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Abstract
This study takes a critical look at inequality of wealth in the United States of America. It takes an empirical and objective look at the concept with regards to variables surrounding its occurrence in the American society. The topics and subheadings that are developed in this study are causes of wealth inequality, how to combat wealth inequality and also the consequences that the US environment is likely to suffer from due to its occurrence. The major aim of the subheadings is for the researcher to have the audience convinced beyond every reasonable doubt about all the variables concerning the subject matter. There were adoptions of graphs where necessary to ensure that points are clearly illustrated and explained for proper understanding.
Introduction
This study will look at wealth inequality in the United States of America and some of the variables that are related to it. The issue of wealth inequality in a country such as the US has long existed after the period of the First World War (1920s) till date. However, it is a topic that has received little or no empirical attention over the years. This study will concentrate on the following subtopics.
Reasons for wealth inequality in the United States
Consequences of wealth inequality in the United States
Ways to combat the problems of wealth inequality in the United States
Before there will be any further explanation on the subtopics above, it is important to briefly explain the subject matter (wealth inequality) in brief.
Wealth inequality can be defined as a situation where assets are unequally distributed in a society. In such a society, there is usually a huge gap between the rich and the poor. It can also be seen as a “scenario where factors of production (land, labor and capital) are not distributed on even terms in the society”1. The issue of wealth inequality is more realistic and practical in the United States of America than most other developed countries in the world.
This is as a result of the fact that there are variables which may be within the economy that promotes it either directly or indirectly. At this point, it should be understood that the term inequality will not be treated in its multidimensional nature. But rather, it will be treated as it relates to wealth.
Reasons for wealth inequality in the United States
This section will objectively look at some of the reasons for the existence of wealth inequality and why it tends to be gaining grounds with each minute that passes in the country. Some of such contributing factors will be explained below:
Economic neoliberalism
This is a concept where there is full support of what is termed as economic liberalism. In this concept there is nothing like “barriers to movement of goods and services”2. It is also referred to as a free market. In the United States of America, the concept of neoliberalism is built on four (4) pillars. These are:
Privatization
Domestic liberalization
Liberalization of capital account
And trade liberalization
Although this may sound as good news as it encourages total freedom in business activities where the interceptions of the government become minimal, there are huge economic repercussions of which wealth inequality happens to be one.
In the case of economic neoliberalism, there is a huge gap between the rich and the poor. That is to say, the rich tends to be getting richer while the poor are getting poorer. Neoliberalism is something that is evident in the economic policy being currently adopted in the United States which is capitalism.
Capitalism is an economic system where the factors of production are owned by private individuals. The wealth inequality being experienced in the country becomes very evident if “government doesn’t get involved in business activities”3.
Technological advancements
Just as advancement in technology can bring some benefits to any country that is how it can create a situation where wealth will be concentrated in the hands of a few. In the United States, there are two types of labor. These are skilled labor and unskilled labor. When a company begins to advance technologically, there is every tendency that most activities will get automated. This will lead to many persons losing their jobs in such a process.
Take for example; companies may introduce the use of computers into their systems which will mean that what was usually carried out by some persons in the past in a manual way will have to be undertaken by such computers. Rendering the unskilled labor or individuals jobless is an avenue that leads to unequal wealth distribution. A reduction in wages can also bring about this situation.
Personal factors
This shouldn’t be ignored as it relates to the motivation driving individuals. People are different in their aims and objectives in life as regards how they would want to work and save. This can lead to unequal amount of wealth being created. Some persons strongly believe in running their businesses and having to employ others. They don’t care about the risks that may be involved in embarking on such journey. On the other hand, there are persons who don’t believe in running their own businesses. In the end, the latter set of persons end up being under the former in terms of who works for who.
Disparity in level of education
Education is the platform where the needed skills are developed. But what happens when there is huge difference in the level of education in a country such as the United States of America? It means that some persons will be well developed than others. In such a scenario, it will only be a matter of time before the individuals with less skill are at the mercy of the ones with better educational background.
In a country such as the united states of America, just as there is uneven distribution of wealth amongst citizens, that is how there is a huge difference in the level of education amongst the people.
Although, it should be noted that such differences stated above majorly exist between the white students and the ones that are colored. While the “former does have the needed skills due to access to better education, the latter is left behind”4. This is perhaps one of the foundations of uneven wealth distribution in the society.
Consequences of wealth inequality in the United States
In this section, the resulting circumstances that the situation of uneven wealth distribution can lead to will be highlighted and briefly explained. Some of them will be briefly explained below.
Growth is greatly stifled
The higher the level of inequality in the society, the higher the level of poverty will be. This is “because there will be a huge state of imbalance between the rich and the poor” . The former can have a very high rate of affordability as compared to the latter. In such a society, investment is determined by few individuals because capital will not available to all. This means that economic growth will be adversely affected.
Political instability
Even though wealth distribution has been majorly related to economic issues, it is very important to point out that it can also be traced to the political scenes within the country. When wealth is unevenly distributed it becomes possible for some groups of persons to be heard over the course of time.
There was a struggle between education and technology which the US government tried to win so as to have its citizens educated in the year 1975. This went in favor of the whites at the detriment of the black race. It was a failed campaigned that widened the gap between the rich and poor in the country. An evidence of this is that in the political scene there have been few persons from the black race whose voice can be heard on the political scene.
High rate of poverty
It is a cycle that seems to continue with the passage of time. Most people will be poor and in most cases, are meant to serve the rich. They don’t have access to foods that are capable of improving their health in all ramifications. Take for example, in the United States of America; the poor have had an increasing in food deserts over solid foods. This has exposed them to lots of diseases and other abnormal conditions. The wealth of the country lies in the hands of a few persons who have the financial power to live a comfortable life that is almost disease free.
Ways to combat the problems of wealth inequality in the United States
This section looks at possible and realistic suggestions that can used to correct the problem of wealth inequality in the United States of America.
Change in government economic policies
One of the major praises that capitalism has been able to attract over the years is a stiff competition among the various factors of production which has led to an increased efficiency in the way things are bring done. However, there is no doubt that this is one of the primary reasons why wealth has been unequally distributed in the United States.
The “economic policy adopted in the country is capitalism which encourages the prices of factors of production to be controlled by private individuals”. This can be controlled or eradicated if the government can participate in production and business activities. This is because it will know how to share the wealth of the country evenly amongst individuals.
Introduction of new tax system
This is also another effective way to combat unequal distribution of wealth among the people. In this regards, progressive tax system should be encouraged. This is a system where tax rate increases alongside an income increase.
The system of tax adopted can prove to be a way through which the government can strike a balance between the rich and poor in the society.
Creation of employment opportunities
There is a very high rate of unemployment among the people and this hasn’t helped in the way wealth has been distributed. The government can do a lot in this regards by helping to ensure that people are engaged in activities that will bring them income. This is to help individuals take their place in the economic ladder in the country.
Conclusion
Having seen the above, it is very obvious that inequality of wealth among the US citizens is something that can be easily remedied due to the fact that it is man – made. Also, it can be observed that such development does have some economic implications which if not well and timely attended to can adversely affect the general well – being of the society.
Reference
Lisa A Keister and Stephanie Moller, “Wealth Inequality in the United States,” Annual Review of Sociology 2000, accessed July 16, 2016, doi:10.2307/223437, http://www.jstor.org/stable/223437?seq=1#page_scan_tab_contents
Edward N. Wolff, “Estimates OF Household Wealth Inequality In The U.S., 1962-1983,” Review of Income and Wealth 33, no. 3 (September 1987), doi:10.1111/j.1475-4991.1987.tb00673.x.
“Five Faults of Capitalism: The Unequal Distribution of Wealth,” February 11, 2013, accessed July 16, 2016, http://dailycollegian.com/2013/02/11/five-faults-of-capitalism-the-unequal-distribution-of-wealth/.
Lisa A Keister, “Race and Wealth Inequality: The Impact of Racial Differences in Asset Ownership on the Distribution of Household Wealth,” Social Science Research 29, no. 4 (December 1, 2000), accessed July 16, 2016, doi:10.1006/ssre.2000.0677, http://www.sciencedirect.com/science/article/pii/S0049089X0090677X
Lisa A Keister, “Race and Wealth Inequality: The Impact of Racial Differences in Asset Ownership on the Distribution of Household Wealth,” Social Science Research 29, no. 4 (December 1, 2000), accessed July 16, 2016, doi:10.1006/ssre.2000.0677, http://www.sciencedirect.com/science/article/pii/S0049089X0090677X
