As probably many of you know, there is a cloud hanging over the future of the US and many other countries, the cloud of wealth concentration. There is nothing in life that will not be affected by this phenomenon. It obviously affects our allocation of resources and it will have tremendous influence on who gets what. It would affect the relations between the social classes and could lead to social unrest if we allow the fissure between the haves and have nots to increase. The following is only one part of an excellent article that speaks to this issue.
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Growing inequality is one of the biggest social, economic and political challenges of our time. But it is not inevitable, says Zanny Minton Beddoes
Oct 13th 2012 | from the print edition of The Economist
A bit over a century later, America’s second Gilded Age has nothing quite like the Vanderbilt extravaganza. Bill Gates’s home near Seattle is full of high-tech gizmos, but, at 66,000 square feet, it is a mere 30 times bigger than the average modern American home. Disparities in wealth are less visible in Americans’ everyday lives today than they were a century ago. Even poor people have televisions, air conditioners and cars.
But appearances deceive. The democratisation of living standards has masked a dramatic concentration of incomes over the past 30 years, on a scale that matches, or even exceeds, the first Gilded Age. Including capital gains, the share of national income going to the richest 1% of Americans has doubled since 1980, from 10% to 20%, roughly where it was a century ago. Even more striking, the share going to the top 0.01%—some 16,000 families with an average income of $24m—has quadrupled, from just over 1% to almost 5%. That is a bigger slice of the national pie than the top 0.01% received 100 years ago.
This is an extraordinary development, and it is not confined to America. Many countries, including Britain, Canada, China, India and even egalitarian Sweden, have seen a rise in the share of national income taken by the top 1%. The numbers of the ultra-wealthy have soared around the globe. According to Forbes magazine’s rich list, America has some 421 billionaires, Russia 96, China 95 and India 48. The world’s richest man is a Mexican (Carlos Slim, worth some $69 billion). The world’s largest new house belongs to an Indian. Mukesh Ambani’s 27-storey skyscraper in Mumbai occupies 400,000 square feet, making it 1,300 times bigger than the average shack in the slums that surround it.
The concentration of wealth at the very top is part of a much broader rise in disparities all along the income distribution. The best-known way of measuring inequality is the Gini coefficient, named after an Italian statistician called Corrado Gini. It aggregates the gaps between people’s incomes into a single measure. If everyone in a group has the same income, the Gini coefficient is 0; if all income goes to one person, it is 1.
The level of inequality differs widely around the world. Emerging economies are more unequal than rich ones. Scandinavian countries have the smallest income disparities, with a Gini coefficient for disposable income of around 0.25. At the other end of the spectrum the world’s most unequal, such as South Africa, register Ginis of around 0.6. (Because of the way the scale is constructed, a modest-sounding difference in the Gini ratio implies a big difference in inequality.)
22 comments:
The income disparity is increasing; however, thats not inherently a bad thing. One of the fundamental differences between Capitalism and Communism is merit. Under a communist economy, everyone gets a slice of the pie that is fairly, if not exactly, equal. Which means that someone who does a harder job gets the same amount as someone who does an easy job or no job at all. This is a highly unfair system. In a Capitalist economy, people are alotted money based on the work they do. For example, a highly-educated and hard-working lawyer will make far more than an uneducated custodian. In my opinion, this system is far more fair. You get paid for the work you do, not just for being a citizen. What you put in is what you get out. It is for this key reason that Capitalism stands and Communism is fading away quite rapidly.
I support Nick's claim that although the income inequality may be increasing, it definitely is not a bad thing. Of course, we are always worried about income equality and people attaining a higher sum than others. However, people work hard for their money. It doesn't make sense if a lawn mower received the same annual income of a doctor or a lawyer. Because the amount of effort invested into academics or specialized in their fields do deserve a higher compensation. I'm surprised China has so many billionaires, given their Communist economy. Regardless, I believe that people who work hard should receive their income worth.
There is a big difference between Capitalism and Communism and differences in income or merit is a big one. For Communist nations, everyone in the society is given a close if not equal income. Which means that it doesn't matter the amount of hardship or schooling involved in the particular jobs. This is in fact unfair as clearly seen and this is where Capitalism reins supreme. In Capitalism people receive the amount of income which is deserved based on the work that they do and what it entails. So this means higher educated or harder working people would make more than the uneducated or not so hard working. So Capitalism gives money based on how much is deserved, not for just being a citizen, and however much you put into the job will reflect how much you get out of the job. I agree with Nick and Kimisei who wrote before me that differences in income between members of society are increasing, but this is not a bad thing, and people who do work hard should receive the amount of money they deserve. Again the amount you put in should reflect the amount you get out.
Capitalism and Communism have very different ways of diversifying their money. In a communist society everyone almost gets the same amount of money, even if they are on the opposite sides of the job spectrum. Where does the competition come into play? In a Capitalism society their is an extreme amount of competition. People study to extremes to get into the top schools, to do the best they possibly can to satisfy their own individual goals and wants. While other people are ok with working a job they got during high school or a job that doesn't demand a college degree. This is a fair system, because you can decide (in certain circumstance) what you want to strive for. This if a favored system and thats why you see communism becoming outdated. People need to understand that you have to work hard for a well payed job, and you can not sit at home and get paid by the government.
Capitalism and Communism have very different ways of diversifying their money. In a communist society everyone almost gets the same amount of money, even if they are on the opposite sides of the job spectrum. Where does the competition come into play? In a Capitalism society their is an extreme amount of competition. People study to extremes to get into the top schools, to do the best they possibly can to satisfy their own individual goals and wants. While other people are ok with working a job they got during high school or a job that doesn't demand a college degree. This is a fair system, because you can decide (in certain circumstance) what you want to strive for. This if a favored system and thats why you see communism becoming outdated. People need to understand that you have to work hard for a well payed job, and you can not sit at home and get paid by the government.
There is a big difference between communism and capitalism, and I do believe that people should work hard in order to become more successful and earn a higher income. But the disparity between rich and poor in today's economy is crazy.
The article says "the share of national income going to the richest 1% of Americans has doubled since 1980, from 10% to 20%, roughly where it was a century ago. Even more striking, the share going to the top 0.01%—some 16,000 families with an average income of $24m—has quadrupled, from just over 1% to almost 5%. That is a bigger slice of the national pie than the top 0.01% received 100 years ago."
Its amazing how the gap between rich and poor has increased in such a short time. I would be interested in knowing why this has happened.
Again while I do agree that people need to work hard in order to become successful, at the same time I don't agree with the huge disparity between rich and poor.
But its also interesting to see how this disparity occurs in other countries, not just here in the United States. The most interesting to me is India and China, especially since China is a communist country.
Entrepreneurial spirit is what this country was founded on and what eventually lead us to being a world super power. So although the difference in income is changing I wouldn’t call it such a bad thing as this shows that our country is still on top. As the article says America has 421 billionaires more than any other country in the world. In my point of view we should be encouraging people to spark that desire to become successful. One of the reasons why is because take some of the American billionaires like Bill Gates, The Walton Family and the late Steve Jobs , they are creating not just thousands but millions of jobs for the American economy. So in fact because of we have these billionaires it helps out all of the rest of classes because it provides them with jobs. Think of it like this if Wal-Mart, Microsoft and Apple were not around we would lose over 1.5 million jobs.
A majority of people work hard for their money so I do not believe this is a bad thing. It does not surprise me that in such a short period of time their has been an increase in the gap between the wealthy and the not so wealthy. People make more money today, technology and advancement is going to cause this. I say let the system work the way its going.
Today’s poverty is much different than poverty 100 years ago. I believe that a person should work hard for what they earn, and the harder they work, the more income they should obtain (capitalism). However, the disparity between the rich and the poor in today’s world is unbelievable. Given the statistics from the article, it demonstrates just how large the gap is. If we were to live in a communist society, it wouldn’t matter how hard someone worked, everyone would have the same income. The only benefit to communism would be the closing of the gap.
The gap between the wealthy and the poor these days does not surprise me. For one, there are many benefits for the unemployed at this time so being unemployed does not seem “so bad”. Second, people truly believe hard work will get you anywhere you need to go. So even though some wealthy are born that way others have worked hard to achieve their place in society. Therefore, that gap is justifiable to some extent. It is about entrepreneurship and the desire to make money. Whether you are the CEO or the one working below him. You’ve worked for it.
While it may be true that income disparities in America are growing, it is also true that absolute poverty is being steadily eliminated in the developed world. By this, I mean that in many (but not all) cases, the poor have a standard of living that provides for all of their basic necessities. In fact, Beddoes makes this observation when he says, “Disparities in wealth are less visible in Americans’ everyday lives today than they were a century ago. Even poor people have televisions, air conditioners and cars.” I believe this distinction is the most important one of all. For in situations where poor people live in absolute poverty, I believe there is a moral obligation to “level” to proverbial playing field. But in situations where there is only a relative inequality, and where the poor often have a standard of living that provides for their basic necessities, such a moral obligation does not exist. Inequality may be an unwelcome fact, but it is not an immoral one under such circumstances.
I believe that even though the wealthy are getting richer, it is not a bad thing, it just means that they are handling their money correctly and making good investments. Everyone has an equal opportunity to make a name for themselves and get as rich as they want to be. I think that things are fair the way they are because this way people get paid for the work they put in. The poor people today have all the basic necessities of living and aren't as poor as they once were. They have a place to live, cars and even air conditioning. Ultimately what it comes down to is that the people that work hard there whole lives get what they earn which is alot of money and the people that don't apply themselves also get what they deserve which is fair.
Though it seems wealthy Americans are becoming more self conscious with their spending, this may be from the difficulty to see income disparities. In past centuries, it was easy to define the wealthy by the amenities their households had. However today, because everyone has amenities like electricity and air conditioning, it is much more difficult. The Gini coefficient further analyzes income distribution and disparities by stating that "Emerging economies are more unequal than rich ones." With that said, I think it is important to remember the levels of inequality are incredibly varied throughout the globe. When discussing the differences between communism and capitalism, one must realize that both have different ways of distributing income. Communist countries prefer to treat everyones income equally regardless of their occupation or education. Personally, I believe that if someone persues higher education or someone who is incredibly driven, should be able to have a larger salary than others because they earned it.
Throughout history there has been a vast difference between the rich and poor. Those who are rich have more money and can easily acquire more resources. Those who are poor or simply middle class have to work hard to allocate their resources. In America, we coin this idea as Capitalism, “an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.” Capitalism has proven to be more successful than communism. If one needs proof then compare the (no longer existent) Soviet Union to America.
In an ideal world, most people would want that no matter what country you live in no one has to struggle to find the necessities like food, shelter and clothing. In most countries, there are huge social gaps. An example of this was in 2011, Americans had begun the Occupy Movement, which protested the distribution income between 99% of Americans versus the 1% of wealthy citizens.
How can we change the distribution in America specifically? There are programs or tax/loan reductions that the government can enforce to help improve the gap. Sadly, I don’t think we will ever have equality among all classes. On the other hand, the beauty of America is that everyone continues to aspire for that “American Dream”, which states that if you work hard enough then you can have it all.
This article brings up a great point even the poor have televisions and cars. This is different the poverty back in the 1800s. aBAck then people barely had food to eat. The back bone of the United States is hard work. America was built by people who took great risks in order to start over and achieve a greater life then what they had. I believe that people who work harder then other deserve more money, if they are making it. A garbage man shouldn't make as much as a doctor, America should be the furthest thing form communist. Let people comet and make the country a better place. There are some 421 billionaires I'm America, more then four times the next leading country. We have to be doing something right
One important point we have to understand is the size of population back in the 1900's in comparison of today's. in 1900 the size of the population was around 76M and today is around 315M LEGAL RESIDENTS. that is a 300+% in increase population therefore there must be an increase in paper money thus increasing the number of billionaires in the US. I think it is important to underline the world "legal resident" since i believe, there are millions of illegal not counted by census residents in the US in which they play part of economics and population as well, not as big and but a figure that we must considerate.
One important point we have to understand is the size of population back in the 1900's in comparison of today's. in 1900 the size of the population was around 76M and today is around 315M LEGAL RESIDENTS. that is a 300+% in increase population therefore there must be an increase in paper money thus increasing the number of billionaires in the US. I think it is important to underline the world "legal resident" since i believe, there are millions of illegal not counted by census residents in the US in which they play part of economics and population as well, not as big and but a figure that we must considerate.
Today's difference between the rich and the poor is much smaller than the difference in the 1900s. There are many factors affecting these numbers. In a communist economy workers are paid almost the same amount regardless of the job done and their academic background. In a capitalist economy workers are paid based on their job done and the years of education necessary to complete their job. The value of the dollar has decreased greatly over time but has the value of a doctor's work gone down as well? If anything the value of a doctor has gone up along with the increase of medical issues. Just because the value of a dollar has decreased greatly it does not mean workers can get paid less and still have to pay more for the goods they need.
The income disparity is discouraging and not good but seems an inevitable cycle. The old saying is that the rich keep getting richer and the poor keep getting poorer. Those who are driven will take what they want and not sit idly.Advancing technology is also a factor because the ease of communication and knowledge is remarkable compared to 15 yrs ago, even 10. This leads to more informed decision makers that reap more benefits. Those who push are more greatly rewarded and the gap between income classes grows
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