Introduction
One of the fundamental problems of society remains economic inequality, which leads to a number of critical consequences affecting the quality of life and well-being of the population. Strictly speaking, economic inequality should be understood as a differentiation in economic well-being between specific categories of the population; the serious social gap between the rich and the poor is a particular example of such inequality. It is noteworthy that inequality determines the level of development of an economic system since it is generally accepted that the more developed a particular civilization is, the closer it is to solving the problem of such inequality. It seems that in an ideal society, all members of the population live in financial prosperity and have equal opportunities and economic rights; however, the real world is far from this. This research paper will discuss the problem of economic inequality and show how this concept relates to poverty.
Current Agenda
Economic inequality is not an abstract model but rather characterizes the current state of the socioeconomic agenda. While such a problem is expected to have always existed, the gap has recently begun to widen (Bradley, 2016). According to Figure 1, the wage gap between CEO and rank-and-file workers in the U.S. has increased rapidly over the past half century, reaching a record high in 2015. This means that during this period, economic wealth has been actively concentrated in the hands of the affluent class, while there has been an impoverishment of the middle and lower economic classes of society. The data reports that the U.S. ranks lowest on the list of wealthy countries, which implies low political effectiveness in managing the problem (Grusky, 2016). Grusky additionally reports on the challenges the country faces on a daily basis: these include low employment among mature women and middle-aged men, as well as U.S. economic non-mobility. In other words, there is a serious economic gap between the rich and the poor in the country that tends to widen over time.
Meanwhile, the problem of economic inequality is not unique to the United States, although that country has received increased public attention because of its expected economic progressiveness. In fact, it is reported that only one percent of the planet collectively holds more wealth than the rest of the world (Dodgson, 2017). To put it another way, the wealthiest people on the planet have enormous financial resources in their hands, and judging by the agenda, this gap continues to grow. In the long run, this problem, without proper political regulation, leads to an intensification of economic inequality, which means that poor people find themselves increasingly poorer.
Conceptualizing the Issue
An essential feature of the problem of economic inequality is the sense of injustice associated with it. Modern society has developed mainly along a capitalist path in which competition and the use of capital are fundamental criteria. This approach to civilizational development creates a situation in which some communities are more capable and economically privileged than others — this creates the problem of inequality. In other words, the root of economic inequality lies in the unfair distribution of public goods and resources, in which some individuals have more power than others.
Of particular relevance to the public debate is the question of the causes of such inequality. News reports often show us examples of corruption among politicians and people in business, in which case we speak of inequality that was born out of crime. Probably, understanding their political power and feeling impunity, the individuals in power step on the criminal path and illegally enrich themselves, but the sources of this money become ordinary people (Bradley, 2016). If corruption as a phenomenon did not exist, then finances would be intelligently spent on the social needs of the state and would help poor people get out of that class and become more accessible in an economic context.
It should be noted that economic inequality is not a problem in and of itself but a characteristic of society at a particular stage of development. As Bradley writes, people do not die from economic inequality because they are able to adapt and survive. However, increasing economic gaps lead to a shortage of resources for certain groups of people. A country’s aggregate demand falls due to people’s lack of finances, which translates into ambiguous GDP dynamics (Cooper, 2017). As a consequence, people are dying due to lack of food, low availability of quality medicine, and despair associated with poverty.
The Importance of Economic Inequality
It is unlikely that society will one day reach a level of development in which absolutely all individuals in the population have equal economic opportunities; on the contrary, the problem of inequality will always accompany the civilizational process. However, we should draw a line and report that inequality is ambiguously related to poverty. In a sense, the higher the economic inequality, the more significant the gap between the rich and the poor, and thus the increasing phenomenon of poverty in a community. Nevertheless, the world is dynamic, and evolving social, political, and technological opportunities create the conditions for the poor to become rich, a phenomenon commonly referred to as income mobility (Bradley, 2016). The UN’s global poverty reduction projects also aim to achieve economic well-being for all people, and these projects are already showing some results (Dodgson. 2017). In other words, society seems to be moving rapidly toward economic well-being for all classes of people, but it is unlikely that these steps will solve economic inequality. More specifically, economic inequality as a phenomenon will persist forever since, in any community, some individuals are more talented and nimbler than others. Nevertheless, the existence of economic inequality does not mean the simultaneous existence of poverty, although an indirect link can be drawn between the two.
An alternative viewpoint can also be suggested, which encourages the idea of economic inequality as a key factor in a country’s economic development. If we disregard corruption but consider that inequality is caused by differences in talent, inherited wealth, and different economic decisions, it seems that such inequality can be a motivating force. In particular, the existence of differential wages encourages workers to try harder in order to earn more. This is the theoretical basis of capitalism as an idea of economic competition, in which everyone has opportunities for development, but not everyone tends to take advantage of them. Thus, economic inequality is an essential characteristic of a society that describes development. However, inequality is not a predictor of poverty since there are more variables in this regard.
References
Bradley, A. R. (2016). Poverty, not income inequality, is our modern problem. The Washington Times.
Cooper, R. (2017). The Great Recession never ended. The Week.
Dodgson, R. (2017). If we want to fight inequality and poverty, we need to take a more humane approach to economics. Independent.
Grusky, D. B. (2016). Stanford report shows that U.S. performs poorly on poverty and inequality measures. Stanford News.