Economic Growth versus Income Inequality Essay
For ten years now, our economy has been growing more dramatically than any other time since World War II. . The stock market is at an all-time high. The government is spending less on itself, and more on the people-weve finally achieved a balanced budget. If were doing so well, why isnt everyone getting rich? Most economists point to the fact that the upper class is running away with capitalism-and that the middle class is left to defend itself.
Many experts have renamed it the anxious class because most Americans (in fact, 70% of the entire population) isnt living the lifestyle their parents had in the fifties, while the top 5% is more affluent than ever before. This brings us to the two problems we face as a nation: Should we slow down growth to let everyone else catch up? Or will addressing income inequality eventually hurt the economy for everyone? Three different perspectives have been created that attempt to solve these problems. Fair share proponents want drastic government intervention to guarantee equal benefits and results for everyone at the expense of growth. Fair start supporters feel that by providing equal opportunity, the playing field will be leveled without hurting the growth of the economy. Those in favor of free market are satisfied with current conditions and, if anything, would like to see less regulation in business and more growth to an economy that appears to be slowing down as it is.
Free market supporters, who I will refer to as strict capitalists, want to accelerate and accentuate the expansive growth periods of the late-nineties.
They feel that a capitalist economy, if rested in the hands of its laborers and consumers, is able to stand on its own because it are the participants that can make the best decisions as to how goods are allocated and certain needs are met. For this growth to be prolonged, they accept the existence of income inequality as a necessary element that spurs innovation, risk-taking, and progress. To summarize the capitalist agenda, they would like to reduce government spending and regulations while increasing incentives for growth. This is best accomplished by lowering taxes on the wealthy to allow as many people as possible to engage in entrepreneurial activity. Another way of decreasing the role of the federal government includes balancing the budget by lowering debt; doing this will free up money for private investment and small business loans, both of which improve the overall health of the economy. In response to fair start and fair share groups, capitalists feel that promoting growth and reducing the role of the government will ultimately improve the standard of living for everyone since all incomes will rise with the overall expansion of the economy.
They would like to improve education, as the fair start proposal plans to do; but capitalists feel that pouring more money into public schools does not guarantee better students. In fact, most free marketers would like to see a voucher system that improves education through competition, not simply dumping money on something and hoping for the best.
Proponents of fair share ideals, who I will commonly refer to as socialists, accept slow growth as a result of watered-down global economics while they hope to establish equal incomes. Market-socialists want to stabilize the local economy with heavy government intervention. They feel that income redistribution will allow everyone to achieve equal results, even if that means slamming the brakes on a progressive economy, because they prefer this is the only way for a society to meet its participants basic needs. Heavily taxing the wealthy would provide a means for raising minimum wage and funding welfare programs that would raise the standard of living for the bottom.
To address concerns in the labor market, such as health standards and working conditions, socialists supports unions as a way of preventing executives from exploiting the working class. They are against both capitalists and fair start groups for reasons: Capitalists allow the rich to get richer as they leave behind the working class, which means that a free market only benefits those who possess money and power. Fair start groups dont go .