What Economic Inequality Is - Research Paper Example

?Full Economic Inequality in America I. Introduction Economic inequality is one major concern of modern America because the nation has been known for decades as the country where dreams come true. This is the reason why so many foreigners not only come to the nation to study but also to find a job, and start a brand new life, hoping that they will soon have in their hands the American dream. However, as America faces economic instability, second thoughts arise and the doom of the nation is feared by a lot of analysts. There has always been a great divide between the rich and poor in the nation but that is gaping more and more instead of having it bridged. Policies were changed, people’s benefits are said to have been greatly considered and every law that was proposed was conceived to better the nation and the economic conditions of the citizens. Nevertheless, the struggling America presents herself as a clear example of a nation which can never rise further unless she will find ways to heal economic inequality. II. What Economic Inequality Is Economic inequality includes but is not limited to the gap between the earnings of the rich, the middle class and the poor. Research shows that only one percent of America’s population earns incredibly high salaries, taking home millions in a year (nytimes.com). On another stratum, a far higher percentage average much less than a million annually and a great number are unemployed and rely on welfare. Obviously, there is a great difference among the three categories and the situation is not a new dilemma the nation faces. In the past, there have also been great gaps between the earnings of the rich and the working class but the current economic inequality is found to be worse these days. According to studies, this inequality is due to the fact that there is also a great difference in how people are taxed nowadays. Those who have high earnings are not equally taxed as the regular earners. In fact, it is noted that “tax cuts since 2001 have returned over $100,000 to each person making over $1million per year. These same tax cuts have returned less than $100 per year to those making less than $50,000 annually. For those earning $55,000-99,000, the percentage of federal income paid in taxes has actually increased from 18.7% to 19.5% during that period” (Dolgon & Baker). Looking at this information, it is obvious that the high earners are paying less than the middle class and low earners. Therefore, this economic inequality is not just an inequality in terms of the earnings but also in taxes paid. This is the reason why it is said that the rich are getting richer while the poor are getting poorer because of the discrepancies in how they are treated. III. Causes of Inequality The causes of inequality include the above mentioned reasons such as the large differences in salaries and tax payments. Moreover, it is said that the middle class and those below them buy food and other basic needs only with their earnings while the rich have much to spare and invest in other businesses where they get additional income (Allen). This obviously makes the inequality even greater. Another factor that hugely affects inequality is the ever increasing costs of health care and education. Health care is a very important matter that needs to be considered because it basically affects how a person functions in society. Much is spent in this area because being healthy is the prime concern of citizens, especially the working class, for them to be able to work well and earn. In terms of education, most if not everyone, wants to study because it is believed that education is one of the means to success. Therefore, parents often spend too much on the education of their children. However, when the hopeful students graduate, they find out that there are actually more competitors for a job than the jobs that would suit their education. What happens then is, they tend to become underemployed and paid lesser than what they deserve, losing the chance that they always expected to have in improving their economic status. In addition, students often continue their education through student loans which so often accumulate to enormous amounts by the time they graduate (Rohac). Therefore, instead of working to improve their financial status, they often find themselves working to pay out their loans. In this case, there is no other else who have benefited from the money the hard-working new graduate earned but the fat pockets of bankers. By the time they have paid off their debts, there will be other needs that they have to earn for such as a new family, a new baby coming, housing and retirement plans and many more. Recently, America’s economy had once yet again been shaken and “as income inequality increased, the government propped up spending by promoting easy credit for less wealthy Americans and much of the profit from that easy credit fed the wealth of the riches, widening the gap between rich and poor yet further” (Allen). Oftentimes, people are lured to seemingly good solutions to their problems however, in the end, they often find themselves suffering more financial dilemma than they would have without incurring debts that brought them to more struggles. Resorting to borrowing money from the banks may resolve financial problems in the meantime but it has been proven time and again that this is not a remedy that will really make financial problems better. In fact, most Americans are not able to save because they have to pay interests in the banks which they could have saved if only they stuck to what their money afforded during the times of economic distress. IV. Consequences of Inequality “Paul Krugman, says that ‘in 1970 the top 0.01 percent of taxpayers had 0.7 percent of total income - that is, they earned ‘only’ 70 times as much as the average, not enough to buy or maintain a megaresidence. But in 1998, the top 0.01 percent received more than 3 percent of all income. That meant that the 13,000 richest families in America had almost as much income as the 20 million poorest households; those 13,000 families had incomes 300 times that of average families” (Rohac). As a result of the economic inequality that existed decades ago, the gap between the rich and the poor increased hugely (Speigel.de). For the rich, this may be amazing and agreeable because they do not have to worry about depression and other financial struggles. However, to the poor, the largely evident difference is becoming ridiculous. Most of the regular earners work as hard as the rich and their unequal compensations simply do not make sense and makes them discontented not only with their finances and lives but also with the government. As Allen says, the increase in income inequality “is not just unpleasant, it is seriously hurting the US economy”. Consequently, the people, especially the ninety nine percent, are affected by the pained economy and therefore, they blame no other else but the government. Rohac further mentions that “income inequality is associated with a variety of social ills, such as homicides, teenage pregnancies, physical and mental health problems.” Perhaps it is a cheap act to point one’s fingers at economic inequality as the cause of such social ills but it has to be faced boldly and with consideration to the possibilities that indeed, economic inequality has something to do with the social conditions of people. Some people simple cannot accept the results of their hard work being enjoyed by the rich rather than by themselves and they are inclined to depression which may lead to robbery and other crimes. Some teenagers cannot see a bright future with their economic status and are not able to go to school. Therefore, they are bent to dealing with their fellow teenagers who have nothing else to do but concentrate in running from their problems including resorting to drugs and premarital sex. Although those are not the solutions to such financial problems, with parents busy working and their children out in the streets with no one to guide them, they are bound to finding more problems rather than solutions to their problems. Most access easy money through drug dealing and the results are not always good. Robberies and other related crimes become rampant with the economic inequality and therefore, homicides and even murder. Those who are not able to cope psychologically with the struggles they are presented with their financial problems give in to mental health problems which often keep their families owing more money for their hospitalizations and other medical needs. V. Solutions As shown above, economic inequality is not only endangering individual families but the nation as a whole as well. Therefore, the government should really find solutions that can help the people in their financial conditions. Perhaps, instead of encouraging students to get loans for their college education, the government should provide more scholarship grants, demanding good performances from scholars and ensuring that they will work in the government after graduation. In this manner, the government who provided the student a quality education will in turn benefit from him. Similarly, employees should be given other means of escape or remedies in times of economic difficulties and should not be encouraged to borrow money from the bank. The ordinary citizens should also have to learn from past experiences of others and apply discipline if they really want to save and succeed instead of borrowing for a period’s relief and a lifetime’s financial struggles. Health care should also become a priority of the government. Health care bills that will really give solutions to current health problems and needs should be strategized in a manner that the people will get more benefits from the taxpayer’s money. Hospitals should be improved as well as the services. Moreover, since unemployment is another problem that is really affecting the government’s economy, jobs should be created for the Americans. Outsourcing has become a major loss in the country’s employment so that other countries are benefiting from American companies more than Americans do. This should be strictly controlled so that jobs will always be available even in times of scarcity. It is believed that if every American has a job, resources which go to welfare can be used for other productive projects because the number of people needing welfare will be minimized. Employment is really a great factor that affects many aspects of individual lives as well as the nation. When jobs are available, there would be lesser unemployed and unproductive citizens who will be needing the help of the government in almost every need they have. If people are employed, there will be lesser people who will resort to drugs and other illegal activities. There will be lesser people with mental illnesses and therefore, lesser medical expenses. In other words, when there are jobs available for the people, there will be an air of hope for a better life for everyone and people will be enthusiastic in living and surviving the hardships they face, knowing that they are but temporary because they have bright futures to face. Rohac also mentions in his paper that there should be a change in the mindset of people about economic inequality. People indeed have placed so much emphasis on wealth as the source of happiness but it should be realized again that this is not true. There are so many things that make a person happy however life can never be completely fulfilled if there are other things that trouble one’s life. For instance, an extremely wealthy man cannot enjoy all of his wealth if he is tied to the bed because of sickness. Therefore, the aforementioned author suggests people to find happiness and satisfaction in whatever they are able to accumulate for themselves in terms of money and properties. More than anything, they should acquire a life that gives them satisfaction, purpose and self-worth. These will help people avoid social ills such as those mentioned earlier. VI. Conclusion It has been shown that economic inequality matters a lot to America and her economic stability. Therefore, more serious attention should be given to it and the problem should be remedied as soon as possible. The nation has been under the governance of so many presidents now and the problems that troubled America before are getting more intense. There may have been solutions that have been proposed for this economic issue, however, it has proven over time that the solutions that were given to the people are not really long-term in nature. The benefits that were enjoyed for the short-term remedies more or less brought more problems to the financial status of individuals and therefore, to the nation as a whole. Instead of driving the majority to short-lived solutions, the government should courageously go after the rich instead. The burden of taxing in order to run the government and help the less fortunate should be equally shared by the rich and not be mostly shouldered by the middle class. Perhaps, the rich should also think of expressing their thanksgiving taking the largest share in helping the poor. Compared to what the middle class gives, the rich will be giving some excess of their money. The middle class is actually giving what they could have spent for more food and clothing if given the chance. References Allen, Frederick E. How Income Inequality is Damaging to the US. Forbes. n.d. Web. February 11, 2013. . Dolgon, Corey and Chris Baker. Social Problems: A Service Learning Approach. 2011. USA: Sage Publications. Print. n.a. Income Inequality. The New York Times. October, 2012. Web. February 11, 2013. . Rohac, Dalibor. Does Inequality Matter? Adam Smith Institute. dteyhhjh. Web. February 11, 2013.. n.a. Interview with Economist Joseph Stiglitz: The American Dream has become a Myth. Breuninger. October, 2012. Web. February 11, 2013. . Read More