Will Inequality Continue To Rise In The Coming Decades (Essay Sample)

WILL INEQUALITY CONTINUE TO RISE, OR WILL IT FALL IN THE COMING DECADES
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Introduction
Inequality is a matter that has become a subject of debate in most developed countries and superpowers in the world. It is a matter that crops up whenever analyst talks about economic growth and development. Inequality is the difference in economic endowment among people or citizens of a nation. Every time economist talk about people living under one dollar a day while others extremely rich, what they intend to explain is inequality among human beings and its effect to the countries welfare and living standards. Recently the president of the most powerful country in the world stated that inequality is the current problem in his nation, a problem which is extremely difficult to solve and it can be solved gradually not immediately. This demonstrates that inequality is a global problem. In the world, it is found that around twenty percent of the people are superrich whereas the other eighty percent consist of middle income earners and majority of the eighty percent living below the poverty line which is universally referred to as living before one dollar a day. This paper will look at the trends in inequality over the years in the United States of America and internationally, this paper will examine the trends in inequality and the patterns over the year with the aim of establishing whether inequality in increasing over the years or it is decreasing. Factors contributing to this economic problem will be examined. The World Bank is one of the institutions which provides data on inequality and provides guidelines on measures to be taken to address this issue. Addressing inequality has become a hurdle to both developed countries for example United States of America and third world developing countries mostly found in Africa.
INEQUALITY
Inequality in a lay man’s language can be defined as the difference in many aspects for example size and circumstances. The state of imbalance and variation between two things is also known as inequality. Economists usually define inequality in terms of the income variations among citizens of a nation in different localities. The variations found among individuals or groups in a certain population by the different measures of social and economic well-being is known as economic inequality (Lakner and Milanovic, 2013). It is commonly referred to as the difference or the gap between the rich and the poor in reference to economic endowment and ownership of production resources. Inequality varies among people, times and the economic systems which are different among countries in the world. Lack of equal employment opportunities, good quality of education and access to good developed infrastructure are ingredients of inequality and these limited resources to some sections of the population limit their ability to become productive at their optimum levels thus continue to live in abject poverty and in areas characterized with poor sanitation (Lakner and Milanovic, 2013). In the world the distribution of production resources such as land and capital is highly skewed. The few rich are the owners of a big proportion of the resources while the majorities who are poor have nothing or something too little which barely sustain them. Studies by established economists cited that inequality is a big social problem which in the long run hinders economic growth and development of a nation. Inequality discourage people from investing because they have insufficient capital for investment and are only left focusing on getting food to eat inequality is measured by observing factors such as household consumptions, differences in incomes and an individual’s income dispersion. We can use instruments such as GINI-COEFFICIENT. A Gini-coefficient is a statistical dispersion measuring the income distribution among citizens of a nation. This coefficient is globally used to measure inequality (Korzeniewic and Moran, 2009).
CAUSES AND CONSEQUENCES OF INEQUALITY
Labor market has been attributed to be the major cause of economic inequality in these modern times. Modern labor markets are driven by wages which is good but there exist imperfect competition among firms in the sense that: information is not easily available to all stakeholders in the market, educational opportunities are not equal among individuals thus resulting to market failure (Lakner and Milanovic, 2013, p.15).in every market there exist challenges which can only be corrected by the government in place. Wages should be driven by the forces of supply and demand which is actually not the case in many markets. For example when a company is making super profits you will find that the firm will not add salaries in the same proportion to its employees thus the owner of the firm will continue being super rich while the economic level of the employees will remain relatively unchanged. In the long-run the owners of productive resources will continue being rich while the worker will continue being poor thus the wealth gap continues gradually over the years (Thomas, 2016). The interaction between supply and demand usually results to lowering of wages and thus citizens continue to suffer and get little income which only sustains them.
Inequality on another hand can encourage people to set up businesses to sustain themselves. This investments result from necessity but not opportunity thus the investment results to minimal technological advancements which would have fostered redistribution of resources (Thomas, 2016). Another cause of inequality in the world is the taxing systems used by governments to collect revenue from its citizens. Income is taxed progressively that is, the taxable base increase as income increases (Lakner and Milanovic, 2013, p.22). When progressive tax is increased it can progressively achieve distribution of resources and wealth across the people. In some countries, the rich are taxed at a lower rate as compared to the poor, basic goods are taxed more than luxury good thus contributing to the big gap between the rich and the poor. Economists have cited that policy which was used during the Second World War is responsible for the growing inequality among the Americans (Korzeniewic and Moran, 2009). This policy have limited capital access to low and middle income earners and made it easier for the wealthy to access capital thus resulting to existence of a few superrich and majority middle income citizens. This policy increased by a very big proportion income inequality in the United States of America.
Researchers done by Piketty (2014) in the USA cited that the wealth gap which has been steadily on the rises can be brought into check by increasing the access to education among all classes of citizens in America. Education is thus a very important factor which creates inequality in the world. Education is a key determinant which is looked at when an individual is seeking an employment position, the more a person in educated the more the individual will be likely to get a higher wage and a secure position of employment with good benefits and allowances which improve the standards of living of the individual and alleviates poverty in his life and family (Piketty, 2014). On the other hand, those with little education are often left with casual jobs for example building, being messengers and providence of labor in farms and ranches as casual laborers. Majority of jobs available to people with little or no education are hard tiresome and have little pay. Some if these jobs are seasonal rendering one unemployed when the season for example harvesting or building is over. The little income is used for consumption and none is left to save or take children to prestigious schools to get quality education. With poor education the children of the poor also end up door casual poor paying jobs and thus the poor remains poor and the cycle goes on and on increasing the gap between the rich and the poor (Milanovic, 2011) .
On the other side, the rich educate their sons and daughters on prestigious institutions with high quality education and training. These educated children often get prime and very highly paying secure jobs thus protecting their future and maintaining their high class living standards. This uneven availability of quality education for all in America has born inequality in the country and the gap goes on and on (Milanovic, 2011). Poor education leads to low wages which in turn result to little or no savings and no investment. The future of the poor children is that not secured. The rich and well educated accrue very high income thus able to save and invest to secure their future of their children and thus as years progress the rich continue to be richer while the poor are left trapped in poverty (Milanovic, 2011). Inequality is often measured by ones income, expenditure and wealth. Education offers one an opportunity to get high income which is used as capital to generate wealth thus increasing expenditure of health, education and investments (Saez and Zucman, 2014). Creation of quality education for all can in a great way bridge the wealth gap between the few rich and the majority poor. It was estimated that if an average worker in the United States was able to be educated one more year, this increase in skills would contributed an additional 105billion dollars in the growth of the united states in a span of five years (Saez and Zucman, 2014).
Education in high United States high school between the year1910-1940 was structured in a way that it equipped the learners with skills and competence to work in firms. This reduced price of skilled labor but at the same time fostered economic growth and development thus uplifting the social welfare of the poor and bridging the wealth g...