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Income, Wealth, and Inequality

Income inequality is one of the defining features of modern economies, including in the United States. According to Coady and Dizioli (2017), “rising income inequality over recent decades is a growing concern for policymakers worldwide” (p. 3). It is primarily determined by the uneven distribution of various material goods. In a market economy, income is distributed in the markets of different factors of production: labor, natural resources, the capital. The degree of possession of these resources determines the nature of the redistribution of benefits, which causes the problem of income inequality. The main reasons for inequality are unequal distribution of property, differences in educational level, skills, work experience, and other essential factors.

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Wealth inequality is another prominent manifestation of the difference between various groups of people. Akin and Mirakhor (2019) state that “financialization has incomparably higher effects on wealth inequality compared to the income inequality” (p. 108). Compared to income inequality, it has different characteristics, but it also leads to social injustice. The main hallmark of wealth inequality in the United States is that most property and wealth belong to a small percentage of society. This leads to the fact that the general level of wealth of the biggest part of the population is not high enough. As a result, many people, even with high incomes, cannot afford to own particular objects and live decent lives.

One of the striking features of financial inequality in the United States today is the racial wealth gap. Although the modern world is diligently combating racism, it has not yet been fully eradicated, which causes multiple economic and other social problems. Many complications cause this gap at the moment. These include the insufficient level of education of many people of color, mistrust of employers, low-skilled labor, and other reasons. As a consequence, white people have much more opportunities to earn a high income and acquire wealth.

The problem of inequality can also be attributed to global stratification. This is a phenomenon that is determined by the deliberately different economic and social states of countries. The differences can also include the level of education, cultural development, science, and other areas. Each state is individual and unique concerning each of these aspects. Thus, it is almost impossible to achieve complete equality in the modern world in such a situation. In addition, “those who control the means of production also control and manipulate the social structure” (Thompson, Hickey, & Thompson, 2016, p. 287). One can name rich and poor countries; however, each has the characteristics that distinguish it from others. Consequently, representatives of various states are initially in different positions, and it is hard to achieve equality between them.

In particular, global stratification is closely related to economic inequality. Historically, countries are divided into rich and poor, developing and developed. Residents of many small states cannot find decent jobs with high wages. At the same time, people in wealthy countries have many jobs and income opportunities. Thus, this inequality can be noted throughout the whole world economic system. To eradicate it, unfortunately, a complete restructuring of society is necessary, which is not possible now. Undoubtedly, the modern exchange of goods and care of undeveloped countries has a significant effect on this issue. However, the world financial system still needs many adjustments to achieve totally correct and beneficial functioning.

References

Akin, T., & Mirakhor, A. (2019). Wealth inequality, asset redistribution and risk-sharing Islamic finance. Walter de Gruyter GmbH & Co KG.

Coady, D., & Dizioli, A. (2017). Income inequality and education revisited: Persistence, endogenity, and heterogeneity. International Monetary Fund.

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Thompson. W. E., Hickey, J. V., & Thompson, M. L. (2016). Society in focus: An introduction to sociology. Rowman & Littlefield.

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StudyCorgi. (2022, April 12). Income, Wealth, and Inequality. Retrieved from https://studycorgi.com/income-wealth-and-inequality/

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StudyCorgi. 2022. "Income, Wealth, and Inequality." April 12, 2022. https://studycorgi.com/income-wealth-and-inequality/.

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StudyCorgi. (2022) 'Income, Wealth, and Inequality'. 12 April.

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