Wealth Distribution Gives the Rich an Unfair Advantage - Essay Example

7 April Wealth Distribution Gives the Rich an Unfair Advantage Introduction In the United s, the poorest homeshave seen their household incomes decline by almost half between 2007 and 2010. Unemployment and stagnation are rife in this country. However, absolute incomes are not the only source of concern currently. The top 1% of US earners enjoyed 93% of income growth after the economic recovery in 2010 (Koechlin 2). Profits have soared among economic institutions, as well. Sadly, nations such as Pakistan, Mexico and India also exhibit unequal wealth distribution. One explanation best explains where endemic inequality prevails; the economic status of the rich gives them an unfair advantage, which causes them to become richer while the poor get poorer. Wealth distribution favors the rich The rich have considerable political influence that enables them to skew markets and the economy in their favor. Markets are not autonomous, ideal bodies that work according to economic rules alone. They are heavily influenced by social and political players who often intervene in order to either correct or create inefficiencies. Politics is the means the elite use to control markets. Countries such as the US have had declining restrictions on the power of financing in political campaigns or processes. As a result, several policy makers cooperate with politicians in order to gain personal interests. Legislators are assured of consistent financing from the elite while the latter also enjoy passage of new laws that favor them. Trade unions and other forms of organized labor have been some of the strongest advocates for the poor or the working class. However, their authority when bargaining for minimum wages as well others forms of social protection is slowly declining. This state of affairs arose out of the passage of several policies that disfavor their presence. A number of them now find it hard to fight for worker’s interest. It is for this reason that the typical fast – food restaurant employee is trapped in a cycle of need. Wealthy individuals were also able to achieve this level of control over labor by sending lobbyists that fought for them. Every time legislators intend on passing a law that may strength labor unions, the elite send advocates that outnumber trade union lobbyists (Norton and Ariely 15). Eventually, they keep winning in terms of policy, and cement their place as wealthy individuals. Taxation systems as well as other regulations designed to curtail excessive wealth in the hands of a few people have consistently been altered in favor of the upper classes. Corporate institutions have fought for the deregulation of the corporate sector. This has especially been rampant since the 1980s. The net result of these predicaments is a corporate environment that is too risky and unconstrained. In fact, several economic analysts believe that deregulation propagated the 2008 financial crisis. In essence, wealthy people have been given free rein to conduct business as they wish due to the part they play in politics. Likewise, taxation rates have continually disfavored the poor who pay higher rates than the rich. It is evident that the power they wield in the country’s economy has augmented their ability to push for their own interests. Several individuals also take advantage of tax loopholes inside and outside their borders. Many of them often avoid paying taxes or may do so at unfairly low rates. Rich people hold offshore accounts in areas that do not question their sources of income (Stiglitz 90). There are no global corporate standards that have been agreed on by countries considered as tax havens. Only a few wealthy individuals have a moral conscious that causes them to ask for more stringent taxation. Majority of them look for these loopholes and evade taxes. The overall effect is even greater accumulation of wealth among them. The poor are prevented from accessing social services like education that would have been used to improve their standards of living. These social services would have emanated from taxes collected from the rich, who have found a way of evading those requirements. Elite members of society have also exerted political influence in the area of social policies. The government usually has mechanisms in place designed to equalize wealth distribution. This is necessary because great wealth accumulation is useless in a country if it is only trapped in the hands of a few members (Koechlin 15). Public services, like free housing, have continually dwindled in the US with several homes in the projects being demolished in order to make way for commercial establishments. Resource owners have found ways of manipulating economic policies in order to favor them. Most of them have propagated the neoliberal agenda which calls for the minimization of government intervention in economic activities. People in the US thus struggle to secure housing because of this. Many of them are anxious about getting sick because they know that it will be difficult to access health services without insurance. Policies that forestall inequality, such as free social services, are dramatically reducing in favor of market-based and neoliberal theories. It is for this reason that more poor people struggle to get basic needs while the rich continue to make money. Few regulations exist concerning maximum bonuses that CEO or top managers can earn from organizations in the US and other unequal societies (Gilens 58). Several human rights lobbyists have stated that the amount of remuneration received by top organizational management is unjust when compared to that earned by the rest of the organization. This is especially true during tough times when retrenchments or high unemployment exist. The wealthy have made sure that their interests are safeguarded by minimizing the level of intervention that governments can make in such situations. This group of people has also fought off any limits to the amount of capital that they can accumulate. Monopolistic behavior is also another way in which the elite use their position to get richer as they foster greater poverty among other groups. It is possible for the elite to establish monopolies in infrastructural-based sectors like telecommunication or resource distribution. Once monopolies are established, owners find it very easy to place consumers at ransom. They charge exorbitant fees for their services (Milanovic 22). Furthermore, since consumers have no other choice but to purchase from them, they may find that the quality of services deteriorate but no action can be taken. Therefore, anticompetitive behavior or monopolies are usually possible through mass wealth, which constrains the ordinary citizen and causes them to struggle financially. The wealthy often take advantage of crooked regulatory mechanisms. Corruption and unethical behavior are partly to blame for rising inequality in developing parts of the world. In nations such as India, the richest individuals got to that position by paying bribes in order to secure government permission. People in the mining and real estate sectors are especially notorious for this. Huge amounts of money are exchanged between the rich and government bodies in order to secure contracts. Economic rules are thus distorted in favor of the wealthy. People with no money to bribe government officials have no chance of ever competing with their wealthy counterparts, and must contend themselves with mediocre jobs or contracts. A number of naysayers may claim that poor or developing countries should be blamed for their situation. They believe that if corruption was absent in these regions, then the rich would not be able to extort them. They thus discount the notion that the rich are to blame for rising inequality between upper and lower classes. Such opponents also believe that poor leadership accounts for increased multinational power in those regions. However, what the challengers do not recognize is that corruption and wealth are interrelated. It is not possible to bribe the government if an entity has minimal resources. Multinational corporations have often been noted for exchanging illegal money with governments of these rich nations in order to secure their place there or to eliminate their competition (Oxfam 18). Therefore, wealthy nations utilize amorphous bodies like multinational corporations in order to make money in the underdeveloped world. Eventually, this prevents developing nations from accessing wealth and traps them in a cycle of dependency on the West. Opponents to this argument may also claim that poor people are partly to blame for their circumstances because they simply do not have enough drive or do not work hard enough to get to the top. However, these individuals ignore the fact that getting a good college education nowadays requires huge investment in tuition. This means that lower classes lack opportunities for social advancements since they can barely access opportunities for higher education. Missing the prerequisites for success causes their families to remain trapped in low-earning jobs and thus continual poverty. Conclusion The elite are using their position in order to secure their place in society and amass more wealth. Through political influence, it is possible for them to determine legislations that are passed by parliament. This explains why trade unions keep losing the ability to work for worker’s rights. Furthermore, minimal control over bonuses to be earned or taxes to be paid by the rich exists due to this political power. It appears that a neoliberal agenda controls most unequal societies. Social services like government housing have been replaced by commercial entities. These are all symptoms of an underlying force that controls state policies. The wealthy use their resources in order to protect themselves at the expense of the poor in society. Corruption only works when the wealthy decide to participate in it. This is especially true for developing or underdeveloped nations. In essence, obstacles to social mobility are real and deeply engrained. The rich seem to focus only on safeguarding their own interests. The government, which is supposed to curtail these tendencies, has done little to do so because it is heavily influenced by the wealthy. A shift away from the neoliberal agenda may be necessary as high inequality is proof that markets are not faultless. They require intervention and correction in order to safeguard the needs of the poor and the middle classes. Works Cited Gilens, Martin. “ Inequality and democratic responsiveness in the United States.” Public Opinion Quarterly 69.5(2005) 56-60. Print. Koechlin, Tim. “The rich get richer: Neoliberalism and soaring inequality in the United States.” Working paper Series 302(2012): 1-35. Print. Milanovic, Branko. “Global income inequality by the numbers.” Policy Research Working Paper Series 6259(2012): 1-40. Print. Norton, Michael and Dan Ariely. “ Building a better America-One wealth quintile at a time.” Perspectives on Psychological Science 6.1(2011): 9-12. Print. Oxfam. Working for the few: Political capture and economic inequality. 20 Jan. 2014. Web. 7 Apr. 2014. http://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for-few-political-capture-economic-inequality-200114-en.pdf Stiglitz, Joseph. Globalization and its discontents. NY: Norton and Company. Print. Read More