Income disparity between the rich and the poor has been a condition known to exist since time immemorial. In the United States, the gap between rich and poor grows wider in unprecedented levels for the last years. Two-thirds of Americans believed “income differences in the United States are too large,” but there are no existing policies to address this situation. Legislators are not coming up with policies that would tax the rich, raise wages of those in lower income bracket, tax wealth inherited or guarantee health care and shelter to all Americans.
This is due to the fact that most Americans believed that the light regulations helped in pushing the economy higher. Also, Americans tend to focus on issues such as abortion, crime, immigration and environment rather than income inequality.
Some wonder why the gap between rich and poor gap matters. After all, if all incomes increase by 5%, everybody benefits, although a person making $100 a day will have higher increase compared to someone who makes $1 a day.
Income inequality is a serious concern because the high levels of inequality could result in increased social disruption. In New Orleans, social disruption due to income inequality is evident which shows that even the richest country on earth is not immune to the consequences of unequal distribution of wealth. Federal Reserve Chairman Alan Greenspan has testified before the US Congress that the gap of income could eventually undermine the stability of democratic capitalism.
There is also the possibility that extreme gap between rich and poor could affect growth. Human Development Report 2005 states, “A world economy in which 40% of the population lives on incomes so low as to preclude fully participating in wealth creation is hardly good for shared prosperity and growth.”
Finally, inequality is an important concern because of its implications on fairness and social justice. A child born to rich family could live to 80 years, while a child born in poor families would have difficulties availing of healthcare. The child from rich families will also be better educated, healthier and more productive than those in the lower income bracket.
References:
Burdess, Gary and Jencks, Christopher. ( 5 March 2003). America inequality and its consequences. Brookings.edu website. Retrieved on February 13, 2008 from World Wide Web: http://www.brookings.edu/gs/events/americaninequality.pdf
Rogers, Nathan. (17 October 2005). The rich-poor gap; a growing problem. New York University website. Retrieved on February 13, 2008 from World Wide Web: http://homepages.nyu.edu/~nar257/docs/rich_poor_gap.pdf
Social class. (2008). Wikipedia.com. Retrieved on February 13, 2008 from World Wide Web: http://en.wikipedia.org/wiki/Social_class
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