Saturday, January 22, 2011
The rich and the rest
The article begins by outlining the various problems a growing economic inequality may cause for our world. Big economic players from England's Prime Minister David Cameron, to Warren Buffet have continuously cautioned about the problems with the growing economic inequality from country to country. Buffet has been trumpeting a higher estate tax for years, saying that the lack thereof only allows inequality to persist. The article highlights the change in recent frame-shift in many people's views toward inequality. Pre-recession debate was largely about not having a dramatic change in inequality, but rather ensuring that the poor don't slip further into poverty, a somewhat laissez-faire approach to addressing the economic gap. Whereas many of the solutions discussed in the recent debate point to the need for income redistribution by taxing the rich, the article says that addressing issues that impede economic growth and propping up the social safety net are two ways to take on inequality without taxing the rich. These policies have been implemented in various countries, including Brazil and have curbed the growing gap. The article finishes with interesting proposals. It is posited that in many of the countries affected by income inequality, the elite are the only ones that have access to various mechanisms for getting richer. This makes sense, they have access to internet, where the poor do not, the often run in crowds that give them the opportunity to network and gain insider information. China even has restrictions on migration, keeping poor farmers in the countryside and preventing them from maybe getting a leg up. Governments should try to give a freer, better access to education, they should also break down the barriers that keep the poor from getting access to insider information. The internet could be the tool to do this, but again, it is often only available to the more well-off.
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6 comments:
To solve the problem of income gap, It is more beneficial to keep their focus on pushing up the bottom and middle rather than dragging down the top. For the poor, lack of significant level of education can widen the gap from the rich. Invest more on the education is always a good choice to solve this gap. As for the hukou problem that the article mentioned, it is a cause of gap, however, on the other hand, it prevent rural population crowding in the city, and it keep the stability of job market within the city.
This article also points to the moral issues regarding capitalism. We are becoming a materialistic, consumer-oriented society through capitalism, though many will argue that the success of this economic system outweighs its immoral impact on society.
The article points out that many people and politicians are using inequality as a kind of scapegoat for the financial crisis and other social problems. There is no real evidence, as the author explains, that proves that inequality and murder rates are positively correlated. Of course it is important to make sure that the poor in countries across the world are improving; the fact is, inequality is a fact of life with capitalism. It is important to make sure that as the poor are not becoming worse off as the rich get richer.
It is unfortunate that we have these moral issues due to capitalism. The reality is there will always be the rich and the poor in this capitalism. This article does not exactly explain how would investing in education would improve the fight against inequality. If this was to improve the standard living then it would not work if you look at comparing the expenditures on education and GDP per capita in each country.
Inequality of wealth has been a problem far before capitalism existed. Manorialism and fuedalism are good examples of economic systems which created far greater economic disparity then capitalism did.
Also I believe there are confounding variables such as religion and racism against minorities which create the inequality, in capitalist economies.
How the problem of a widening gap between poor and rich should be addressed has been a center of debates for a while now. While I don’t see easing access to public education as a main solution to the problem, some would argue that it would solve the problem in the long run. Changing tax system, focusing on redistribution and welfare programs might be a better solution in the short run. Recent tax cuts extensions for middle class folks and increased taxes on capital gain aim to solve the problem in the short run. While means to addressing this problem can be arguable, it is clear that the rising gap between poor and rich has to be address carefully. Previous, politicians tried to address this problem by easing access to the housing market for poor which resulted in a resent sub-prime mortgage crisis.
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