History has shown us that societies with broad gaps between the wealthy and the poor are not as viable as those on a closer income and wealth ratio are. This inequality creates a ripple effect as it spreads out across institutes of learning, agriculture and manufacturing. Societies need a broad foundation of citizenry capable of bridging the gap between the wealthy and the poor. When this foundation crumbles, the business empires built upon it topple and the poor are crushed. Because of the social and economic damage it creates, for both the rich and poor, it is a problem that 1% of Americans possess 50% of its assets.
Historically grossly unequal wealth distribution has resulted in losses for both rich and poor. Economically it creates a society with limited markets for its output. People will buy food before they buy new refrigerators. They will not buy automobiles when they are facing foreclosure on their homes and will no longer have a driveway to part a car. This cuts into the income of the wealthiest citizens who rely upon a broader market to buy the good their manufacturing and distribution centers produce and sell. Income inequity in America is much greater than it was thirty years ago, with the percentage of income gap approaching that of France just before the French Revolution. This created an uneven distribution in wealth known as the gap between the rich and the poor. This income inequality leads to discontent within the citizens of a country who feel inadequately rewarded for their hard work. It may also increase the crime rate, especially crimes that involve looting and stealing money from the rich. The people may believe they are not treated fairly. Most scholars agree that wealth inequality in the United States is at historic highs, with some estimates suggesting that the top 1% of Americans hold nearly 50% of the wealth, topping even the levels seen just before the Great Depression in the 1920s (Hbs.edu, 2011).
The argument can be made that an uneven distribution of wealth works in favor of society instead of being a problem. Large-scale manufacturers and industries can produce less expensive good than local artisans or small manufacturers. Socially responsible corporations such as Google, Apple and Pepsi have, and spend their resources to provide immediate responses when calamities strike. They also have ongoing projects to assist the needy and the poor. They can only do that in an economic environment that provides them with sufficient flexibility to accrue and distribute their resources. However, this redistribution of assets from the wealthiest to the disadvantaged is voluntary and not all, or even most; of the wealthiest 1% distribute their income in this manner. This argument ties to the theory of trickledown economics. When there is a privileged class, they have the capitol to spend freely and create, or invest in new businesses. Another related argument is that only the wealthiest have the resources and freedom to support the arts. Without the resources available from private patronage, artists are forced to bow down to governmental or public opinion and their creative efforts are stifled by this. Finally, there is the fairness issue, with the wealthiest arguing that they earned it, they should be allowed to keep it, and pass it on to their children.
The greatest portion of assistance given to disaster survivors and regions eventually comes from “grass roots” support by individuals. When wealth inequality is too great, the population base does not have the resources to provide this support. Likewise, communities are often the best providers of assistance to the poor and needy. When poverty is a way of life in a community, it does not have the ability to help these people. Historically the small “start up” businesses created by individuals have provided the impetus behind most growth cycles created the most innovative businesses and employ the most workers. Artists and artisans do benefit from private patrons, but there is no assurance that this is less stifling than reliance upon other institutions, an economic climate where they can support themselves, and sometimes each other as in artists’ communities, provides the best assurance that all artistic talents will have the resources to blossom. In all fairness, it is a viable argument that an individual should be permitted to keep what they earn. However, when the power is concentrated in the upper economic strata there is a tendency for the privileged to elect to value themselves far greater than their subordinates and reward themselves accordingly. The financial firms who are a part of this 1% are only concerned about the financial portfolio of their clients who are already rich and do not help people through corporate responsibility programs or any other such program. They have the assets but do not choose to invest it in the ventures create more jobs and distribute wealth. They invest in ventures that use more machineries and increase overall profit. They also have the financial capitol to unfairly influence politicians. These people do not work towards the overall welfare of the people but serve their own selfish motives. We see this in American politics and economics today and it is an unsustainable scenario. This is why it is a problem that 1% of Americans possess 50% of its assets.
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Shaw, H., & Stone, C. (2011, May 25). Tax data show richest 1 percent took a hit in 2008, but income remained highly concentrated at the top. Retrieved from http://www.cbpp.org/cms/index.cfm?fa=view&id=3309
The 99 percent. (2011, October 26). Retrieved from http://www.economist.com/blogs/dailychart/2011/10/income-inequality-america
Norton, M., & Ariely, D. (2011). Building a better America—one wealth quintile at a time. Retrieved from http://www.people.hbs.edu/mnorton/norton ariely in press.pdf
Feinman, Robert D., (2005), Wealth Distribution. Retrieved from http://robertdfeinman.com/society/wealth_distribution.html
