Should We Keep or Eliminate the Inequality in the Economy - Research Paper Example

Economic Inequality Introduction The topic of my research paper is: Should We Keep or Eliminate the Inequality in the Economy? My thesis is that through this research I can be able to tell the people how the inequality affects the economy around the world. Because for my rhetorical analysis paper, I’ve chosen an article which is about the inequality in the economy, my major is economics, I am interested in the economics thesis research paper. The current debates on inequality in the economy have been vague and of misleading and confusion nature to the general public regarding the explanation and importance of an increase in income inequality. What is clearly evident is that somehow the distribution of income always has an unsubstantiated link to human wellbeing. The fluctuation in income within individuals is jointly due to ethically wanted and unwanted mechanisms. When instances of inequality are heightened by injustices, the crisis is actually the initial malign cause and shouldn’t be blamed on the consequential inequality (Bonica et al., p103-11). A lot of elite persons and good thinkers sometime obscure the difference between the national population and society; they usually merge this to be having the same meaning. Hence, ignore the facts and consequences of immigration and trade accrue on the issue of justice, welfare and inequality. There is no solid evidence to support that income inequality leads to ruin of democracy and more authority for the rich. Formulating policies that effectively tackles the issue of poverty and poor education will help in solving the inferiority voice of the poor politically. The inequality in economy can be a major diversion to handling the factual problems faced by the society; poverty and social injustice (Bonica et al. p.105-20). Body Inequality in economics explained To better understand the concept and meaning of the term inequality in economics I interviewed Mr. Qi Han my economics TA, in our university economics department and he is also a doctor of economics. This will enable me to form a solid foundation for effectively handling the research topic question. Inequality in economics can be therefore referred to as the inconsistency in the sharing of economic resources, earnings and wealth among a social group or particular population. The inequality is usually within a society can also be replicated to the international level where inequality is considered between different countries. Various studies differ on the significance of inequality in the economy. Some term it as a social problem while others argue it endorses investment. However, extreme inequality is quite disparaging. It can also be a hindrance for future economic development. A well recognized tool for measuring economic inequality in the world is known as Gini. Using the information from the recent Gini results that show that the developed countries have less inequality than developing and disadvantaged countries can help us deduce a mechanism of eliminating the inequality (Harford n.p). On the other hand, some developed countries, such as China, used to be very poor and behind during the past three decades, at that time, China’s leader made a policy: “let somebody get rich first”. This helped China to develop economically so fast. But until now, this policy still plays a role in Chinese economy, and it makes a huge inequality, but it still can help Chinese economy in somewhere, we might keep the inequality. Therefore, the inequality is big and ambiguous issue in the world (Harford n.p). Economic inequality influence in developed countries America doesn’t have much economic inequality as the developing nations but it is not immune to the recent developments of creating an unequal society. There have been a lot of deviations from tackling the real issue of inequality. The public policies present have done little to solve the issue due to ignorance of putting the right measures in place. Democracy seems to be at the edge of disappearance as Paul Krugman a columnist in the New York Times puts it: Even if the forms of democracy remain, they may become meaningless. It’s all too easy to see how we may become a country in which the big rewards are reserved for people with the right connections; in which ordinary people see little hope of advancement; in which political involvement seems pointless, because in the end the interests of the elite always get served (Krugman n.p). This is a painful setback for any liberal and its fulfillment should be avidly opposed. Actually it occurs in many countries, and can cause misery and strife any time. However it is important to ask ourselves if this is the actual path we are moving towards if we don’t reduce the economic disparities. Many scholars agree that this inequality is not right for the general growth of the society. This raises the question if it is possible that this consistent trend of inequality may create an illiberal regime in America whereby from time to time only the well-connected and rich person’s control the economy and rule (Piketty & Saez, p.11-30). Nevertheless, this point of view by Krugman and others can be disregarded as not the truth of the matter. There are many misconceptions and vague ideas through the discussions by various prominent people in the economic brackets. In trying to evaluate and clarify on this issue of inequality there are confines to which I can reach in the research for this paper. For example, it would be difficult to give the full account on the pros of equality and cons of inequality. In the case that I could clearly give full details some political and moral concepts can be certainly contestable. It is not essential enough to be having a lower Gini coefficient for the sake of having it. Even if the income gap is reduced there is no reason for applause, since this was not actually the main problem. A lot of Americans strive to get a decent work, and maintain their families with no insecurity both physically and economically. Many are abused due to our laws that leave them susceptible to abuse. Many are always afraid of losing their hard fought fortunes in distant lands far from their homes. Many children are quite disadvantageous in that they are provided with limited chances to advance their intellectual skills necessary to tap to the vast opportunities present in the society. It is not helpful to focus people’s attention on the economic disparities that exist or to rail against them. People don’t need to be demoralized or incited towards it (Harford). This would not only separate us from ourselves but will also draw us more away from the institutions that fostered our growth and availed opportunities to us. There is need for each individual to recognize how the existing marketing systems promote our overall growth and raise in living standards. This can be through encouraging more entrepreneurs and healthy competition strategies. In the absence of this our democracy would reduce significantly hence people would be lacking favorable opportunities to promote their development (Miller). There have been numerous protests and campaigns from time to time pleading to the government to reduce these incomes inequalities yet no much change has been seen. The question is; why aren’t people so reluctant to bring change? The best answer could be: the impact of technology on cost and qualities of things usually obscures people’s perceptions on these issues and the manner with which to judge them. The consumption experiences between the rich and the rest of the population have, are actually narrowed down due to the rising and falling of the income gap (Miller). There is little effect felt in purchasing or use of things. For example driving a lavish Mercedes Benz and an ordinary affordable car there is actually no noticeable difference as compared to a person who walks to work and the one who drives to work. Is this useful in explaining why people never put up so much revolt? Probably it is. Technology has simplified things and people can be able to acquire equivalent options of things that are more expensive to them at a cheaper price. The alternatives are able to provide the same services at a lower cost (Miller). Role of Democracy in Solving Inequality Studies have shown that the practice of a much democratic society has proportionally also increased the inequality in economics in the developed nations as well as the United States. These inequalities have basically favored the few rich and people of influence in the society. Though the group may seem small and can be balanced through the exercise of democracy in voting. However this isn’t the case (Bonica et al.). The propagation of this inequalities and the failure of democracy to reduce these inequalities may be due to. Basing an explanation by considering the U.S. the following are possible reasons (Bonica et al., p.103-24): 1) both the two political parties in U.S. freely accept the free market capitalism system which gives government minimal support, low taxes to high income earners, and deregulation of some businesses; 2) low voter turnout among the poor has ensured that the high income people secure a substantial number of votes; 3) a large percentage of the populace don’t seek social insurance from the government due to increase in existent income and assets; 4) the wealthy in the society have ensured that they can control or effectively influence legislative, electoral and regulatory mechanisms through immersing their resources to lobby and fund political campaigns; 5) there are institutions which make the political process quite distorted through lowering accountability of elected individuals and others that correlate with politicians to form a policy stalemate. Inequality in the developing country According to the Gini results developed countries seem to be having the highest economic inequality. The senior government officers and the senior entrepreneurs control almost 80% wealth of the whole country. For example countries such as India, China and Brazil that has high percentages of Gini coefficients as compared to the U.S. and U.K. In an article in the Indian post wrote by Tim Harford he offers a comparative opinion about the various manifestation of inequality in different regions of the world and its implications. Although he highlights on inequalities in Brazil and China he focuses mostly in India (Harford). India is a good country to use as a yard stick in this context because it is ranked as the most promising economy in the world. Inequality is high in India as it is in countries of its caliber in terms of economy and future projections. Harford explains the new term in economic inequality that is “inequality possibility frontier” to mean (Harford): taking for instance, In a subsistence society, significant inequality is impossible: if resources are unevenly distributed, people will starve. The richer a country gets, the greater the proportion of resources that could go to a smaller number of people, and the more unequal it could become (Harford n.p). This prospects show that possibly the future India will have s system whereby the rich have control of all the resources. However, there is no need for alarm as India can emulate examples from China’s leader after Maoism quote “Let some people get rich first”. This is a strong view in that in reality economic growth doesn’t actually automatically occur it takes a process. There is need to develop new mechanisms of trade and doing things. This is in line with what Brazil’s Lula Da Silva did when he led the country to economic revival when he ensured that the countries fortunes benefited the poor and the middle class responsible for driving the country’s consumer economy. Harford proposed the following ways to reduce the economic disparities (Harford): Steps to Solve Economic Inequality Taking India as an example for this study the recommendations are: First, there is necessity to ensure that various businesses are given ample space to develop. Although this is necessary, businesses need to work under legal and regulatory mechanisms developed by the government. But it is important for these government laws to be at least simple to foster easier set up and register the business enterprise. What’s astounding is some of the now successful business enterprises in India sometime back were never considered by the government to be important. Thus sometime recognition is not possible and businesses need to work their way up (Harford). Second, India has good reputation of education in its higher learning institutions (universities) across the world. However, its primary education is poor and thus needs to improve on this sector to maximize on the available economic opportunities. Thus good and quality education is an important factor in handling the issue of inequalities in economics. It helps individuals get the essential knowledge and skills to tap the available opportunities in the society. Third, is to deduce good strategies to ensure social programmes are efficiently managed. Resources should be ensured that they reach the target groups and people. A lot of resources sometimes get to wrong hands which don’t help solve the situation (Harford). Some people are in the opinion that if the poor have their standards of living raised it is none of their business if the rich get richer. However Harford sympathizes with those of this opinion, though stresses his main aim isn’t inequality but poverty. Despite this he acknowledges that it is impossible to eliminate inequality completely. A large share of the income gains of various countries usually go to the rich leaving the ordinary individual suffering. This doesn’t necessarily mean they acquired it illegally. The contentious issue here is that the sums implicated are extensive (Harford). Conclusion The resounding conclusion for this paper is that economic inequality will always persist. But what really matters is how countries manage their fortunes to ensure that their poor and the middle class continue enjoying a rising living standards. To change the tradition of inequality there is need to craft new public policies that promote development especially among the comparatively underprivileged in the society. Economists can sometime be disposed to ignore the part public policy and politics play in spawning and continuing inequality. It is a fact that, Inequality can be possibly due to various technological and economical shifts, and social change. However, such changes aren’t independent to political decisions already made or not made yet. For instance, Piketty and Saez (2003) argue that some of the causes of drastic shifts in income inequality are dynamics in fiscal policies, wars and economic recessions. Hence when discussing economic inequality these factors need to be considered in arriving at possible recommendations and decision making. The debate of Inequality in economics is nowhere soon to end. Reaching a consensus on whether to completely eliminate or to keep it is still a disagreeable issue. Future and current economists that are interested on the inequality topic should not be constrained to one particular point of view. It is true economic inequality is not good for the society or country development. But having a totally equal economy is practically impossible. We can coexist well in unequal society as long as our standards of living continue to rise. The focus therefore should not be to completely eliminate these economic disparities but to tackle issues of poverty and injustices in the society. Works Cited Bonica, A., Nolan, M., Poole, K.T., and Rosenthal, H. "Why Hasnt Democracy Slowed Rising Inequality?" Journal of Economic Perspectives 27.3 (2013): 103-124. Harford, T. "Why Equality is better for All." 31 December 2013. India Today Group. . Krugman, P. ""For Richer"." 20 October 2002. New York Times Magazine. . Miller, M. "Inequality riddles." 15 January 2014. The Washington Post. . Piketty, T., and Saez, E. "Income Inequality in the United States." Quartely Journal of Economics 118.1 (2003): 1-39. Appendix Interview protocol Institution: Interviewee (Title and Name): Interviewer: Survey Section Used: i. Interview background ii. Institutional perspective iii. Discipline iv. Demographics Other Topics Discussed: Documents Obtained: Post Interview Comments or Leads: Read More