality is
Although the income inequality is very serious in china, some economists based on “Kuznets's Inverted U-Curve Hypothesis”, still argue that is good for Chinese economy. The income inequality is the reasonable products of industrialization. They believe that China is in the initial stage of industrialization, so the income inequality is positive to Chinese economy like proving cheap labour force. However, they ignored many serious damage of income inequality to Chinese society and future economic growth.
This article titled "How income inequality hurts America” written by Steve Hargreaves explains the thesis statement itself. On the other hand, he states it’s not just income equality but it’s also lifespan inequality, education inequality, and declining economic growth, which refers to the graphs shown above the starting paragraph. Mr. Hargreaves then points out a fact that the rich are getting richer, while the poor and the middle class are falling behind. Another fact concerning this issue is the 400 richest people outnumber the wealth of the bottom 150 million put together.
“The 0.1 percent in the U.S. today account for more than eight percent of the national income” (Freeland). Economic inequality is also known as income inequality, and it has always been a problem. The gap between the rich and the poor is growing wider and wider because wealth grows faster than the economy according to Thomas Piketty, and people are not able to move up through economic classes according to Paul Krugman. Economic inequality is a problem that can be overcome with raise the minimum wage, expand welfare benefits, and provide higher education.
society, the idea of income inequality is a frequent topic of argument. Many believe that a large income inequality distribution has a negative effect on a society, while others feel that it has very minor, nonexistent, or even positive effect. Some of the factors that affect the income inequality in the United States are low minimum wages, education, and discrimination of race and gender. The swelling income inequality gap in the United States has created numerous social, health, and human capital problems. There is a ton of information to digest regarding who the majority of money is split between and who is actually benefitting from it. There are numerous factors that affect the income inequality and the data associated with the results of it are rather
Income inequality has been a major concern around the world, and it mainly links to how economic metrics are distributed among individuals in a country. Economists generally categorise these metrics in wealth, income and consumption. Wilkinson and Picket (2009) showed in their studies that inequality has drawbacks that lead to social problems. This is because income inequality and wealth concentration can hinder or delay long term growth. In 2011, International Monetary Fund economists showed that less income inequality increased the duration of countries’ economic growth spells more than free trade, low government corruption, foreign investment or low foreign debt (Berg and Ostry, 2011).
Saez presents his credible data through the use of ethos. Saez is a well-known economics professor who devotes time to publish reports about the income inequality in America. Although his reports are strictly opinion, he uses enough historical statistics and actual facts to make his writing credible. Many historical theories lay a foundation that helps prove income inequality is necessary. Social Darwinism is a collection of theories that explain why the rich get richer, while the poor become poorer. Social Darwinists generally claim that the strong and successful people should see their wealth and power increase while the weak and unmotivated should see their wealth and power decrease. This is an excellent explanation for the cause of income inequality and why it shouldn’t be stopped. Wealth can sometimes be a direct result of the hard work and dedication of a person that is motivated to become successful in life. While most people may work as hard as they can and only make an average income, there are the few exceptional cases where people can prosper and rise to great economic stability. For all other citizens, the reality is they may be motivated and driven to become successful just like everyone else, but can only manage a low or middle class job. This reality
The educated must not be minimized by the undereducated entitlement to income advancements above those that obtain a college degree.
In the article, Leonhardt mentioned that governments promoting laws to balance the wealth and education is probably a way to fill in the gap which renders inequality. However, from my personal point of view, government control may lead inequality decline, while it takes a chance to dismiss justice in our human society.
Income redistribution refers to the concept of transferring income from the wealthy individuals to the less wealthy individuals through social mechanisms such as monetary policies, charity, welfare, land reforms, and taxation among others. Income redistribution affects the entire economy rather than selected groups of individuals. The concept of income redistribution emanates from the existence of income inequalities within an economy. Income inequality depicts a gap between the highest and the lowest income earners in an economy (Tullock 13). Income inequality is sometimes considered appropriate in societies since it acts as an incentive in free market economies, whereby in the absence of inequality, elements of economic stagnation and lack of enterprise would emerge. Conversely, income inequality is criticized on the basis of introducing contributing towards the development of key problems in the society, including progression of poverty levels. This paper seeks to explore the concept of income redistribution and its key pros and cons.
Inequalities exist an all aspects of life. The nature and result of such inequalities shapes our social as well as economic lives. As people progress through their educational life certain inequalities will result in different outcomes of schooling for different sets of people. “In post war Britain pupils from a working class background are constantly found to gain fewer academic qualifications, to be under represented in institutions of higher education and to end up in jobs offering little opportunity for social advancement'; (Brown 1987 p11). It is inequalities such as these that are present both in and out of school that will determine life chances of individuals. It is commonly accepted that education is the main