Day: April 24, 2017

The unequal distribution of wealth in America has been a controversial issue for decades now and is one of the most significant problems that our generation must face. Over the years, it has been observed that the wealth of those at the bottom have experienced little to no growth while the wealth of those at the top has risen dramatically. Have the wealthy CEOs and rich individuals simply been working that many times harder or is there something else at play here? The Occupy Wall Street Movement, which happened a few years back in 2011, sought to not only take action against income and wealth inequality but also against the corruption and enormous influence that large corporations have on our government. Ultimately, our government is unable to pass comprehensive laws regarding these issues due to the might of Wall Street and the billionaire class.

This has led to several weaknesses in different aspects of our government that the wealthy can take advantage of. The Panama Papers, which were released one year ago, exposed the methods by which the very wealthy elite could conveniently store away billions of dollars that would go uncollected by our flawed tax system. This corruption has gone on for far too long but a strong, effective solution to these problems has not yet been adopted. One such proposal by the French economist Thomas Piketty suggests a global tax on all forums of wealth and assets (trusts, partnerships, and stocks) but this idea has drawn controversy because it would lead to having more rich individuals who would spend money a lot more money on themselves rather than investing and helping others. Another proposal, this time by Professor Jacob Hacker of Yale University, suggests raising the top tax rate on the very rich to 45% if their income is between one and ten million or 49% if their annual income is over one billion. This idea would probably cause many large companies to minimize their enormously high pay packages for those at the top of the company. In my opinion, while these might not exactly be the best solutions to the wealth inequality problem in America, it might be a step in the right direction. It’s better to take action than to sit around and do nothing while people keep suffering.

Wealth and inequality has always been a controversial topic within the Unites States, especially with the past election, it being Presidential candidate Bernie Sanders’ main campaign focus. The popularity and support he received attests that this is felt by many. However, it is important to mention that Bernie Sanders was a socialist and the concept of creating a country with little to no wealth disparity is a socialist idea. The United States is a capitalist democracy, not a socialist country. Thus, it is inherent that there will be inequality in wealth.

America is known for its economic fundamental principles of a free trade economy and capitalism which in essence means that the government does not interfere in the economy rather allows economic freedom and consumer choice. In the economic sphere, capitalism encourages economic growth.  Thus, the claim that income inequality prevents economic growth is not valid. Many socialist and communist countries such as the former Soviet Union who promoted income equality and the termination of social classes based on wealth, were able to disband income inequality but were thrown into poverty. Therefore, to correlate income inequality and poverty is inaccurate.

Moreover, to suggest that we should increase the income tax on the rich in order to distribute to the poor goes against our countries capitalist principles. Not only do they pay more tax as it is now, it simply goes against what our country was build on and would turn America into more of a socialist country. I personally believe that instead of just taking more money away from those who are wealthier, there are other methods to help reduce poverty and lessen the income gap by helping those who are in a lower income bracket to earn more by creating more educational opportunities, employment workshops and training etc. We should be directing our efforts on how to increase the wealth of the poor in order to prevent the cycle from repeating itself than simply distributing the wealth of the rich simply because it is an easier option.

Upon reading this week’s chapters regarding the topic of homelessness, it struck me how many different factors besides poverty is a cause of homelessness; insufficient resources, discrimination, and unaffordable housing all contribute to the issue of homelessness. Thus, solving the issue of homelessness is a more complex process that needs to address the various contributing factors.

The “Housing the Homeless” and “Opening Doors” approach which avoids shelters and instead provides housing for those who have lost their homes is only beneficial to a portion of the homeless population, mostly those who struggle financially and economically. However, this doesn’t address the problem for those who are homeless due to other factors such as lack of education, mental illness etc. For these people, in order to help them keep their homes, we need to address the root of the problem to prevent a repeated cycle of homelessness.

Similarly, combating discrimination in housing is another example of getting to the root of the problem. Not only to people of color and different race face discrimination, but this is also a severe issue for disabled people as well. As a result, minorities and the disabled are forced to settle in poor neighborhoods and are unable to receive the same comforts, security, and opportunities.

Overall, the issue of homelessness is complex and multifaceted and needs to be addressed from all facets in order to be fully solved. A more active role by the government and our public officials to enforce policies, provide rehabilitation, job training etc. is needed to reduce homelessness and to ensure that every person is able to have a place they can call home.

The conversation of income equality is a tough one to have because, we know that there is a problem with the distribution of wealth, but there is no clear way to decide how wealth should be distributed without there being opposition from those who are wealthy. Throughout the reading I noticed arguments that the wealth gap has stayed the same throughout the years, when considering the advancements, and modernization that differed between the poor in the 1920s and the poor now, such as access to indoor plumbing, or a refrigerator. I feel that the argument differs from what every other economist and historian argues because they state that as the world advanced, and capitalism became more prevalent, the wealth gap has increased dramatically. I wonder if the wealth gap is really larger now, or if it is the same based off of the new factors.

The question that has been ongoing is how do we make the wealth gap shorter. The wealth gap became so vast in the fist place due to the 1970s Reaganomics. The tax cuts that were created ended up benefiting the wealthy and business owners, while the working class got stuck with the higher taxes. The policy that President Obama developed taxed the wealthy 39.6% of their income, yet with so many loopholes attached to it, it makes it easier for businesses  to count some incomes as capital gains, meaning they are not getting taxed. Although, there is a policy in place that’s wants to tax the wealthy, it does not help to shorten the wealth gap because there are other situations such as offshore accounts. With offshore accounts, big businesses can keep their money tax free and unregulated, meaning the money that they are making is not going back to the economy.

Another question that I have about the increased taxes for the wealthy is will the money go back to improving the welfare system, and give benefits to those who are in the lower class, or will it go to other programs and government policies. What I also want to know is how will we improve the welfare system so that we can help people get off off their feet, and get out of the lower class? My other question is how are we going to help elevate the middle class. Some people and families who are in the middle class are barely surviving because of income, rent, and other monetary factors. We need a plan that is also going to help them, and make them feel less economically burdened. I think that we can create a welfare system like places in Scandinavia, but we have to do it in a way that will fit our population. The only problem is when creating policies that are used to combat the wealth gap,  someone is either going to lose, or the wealthy will try to combat it because it means the government is interfering too much in business practices.