Why Wealth Inequality Is Way More Complicated Than Just Rich And Poor

James Madison once stated inequality of the rich and poor predicament to be “evil” and believed that the government should avoid an “immoderate, and especially unmerited, accumulation of riches” (Johnston, 2016). As one of the founding fathers of our nation, James Madison had a concern about the separation between the rich and the poor. He felt the government should do what it could to avoid the separation, which one can infer that he meant for the government to tax the rich by a greater percentage, thus reducing the financial burden on the poor. A rift has always been present between the rich and the poor throughout history. Depending upon the job, the working class may or may not make enough to support a family. At this point, the

According to Inequality.org, “We equate wealth with ‘net worth,’ the sum total of your assets minus liabilities. Assets can include everything from an owned personal residence and cash in savings accounts to investments in stocks/bonds, real estate, and retirement accounts. Liabilities cover what a household owes: a car loan, credit card balance, student loan, mortgage, or any other bill yet to be paid. In the United States, wealth inequality runs even more pronounced than income inequality” (Wealth). Wealth disparity affects everyone in America. When the top twenty percent of earners in America take over fifty percent of total earnings in any given year, It can be see as very unfair by anyone who is in the middle class and especially the lower class of citizens in the U.S. It is safe to say that both sides of the political world (Republicans and Democrats) are equally worried about how economic inequality will affect their children and future generations. No matter who you ask, rich or poor, and whatever their opinion on the shape of economic distribution in America is, they most likely have a unrealistic sense of the state it is actually in.

In Thomas Shapiro’s “The Hidden Cost of Being African American”, Shapiro goes in depth on how wealth in America is disproportionately dispersed between different nationalities. Mainly between Caucasians and African Americans. Shapiro has helped paint the image of wealth inequality and has shown how this is even more staggering than the wage gap between African Americans and Caucasians. Some of the theories he indirectly uses in his book and that I will be exemplifying are generational wealth and support systems, education, and the idea of how poverty only begets more poverty.

In today’s capitalist economy, where economic transactions and business in general is centered on self-interest, there is a natural tendency for some people to make more than others. That is the basis for the “American Dream,” where people, if they worked hard, could make money proportional to their effort. However, what happens when this natural occurrence grows disproportional in its allocation of wealth within a society? The resulting issue becomes income inequality. Where a small portion of the population, own the majority of the wealth and the majority of the population own only a fraction of what the rich own. This prominent issue has always been the subject of social tension

Reich starts his exordium with a distribution of where American workers found themselves in the early 1990’s in reference to where almost all American workers were just 20 years before. Reich placed most of the workers that contributed to the economy during the Nixon administration as being in one boat, analogous to the famous quote by G.K. Chesterton, “We are all in the same boat, in a stormy sea, and we owe each other a terrible loyalty.” Under Reich’s distribution you were still in a lifeboat, but the sea state and your future could be rough or smooth sailing depending upon your chosen profession. To which boat one found his or her self was directly related to how

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.

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.

Furthermore, when analyzing the different classes, and the distributions of wealth and income in the United Sates; for instance, the upper, middle, and lower classes – it is an astronomical amount of wealth that the top 1 percent acquire. It is also noted by Johnson & Rhodes (2015), “that income and wage inequality have risen sharply over the last thirty years” (pg. 228). Equally important to this, is how the average change in income is divided in Americas quintiles and the widening gaps. For example, in Table 5.2, while the lowest fifth quintile increased from $11,128 to $11,361 – a difference of $233.00 from years 2006 to 2012; the highest quintile increased from $289,446 to $319,918 – an exponential increase of $30,472 (pg. 229). With income inequalities at this rate, it is difficult for the majority of the United States to experience upward social mobility. Pursuing this further, in a line stated by Johnson and Rhodes (2015), “The wealthiest Americans can live on the dividends from their investments without having to touch the principle or work for a salary” (pg. 230). From this, it is visible to see how society has compartmentalized different levels of functions to keep a so called balance for the greater

In today’s world there are defenders of the current distribution of income in the United States such as the Heritage Foundation, which says that America isn’t a caste society because higher income individuals can possibly have a low income the next year and vice versa (Krugman 146). In response, Krugman states that countering economists, sociologists, and media outlets rather exemplify that it is more of a caste society than people would believe and the gaps have become far wider and difficult to cross (146). It is true; however, that America was once a place of substantial inter-generational mobility compared to today. In 1978 adult men whose fathers were born into the bottom 25 percent, 23 percent of those men made it into

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.

The difference of income and workers conditions has been a timeless conflict present throughout history of the United States. In the past workers were faced with deadly work conditions and around the clock hours for little pay. These unjust conditions dramatically increased during the Industrial Revolutions that the United States experienced in the nineteenth century. The latter period of industrialization produced the organization of the first labor unions in the Country, namely the Knights of Labor established in 1869 and the American Federation of Labor established in 1886. In present day countless unions exist, and are a lot less needed than they were in the early industrial days of the United States (Brinkley, 2012).

In the book by Jacobus, A World of Ideas, Robert Reich writes the article, “Why the Rich are Getting Richer and the Poor, Poorer”, and he uses a metaphor to describe the three economic groups that are now in different boats. He compares how the routine producers’ boats and the in-person servers boats are sinking while the symbolic analyst is rising. He also discusses how immigration, and technology competes for the job of routine producers and in-person servers while the symbolic analysts are in such great demands. Robert Reich is correct about the symbolic analyst have the potential to become wealthy and it is expected for them to have high level education and job experience: for example, being a student is considered as an in-person server but taking high education, such as nursing, will make them be identified as a symbolic analyst.

In the book by Jacobus, A World of Ideas, Robert Reich writes the article, “Why the Rich are Getting Richer and the Poor, Poorer”, and he uses a metaphor to describe the three economic groups that are now in different boats. He compares how the routine producers’ boats and the in-person servers boats are sinking while the symbolic analyst is rising. He also discusses how immigration, and technology competes for the job of routine producers and in-person servers while the symbolic analysts are in such great demands. Robert Reich is correct about the symbolic analyst have the potential to become wealthy and it is expected for them to have high level education and job experience: for example, being a student is considered as an in-person servers but taking high education, such as nursing, will make them be identified as a symbolic analyst.

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.

The way money is distributed within the United States is unbalanced, with the majority of the wealthy owning the bulk of the country’s wealth. Wealth can be defined as a person’s assets and monetary gains. This unequal distribution has caused numerous economic and geographical problems, such as how resources are divided among countries, how developed or industrialized a country is in relation to wealth distribution and the wide spread of disease and lack of medical attention due to an absence of money. In this paper I will address the negative and positive aspects associated with wealth distribution. I will explain how resource distribution contributes to an area’s economic growth. I will also discuss varying ways to measure wealth