The Growing Gap between the Poor and the Rich
The gap between the poor and the rich has stretched to its widest levels since time memorial. Economic inequality also referred to as the gap between the poor and the rich, wealth disparity or income inequality consists of the differences in the income and wealth distribution. Typically the term, the gap between the poor and the rich refers to inequality among groups and individuals in the society, but can as well refer to inequality among countries. The gap between the poor and the rich is related to the concept of equity: opportunity equality and outcome equality. This paper explores different aspects related to the growing gap between the poor and the rich.
There are several reasons why there is a growing gap between the poor and the rich within societies. These reasons normally are interrelated. The major factors that are seen to affect the growing gap include innate ability, culture, education, globalization, labor markets, policy, taxes reforms, technological changes, racism, gender, inequality in salaries and wages.A major cause of the growing gap between the poor and the rich within modern economies is the wage determination by the capitalist market. The job wages are determined by demand and supply in the capitalist market. For instance, in a situation where there are many workers who are willing to do a job for a desirable time, then the supply of labor will be high for that job. On the other hand, there will be a low demand for a job in case there are few persons willing to do the job. When the supply is high and the demand is low for a job, there will be a low wage.
Apart from this market related factors which impact the inequality of the wages, government facilitated initiatives can as well decrease or increase inequality. Policy makers and social scientists debate the effectiveness and relative merits of every strategy of inequality regulation. Typical initiatives of several governments that can reduce the growing gap between the poor and the rich include public education which can increase the skilled labor supply and reduce the income inequality because of education differentials. Implementation of progressive taxation that will result to the rich being taxed relatively more as compared to the poor; hence the amount of income inequality in society will be reduced. Minimum wage legislation initiative will raise the income of the poorest workers. Products subsidization initiative will result to services and goods being provided cheaply to everybody.
In conclusion, the trend whereby only the rich become rich can be resolved or reversed by putting more emphasis on financial literacy, education and investing in human capital, but this is not expected to be effected within the next decade because the growing divide between the poor and the rich in most countries such as USA is worsening because of the manner in which the resources are allocated.