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Running head: ANALYZING THE WEALTH
Analyzing the Wealth Gap among Economic Classes
Bruce Xu
University of Miami
Introduction
The wealth gap, the increasing concentration of wealth in fewer hands, has been called the “defining challenge of our time” (Buttrick and Oishi, 2017). In Hero and Levy’s article (2016), it is also called “the great divergence of America’s rich from its middle class and poor.” In fact, the “mordern” wealth inequality can be traced to the evolution of human survival from foraging to farming more than 10,000 years ago (Patel and Bagchi, 2018). For the United States, its origin was in the early of the 20th century. According to David and Jonathan (2016), the wealth inequality began a long but modest decline since 1929. However, this trajectory reversed throughout the industrialized world during the last 40 years (Buttrick and Oishi, 2017).
Wealth inequality occurs in countries among different kinds of people. This paper discusses the wealth inequality between different classes of people in America. Especially, it analyzes wealth gap between the citizens from middle class and lower class. The middle class of the U.S. are those earning between two-thirds and double the median household income. This means that the category of middle – income is made up of people making somewhere between $40,500 and $122,000, which represents the majority of the American. Those who do not participate in the labor force and rely on public assistance as their main source of income are commonly identified as members of the lower class. This paper provides a literature review on wealth inequality. What’s more, it will examine three themes based on the topic, which are the elements and factors lead to the wealth inequality, the negative impact of the wealth gap in the U.S. on the resident’s life and the possible solutions of this phenomenon.
Literature Review
Elements and factors lead to wealth inequality
Moreover, McKernan (2013) thought the gifts and inheritances play a further role in perpetuating the wealth gap. For higher wealth family, they are able to sent their children to high-quality educational systems like college or private school. For the majority of families, children own more assets that can be inherited to enhance even the start of a small business than some minorities. Similarly, Mr. Buttrick (2016) said that the generational passing of wealth has led to the rich children inheriting the rich class and the middleclass. Meanwhile, the poor children inherit less poverty and hence the gap in wealth distribution increase.
Another factor causes wealth inequality is the great difficulty of borrowing money or any kind of asset. Patel and Bagchi (2018) point out that when the interest rates are high, people in lower social class avoid borrowing. Consequently, they have fewer opportunities to start their own business without such fundamental assets. According to McKernan (2013), discrimination by the upper and middle class against the lower social class discourages the poor from borrowing as well.
The negative impact of wealth gap in the society
The wealth gap is not on the economies but also on the individuals. The expansion in the salary disparity has significantly influenced the minority bunches in the nation who have stayed in the lower social classes (Jacobs & Dirlam, 2016). The 90% of the population have been left with a little level of wealth expanding destitution.
The entrance of basic administrations, for example, wellbeing has been influenced in many occasions (Hero & Levy, 2016). Expanded work levels in light of the fact that most of the wealth is collected by few individuals which compounds trouble on the administration as it is required to offer fundamental administrations, for example, instruction and wellbeing.
It causes an expansion in more awful wellbeing for the population, the poor as well as the rich (McKernan, 2013). More prominent gap in wealth dissemination causes lower prosperity, for example, psychological instabilities, sorrow and inclusion in wrongdoing, for example, strike and murder. Different issues are corpulence, imprisonment and social treacheries. Large amounts of wealth disparity influence US since it decreases the dimensions of intergenerational versatility (Saez & Zucman, 2016). The general population in the lower classes has encountered stagnation in profit and personal satisfaction.
The expanding gap between poor people and the rich families makes it exceptionally troublesome for the poor kids to climb the monetary stepping stool even later on (Jones, 2015). The well-off people acquire from the wealth gap contrasted with poor people and consequently kept on sustaining exercises that are expanding the gap (Buttrick & Oishi, 2017). Expanded destitution levels among the working class and the poor can be blamed for the expanded reliance and decreased saving, diminished ground-breaking developments and advancements in the white collar class and poor populations.
The solutions for the wealth inequality
There are many cause and effects of this income inequality but on the other hand the solution to remove this inequality is also present. To remove this inequality, the democracy and the role of all political parties is extremely important (Hero & Levy, 2016). Furthermore, all the policy makers have to design such policy that removes these inequality barriers (Jacobs &Dirlam, 2016). Decreasing imbalance in pay circulation is fundamental for social equity reasons in the general public. It is additionally imperative for social attachment and financial development. Reinforcing the enterprising biological system assumes a noteworthy job in decreasing disparity (McKernan, 2013). This includes offering instructing projects to poor people and working class just as arrangement of capital for new businesses and development of organizations.
Government responsibility through various offices cooperating to close the wealth gap and improve access to working capital by the private ventures help improve the social welfare. They incorporate decrease in home loans interests' rates (Saez & Zucman, 2016). Moderating lines of wealth should be possible by establishment of arrangements, for example, a wealth charge. Backing by wealth is a strategy that is trying in lessening the wealth gap yet it might create positive outcomes over the long haul (Scully et al., 2018). This is the place the well-off choose to help the activities that help improvement of wealth fairness Utilizing "benefit work" where the rich utilize their insight into wealth aggregation together with poor people (Jones, 2015). An improved instruction framework can be used to upgrade execution of poor people and the white collar class in work environments and organizations.
Conclusion
People think lightly about wealth inequality, but this inequality is why worse than average minds may think. Wealth gap should not be underestimated since it plays a major role in the economy. There are several elements and factors that lead to wealth gap and should not be ignored, they range from laying off of workers in the manufacturing sector, the poor finding it hard to borrow loans due to high interest. There are solutions that can be put in place to solve wealth gap, some of them are, removal of inequality barriers, decreasing payment imbalances. When all this are handled well, wealth gap can be handled.
Reference
Buttrick, N., & Oishi, S. (2017). The psychological consequences of income inequality. Social and Personality Psychology Compass, 11(3), N/a.
Chiteji, N., & Hamilton, D. (2003). Family connections and the black-white wealth gap among middle-class families. Conflict Management and Peace Science, 20(2), 9-28.
Ernesto F. L. Amaral, Sharron Xuanren Wang, Shih-Keng Yen, & Francisco Perez-Arce. (2018). A meta-regression analysis on the association between income inequality and intergenerational transmission of income.
Hero, R., & Levy, M. (2016). The Racial Structure of Economic Inequality in the United States: Understanding Change and Continuity in an Era of “Great Divergence”. Social Science Quarterly, 97(3), 491-505.
Jacobs, D., & Dirlam, J. (2016). Politics and Economic Stratification: Power Resources and Income Inequality in the United States 1. American Journal of Sociology, 122(2), 469-500.
Jones, C. (2015). Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality †. Journal of Economic Perspectives, 29(1), 29-46.
McKernan, S. M. (2013). Closing the Wealth Gap: Empowering Minority-Owned Businesses to Reach Their Full Potential for Growth and Job Creation. Urban Institute.
Patel, P. C., Doh, J. P., & Bagchi, S. (2018). Can Entrepreneurial Initiative Blunt the Economic Inequality–Growth Curse? Evidence From 92 Countries. Business and Society, .
Saez, E., & Zucman, G. (2016). Wealth in equality in the United States since 1913: Evidence from capitalized income tax data. Quarterly Journal of Economics, 131(2), 519-578.
Scully, M., Rothenberg, S., Beaton, E., Tang, Z., Bapuji, H., Husted, B., . . . Mir, R. (2018). Mobilizing the Wealthy: Doing “Privilege Work” and Challenging the Roots of Inequality. Business & Society, 57(6), 1075-1113.
