Implications of income inequality. Does or should inequality matter Why or why not - Essay Example

INEQUALITY By Inequality in economy Inequality in the economy could help grow the economy. Economists argue that redistributing the income from the rich to the poor could hurt the economy. There will be costs involved in this redistribution of wealthy. Trying to reduce the gap will have a negative impact on the GDP (Kakwani, 1976, p. 18).The reason for existence of this inequality is government policies. Most governments have a primary income, which is salaries that is unequally distributed (Engelmann, 2004, p. 34). It will create a large pool of taxes for the government to draw from.

The taxes for the high earners are very high, compared to the low earners. The government will get enough funds to run its operations (Chambers, 2008, p. 98). Countries that support inequality experience political stability. Those who do not support this face welfare crisis (Hanushek, 2006). The governments will pay heavy for creating a monetary union without political unions. Thus, it creates instability. It is very hard to have equality of opportunity (Navarro, 2007, p. 100). There will be economic efficiency in the presence of inequality.

The poor in society will have an incentive to work hard. Because of the need to be high earners. In an unequal society, there are limited resources. The government will be able to gain resources from the taxes garnered from the rich (Harmon, 2009, p. 19).There is no social justice in equality. The poor will access low standards of living and do not receive social amenities like healthcare. Those with great wealth provide to their people and take the opportunities meant for the little wealthy.

Thus, the cause of injustice (Arrow, 1996, p. 12).Some economists believe degree of inequalities is necessary for working of free markets. In a free market, income inequality will be a fact. There is no equal income and the rich will have their say in the markets. The governments of various countries fail in putting up an equal opportunity for all (Barbanel, 2013, p. 1)Reference ListArrow, K., 1996. Intertemporal equity, discounting, and economic efficiency. New York: Yale.Barbanel, H., 2013.

In a Free-Market Economy Income Inequality Will Always Be a Fact of Life. Economics, p. 1.Chambers, R., 2008. Profit, directional distance functions, and Nerlovian efficiency. Washington: Springer.D Engelmann, 2004. Inequality aversion, efficiency, and maximin preferences in simple distribution experiments. New Orleans: American Economic Review.Hanushek, E., 2006. Does Educational Tracking Affect Performance and Inequality? Differences‐in‐Differences Evidence Across Countries*. Atlanta: Wiley.Harmon, C., 2009.

Investing in early human development: timing and economic efficiency. New York: Elsevier.Kakwani, N., 1976. Efficient estimation of the Lorenz curve and associated inequality measures from grouped observations. Chicago: Econometric Society.Krugman, P., 2014. Liberty, Equality, Efficiency. Liberty, Equality, Efficiency, p. 1.Navarro, V., 2007. Neoliberalism, globalization, and inequalities: Consequences for health and quality of life. New York: Oxford.PK Porter, 1987. Economic efficiency in cooperatives. p. 245.