Long Report (2400)
S.SHARON
REVISEDLONGREPORT.docx
Political Influence Contributes to the Widening Gap of Wealth
Globalization and technological changes have led to enhanced inequality among individuals in various communities, a factor that has resulted in widening of the wealth gap thus less competitiveness among some people while making educated individuals more competitive. The little truth in this is that the tasks that most individuals were carrying out before can now get done by lower paid workers or by the use of the computer-driven machines at fair costs. However, this illustration overlooks an essential phenomenon as to why the wealth gap keeps on widening between the poor and the rich. The increasing concentration of the political power in both the corporate and financial elite has gotten to the forefront to influence the rules by which the economy runs thus leading to the widened wealth gap. Various ideas explain this phenomenon.
A. Alterations of the Various Forms of Laws Widens the Wealth Gap
The loosening of the bankruptcy laws has resulted in inequality in acquiring credits
Most corporations such as airlines, automobile manufacturers have benefited from such acts an aspect that has permitted such corporations to leave workers and communities stranded (Reich, 2015). Besides, even though the established laws benefit the large corporations, the same has not gotten extended to the homeowners burdened by mortgage debts or the graduates overwhelmed with the student loans with their debts never forgiven. The most significant auto manufacturers and the large banks got bailed in 2008, with the risks of the economic failure from such practice getting shifted to the backs of the taxpayers and the average working individuals (Reich, 2015). The aspect enables the rich owning the large corporations and those owned by the government keep on accumulating wealth while the poor and the average working citizen getting burdened by economic failures a factor that widens the wealth gap between such individuals.
The existing loopholes in tax laws have resulted in increased wealth gap
Special loopholes exit in the tax laws for the partners of hedge funds and the private-equity funds that have aided the widening of the wealth gap between the rich and the poor. Besides, special favors have gotten established for the oil and gas industries, lower marginal income-tax rates on the highest incomes and decreased taxes on great wealth. The reduced taxes on the vast wealth translate to increased taxes on the average workers and other taxpayers a factor that makes the reach to continue amassing the wealth widening the gap. Besides, the various agreements such as the free trade (Trans-Pacific Partnership) offer substantial protection to the intellectual property and the financial assets, but less protection given to the labor of the average working Americans (Reich, 2015). The practice has led to reduced employment benefits to the ordinary workers in the American society with the portion of the employees with any pension attached to their jobs have reduced from just half in 1979 to below 35 % today. These changes have resulted in high corporate profits, increased returns for the shareholders and high pay for the executives from various organizations but lower payment and high prices charged on other Americans resulting in widened wealth gap.
From the alterations of these laws, the changes in technology and globalization that have resulted in less competitiveness among the American workers or lack of education needed to be sufficiently productive are not only the problem. The market itself forms the primary problem getting influenced to the direction of the moneyed interests that have exerted disproportionate influence over it. On the other hand, the average workers have lost the bargaining power both economically and politically making them not able to receive a large part of the gains of the economy as what they enjoyed in the last three decades after World War II. The tax and the systems of benefits have not helped when it comes to the distribution of income, a factor that has further widened the wealth gap.
The government can also influence the distribution of wealth through the tax policy. Through this policy, the government has a choice on what taxes to levy, how much they should collect and the type of individuals to be taxed. Numerous factors have an impact on such policies. Such factors include the kind of government and the social group that affects the policies. Such factors cannot get noticed easily by an average person but have great significance in the distribution of wealth between individuals. The government may decide and levy more taxes on certain goods consumed mostly by the commons while those limited to the high social class individuals have low taxes levied on them (Cowen, 2012). These will ensure that the ordinary citizens get taxed more compared to the other individuals supposed to pay much of the taxes depending on individual income. The same individuals maybe the owners of the products that these citizens are paying for and thus much of the profits go to them. Some of these people also have shares in the government operations, and they too earn from the taxes thus widening the wealth gap.
B. Politics have played an Essential Role in Widening the Wealth Gap between the Rich and the Poor.
The impacts of politics arise from various aspects such as on investments and the educational personnel needed in the labor markets.
The underinvestment in "the Commons" increases the wealth gap
According to Rivkin, the pressures due to globalization and changes in technology have had significant impacts on the weakening of the labor unions. Besides, Rivkin feels that the sustained underinvestment by the government and other businesses (the institutions and the services that provide extensive community benefits such as schools and roads) in the commons is detrimental (Reuben, 2015). In the commons, the limited investments have led to most individuals not getting the job opportunities hence remaining underemployed.
Besides, not only through the investments that the politics have favored certain regions but underinvestment regarding education is also an element that has shown favoritism. Limited institutions in these regions that have limited the chances of these individuals from being competitive in the markets due to lack of the needed institutions that can provide them with the needed skills required in the labor markets (Cowen, 2012). Lack of such investment has favored specific regions, and in areas where the government and major businesses have had significant investments, numerous job opportunities for the individuals that have enhanced the living standards of such people. Besides, various institutions get established in the areas that have ensured that they have the needed skills in the markets.
Highly educated personnel needed in the job markets
The job markets due to the technological changes and globalization now need a highly trained workforce. The number of job and employment rates has reduced for individuals with less-skills a factor that has enhanced the number of households with children, but no male breadwinner, leading to widening of the wage gaps. Besides, there exists high demand for the college graduates that has outpaced the pool of the job candidates, increasing the difference between the middle class and the upper-middle class. Most of the job opportunities in the markets get taken up by the upper-class individuals since they have the chances of getting employed due to their levels of education. Besides, most of these individuals have the power to influence some of the politicians and the business owners to get used.
The establishment of the technology has also led to the elimination of some individuals considered surplus to the requirements in the job markets. The aspect has enhanced the rates of unemployment, especially among the middle classes hence widening the wealth gap (Reuben, 2015). With most people becoming unemployed, they do not have the needed resources to support their families and makes them languish in poverty leading to an enhanced gap in the distribution of income between such people and those employed.
C. Unequal influence in the Society, a Major Contributor to the Existing Wealth Gap in U.S
The wealth gap between the poor and the rich gets widened by different influence on various individuals and businesses. Most of the individuals of high socioeconomic status have more significant impacts on the government and the stakeholders of various organizations (Iara, 2015). With such influences, these people have the high chances of getting the jobs, and other benefits as those from the low socioeconomics may not get. One essential way in which the aspect has gotten manifested is earning of the salary. An unequal distribution in earning the salary among individuals has also persisted among people. Those from the high social class earn more wages for the same job opportunities than those from the low social classes due to their influence on the stakeholders of such business and their levels of education. Besides, their experiences and skills will enable them to earn more than the individuals who have not gone through adequate training.
Percentages of the assets held by the wealth class in the United States
Percentages sage
Assets held by wealthy Americans
Another essential influence that can create widened wealth gap within the government is on the monetary policy. Through this policy, the government controls the supply of money, a factor that ensures the stability in prices and establishes confidence and the general trust for the currency in a nation. The policy has an objective to foster the economic growth of the country, stability and to lower the rate of unemployment. However, due to the unequal influence, the government can concentrate their impact on the control of money supply to specific regions especially those inhabited by the individuals of high social classes and leave the other areas resulting to a widened wealth gap (Eisner & Gosling, 2015). The government can also regulate the businesses activities undertaken by individuals. The state can entrust some individuals with highly productive businesses or risky businesses that will bring them more profits and limits such opportunities to the individuals from low social classes. Besides, the chances get limited by individual’s abilities that hinder the flow of money (Kelly, 2016). For instance, the individuals from high social classes may have the needed resources to venture in certain businesses considered highly profitable, and this will bring them more profits than the individuals who are venturing in less risky companies or that which require less capital to start and thus limited on the earnings that they get.
D. Advanced Technology has resulted to the Wealth Gap in between the Poor and the Rich
Automation
The advancements in technology form one of the major causes of the widened wealth gap between the poor and the rich. Automation evident in most leading companies forms an essential way in which technology has resulted in an increased wealth gap leading to the replacement of the human labor (Reuben, 2015). The industrial owners through the use of these machines continue to amaze wealth through mass production and high profits while the individuals who are getting replaced ends up being jobless. An increased widening of the wealth gap between individuals is the result of the automation in
Moreover, with good jobs and high salaries, the living standards of such individuals get enhanced, and this leads to the creation of significant difference between lives that people live. Improved technology results in wealth and income getting concentrated meaning no equality of the opportunity in numerous societies and this influences the growth of individuals where some people have high chances of growth while others languish in poverty.
The labor-saving technologies have replaced the several blue-collar jobs that paid well to most people, and this has mainly affected middle earners (Reuben, 2015). The use of robots, automated processes the internet of things and machine learning especially in information and communication have made the workers here redundant. The robots have become smarter over time. The new models in the markets can learn, and the advances in the artificial intelligence will also enhance the value of the robots. The aspect has made the robots to get preferred over human labor. The use of robots has enhanced the hourly wages, an aspect of significant benefits to the product owners. On the other hand, the automation such as self-driving cars has the prospect of reducing the number of drivers and through such replacements; some individuals earn more while other people will miss such opportunities due to unemployment leading to an increased wealth gap (Hudak, 2014). The automation has the effect on the emerging economies with most of the developing countries at risk. These nations have also begun taking part in the production of robots that will highly lead to the increased unemployment rates in the states and thus more significant wealth gap.
The skills needed to operate various devices have increased the wealth gap
The operation of the technology requires skills learned that most individuals do not have possession and the jobs only given to the people having the needed skills for such operations. Since most people of low social class do not have such skills that they cannot employ in the operation of the devices, they end up not getting engaged in the high paying jobs and in the industries, they get low paying jobs (Tamai, 2015). On the other hand, the individuals from upper social classes often have the needed skills in various fields because having the resources they can go through any form of training required to get hired in multiple firms. Also, with the knowledge and skill, such individuals can get high paying jobs, and through this, they get more money than their counterparts from the low social classes.
The wealth gap continues to widen in most nations all over the world. The poor still get involved in less productive activities compared to the rich due to the limited resources these individuals have Reuben, 2015). Besides, the government has also played a part in widening the wealth gap. The establishment of the various laws such as the bankruptcy and tax laws has favored certain groups of people, and this gives them certain advantages over the other individuals leading to more wealth on their parts. The government can also influence the investments in other regions hence making the individuals miss the job opportunities. The education level has also played a part in creating the wealth gap since most businesses now require skilled labor not common with every individual. The technology has also played a role especially an automaton that has led to job replacement.
A representation of share of total household wealth growth accruing to various wealth groups from 1983-201
Wealth Groups
Total Household
References
Beattie, A. (Feb 2, 2018). How Government Influence Markets. Retrieved from, https://www.investopedia.com/articles/economics/11/how-governments-influence-markets.asp
Eisner, M. A., & Gosling, J. J. (2015). Economics, politics, and American public policy. Routledge.
Hudak, J. (2014). Presidential pork: White house influence over the distribution of federal grants. Brookings Institution Press.
Iara, A. (2015). Wealth distribution and taxation in EU Members. Office for Official Publications of the European Communities.
Kelly, N. (2016). Political Choice and Income Inequality in the United States. Retrieved from, http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.198.6923
Pazzanese, C. (Feb 9, 2016). The Rich and the Rest. Retrieved from, https://www.usnews.com/news/the-report/articles/2016-02-09/the-costs-of-inequality-the-rich-and-the-rest
Reich, R. (March 28, 2015). The Real Reason for The Growing Gap Between Rich and Poor. Retrieved from, http://www.newsweek.com/real-reason-growing-gap-between-rich-and-poor-377662.
Reuben, A. (May 21, 2015). Gap between Rich and Poor keeps growing. Retrieved from, http://www.bbc.com/news/business-32824770.
Tamai, T. (2015). Redistributive taxation, wealth distribution, and economic growth. Journal of Economics, 115(2), 133-152.
Series 1 Financial securities Stocks Life insurance Deposits Position accounts Total debt 1 0.8 0.6 0.4 0.2 0.05 Series 2 Financial securities Stocks Life insurance Deposits Position accounts Total debt 0 4.4 1.8 2.8 Series 3 Financial securities Stocks Life insurance Deposits Position accounts Total debt 2 2 3 5
Series 1 -2.60% -1.30% -1.50% fourth/fifth 80th- < 90th percntile 90th- < 95th Percntile 95th- < 99th percentile Top 1 percent 0 0 0 0.403 0.509 0.6016 0.884 0.983
