Is Wealth and Income Inequality really a concern/ a consequence of free market system ?
a cause of concern
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it happens in every country
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Of course. It is a direct symptom of pretty much any right-leaning economic philosophy. In economics, you can support efficiency (maximizing the amount of money in the economy) or you can support equity (using money in the economy or passing regulations to help marginalized members of society). It is nearly impossible to do both at the same time. Right-wing economics picks efficiency, left is equity. To get the highest amount of efficiency, you reduce or totally remove government involvement. But if you do this, you limit the possibility of marginalized members of society to move upwards. Further, it is more difficult to move up from poverty than at any other point on the ladder. If you are poor you probably won't get to go to college, your chances of going to jail are higher and your ability to pay for medical care is severely hindered. Without government intervention, the percentage of people in poverty is very likely to rise. Meanwhile, money always flows upwards when it isn't being reallocated. What this means is that a free market will always end up with a few people holding most of the wealth a smallish middle class and an ever-growing lower class. Ironically, this is highly inefficient. The wealthy are most likely to save their vast amounts of money. The poor are most likely to spend any money they have. Since, in this scenario, the poor are the largest segment of society, if they all had, say, $200 more to spend, they would be able to directly contribute more to the economy than the rich. Side: a cause of concern
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got a tiny issue with "The poor are most likely to spend any money they have." as in a society with credit, most people, particularly those who don't have much in terms of money, won't always live within their means. this means that most of the lower rung's money is going toward paying off debt. Isn't that as much a stagnation of money as those who save their money? since the money is just going into a bank in both cases? Side: it happens in every country
You make a fair point KanyeTheNoob (sorry, I've been waiting a few days to use that one). But more money is more money. As a general rule, I suspect poor debtors would generally avoid paying more than the minimum, and theoretically, most can currently afford to pay it. Sooo...putting $200 in their hands could still mean around $200 more. And more money could mean debts get paid off faster. Also, many poor people have such bad credit, lenders won't even look at them. Now, you might say that giving them more could just move the credit problem up a rung, and it might. But I suspect the higher up you go the more money is freed up. Making school more available to the poor could help a lot too by pushing the children of poverty into the middle class. Side: a cause of concern
In capitalism, Wealth Inequality is not only a social issue, but is also an economic issue. Many have an issue with how "unfair" wealth inequality is. However, I view it as an economic problem. Increasing Wealth Inequality depresses demand, since consumption levels depend more on the lower income. Lower Income consumers rely more on debt with rising asset prices, since there is stagnant wages. Rising Inequality is an unfortunate consequence of capitalism. Instead of more Government intervention, the structure of capitalism should be changed. Side: a cause of concern
When it is unregulated (to an extent), it IS. When money gives one the power to lobby and control votes it takes away the rights of the PEOPLE! and puts them into the hands of the powerful few! That's WHY we no longer have government "of, by and FOR the people". It is of, by and for those who can (eventually) have complete control of that government. No amount of "taking our country back" will change that! Teddy Roosevelt saw that danger when he took control from the "robber barons" and gave it BACK to the people! Now we are in danger of NOT learning from our history and are in danger of repeating the mistake .... and it's the conservative controlled SCOTUS that is responsible! Side: a cause of concern
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I think inequality is mostly a political problem. The super rich and mega corporations gain too much political clout when there is a huge disparity of wealth. Furthermore, just like we can't have social systems that depend on people not being greedy, we can't have social systems that depend on people not being jealous. Even when the average american has a cell phone, a car, a computer, A/C, and all the other normal amenities of modern life, they will still be unhappy when there exists some people who own 100000000 times more than they do. If they don't see that they have the opportunity to be as successful as that person, they will throw a fit. If you don't want the people to destroy the system, don't let inequality get too far out of hand. Side: a cause of concern
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There are rich and poor in every economic and political system. And for the most part I'm willing to let the free market do whatever it's going to do -UNTIL the general population overwhelmingly cannot sustain growth and necessities of life. Because that's when the rest of the economy starts to come apart, and frankly that's what's been going on in the USA for decades now. We are a debt driven (personal and governmental) society and now we're all in deep. We had our own hand in it but ultimately all the wealth is flowing to a very small percent of people at the top and the rest of us are left fighting for ever growing bank loans to scrape by. Families with two well educated parents and everyone working and contributing and now barely afford the most minimal of housing. Something is very wrong now. Side: it happens in every country
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That is a result of competition via free trade, NAFTA and all the other trade agreements. There are burgeoning classes of people in the far east and South American that have the same job skills and can produce the same quality product as the workers here and they will work for less than half of what American workers will. That has put downward pressure on wages. It all boils down to competition. Side: a cause of concern
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