What the model has done to the United States matters and it matters a lot. The American people of today are still feeling the atrocious effects of the Better Business Climate model. The inequality gap keeps growing in which the rich are getting richer and the poor are getting poorer. Unbridling Wall Street from regulations allowed financial raiders to buy companies, increase debt, and let the American people suffer from its demoralizing effects (Leopold, p. 54). The wealthiest one percent, usually CEOs and investment bankers, were given hefty raises while the average worker’s pay has languished.
Rising income inequality is considered as a global issue. Over the last ten years, median household income has declined in many advanced economies that resulting median household easily trapped in the risk of falling into poverty. Based on the research, we found that the average income of the richest 10% of the population is higher nine times higher than that of the poorest 10%. After 20 years, some countries have developed the advanced technology to improve the productivity of 30% in industries sector. However, there would also 50% worker will encounter the risk of displaced.
The wealth inequality is growing in America and it keeps getting worse. The wealth inequality is a serious problem because higher education is putting people into debt, minimum wage is not high enough for people to move up in society, workers are not allowed to unionize, and the rich are making more money with tax cuts. Wealth inequality is a serious problem because higher education is putting people into debt. Higher education will not “make you into a winner in today’s U.S. economy. At best, it makes you somewhat less of a loser” (Krugman 4).
Draining the rich of their money will not help those who are poverty stricken. It could cause the opposite of the intended effect (more equal income) and cause a greater amount of poverty and less chances to earn a living. A wealthy person is generally thought of making more than $300,000 a year and usually has stock, real estate, or both. In developed countries, such as the United States, “income inequality has increased since the 1980s” (Woo 5). A large amount of people argue that a system such as socialism could fix that inequality.
The unemployment rate of black is two times greater than unemployment rate of white (Fields and Weller, 2011). In 2011, the black unemployment rate was equal to 16.1 percent, while it was just 7.9 percent for whites (Fields and Weller, 2011). Schnurer (2014) states that “Giving more people a shot at economic success produces greater gains for society because more people are contributing”. According to World Bank research findings the main reason for languishing economy in Arab countries is exclusion of women from economic contribution (Schnurer, 2014). The second example of unequal distribution of income in the US is inequality between income of college graduators and non-college graduators.
In Mankiw, Goldin and Katz’s case inequality is considered harmful only to the extent to which it destabilises growth, investments, and suitable conditions for the reproduction of capital. But this is a morally shallow treatment of harms of inequality, and prematurely brackets off the extent to which capitalism is itself to blame for the inequality with which they are concerned. Building upon research on tax return he previously did with Emmanuel Saez, Thomas Piketty provides a long view of the changing shape of income distribution and exploitation. One element traces the already well-known relative rise and fall of incomes over time, and their political influences thereof, ranging from unionization to re-regulatory exercises. The highlight
We also can’t really flatten the tax rate fairly because the only way to reduce the riches tax pay is to soak the middle class. That is not reducing the tax rate, we’re just making the middle pay more than the rich, and right now that is what is exactly happening. I know that most wealthy people work hard for their money, but we have people in the lower class barely getting by while the wealthy people throw around hundred dollar bills and don’t care about what anyone else thinks. They waste their money on things they don’t need while people in the lower classes struggle everyday. People that have financial disadvantages live paycheck to paycheck while the wealthy people just walk around with lots of money that they’ll waste on things they don’t need such as gold marbled tiles or million dollar perfumes.
A negative relationship between inequality and growth According to Perotti (1996), the negative impact of income inequality on economic growth can be summarized into four main arguments. The first argument is that an imbalanced distribution of income most of the time pressures the authorities to implement distortionary taxes as a way to redistribute income and reduce inequality. However, these measures lead to a slower economic growth. Perotti (1996) also clarified that it is the pre-tax income inequality that is harmful to the growth of the nation, and that an equal after-tax distribution is only a result of the implementation of progressive taxation. The second argument is that income inequality could cause sociopolitical instability which can result in lower investment rate and therefore lower growth.
Unsurprisingly, China’s inequality percentage is transcendent to United State’s inequality percentage of 40%. This high inequality was imaged within the urban areas, in which their people enjoyed possession of the income-generating capital and skills and were able to benefit from the new economy. On the other hand, the rural people were deprived from this opportunity and lacked equal allocation of incomes and resources. Also, there were preferential policies for the coastal regions while not for interior ones. About 8% of people suffered poverty in 2001 and 145 million illiterate adults in 2003.
Income inequality is the “defining challenge of our time”, with a higher number of people struggling in work just to get by with pay no more than what they receive a decade ago, while some unemployed due unequal opportunities that exists as said by current president of the United States of America, Barrack Obama (Warren, 2014). “A State divided into a small number of rich and a large number of poor will always develop a government manipulated by the rich to protect the amenities represented by their property.” (Laski, 1967, p. 157). This can be applied to Thailand where poverty in Bangkok is at an all time low of just 1% while more than a fifth of the population in the North and northeast are poor (Zachau, 2013). Thailand would be a better nation if people have the same opportunities and were treated the same way. This could be achieved if the Thai government legislates to distribute income evenly as it will help the economy to grow, increase opportunities and social status of the lower class.