Term Paper: Inequality and the Gap Between Rich

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Inequality and the Gap Between Rich and Poor

It is generally accepted that there is an increasing gap between the rich and the poor, with the rich getting richer and the poor getting poorer. However, this general statement may not be an effective summary of the real situation. Various articles on the issue offer perspectives that indicate the complexity of the issue. In an article titled "The Wealth Divide: The Growing Gap in the United States Between the Rich and the Rest," Edward Wolff describes how income and wealth are not the same thing. In a New York Times article titled "Movin' On Up," it is shown that the rich and the poor are not static groups. Another New York Times article titled "Grounded by an Income Gap," questions whether inequality is really a problem that needs to be solved, or just a natural product of the economy. Finally, in the article "Poverty Is More Than a Matter of Income," Ray Boshara argues that considering the poverty gap involves considering both income poverty and asset poverty.

An article published in the Multinational Monitor titled "The Wealth Divide: The Growing Gap in the United States Between the Rich and the Rest" presents an interview with Edward Wolff, a professor of economics at New York University. The article provides information on the wealth gap in the United States, starting by noting that there is a difference between wealth and income. Wolff describes how wealth refers to the things that people own, including a home, real estate, shares, general belongings, and savings. One of the important things about wealth is that it determines how much income a person needs. For example, a person who owns their home outright and does not have a mortgage will be better off than a person who does not own their home, even if the two individuals have the same level of income. The other important point about wealth is that it provides a measure of security when individuals are unable to produce income for any reason. Wolff also describes trends and statistics regarding wealth in the article. These statistics include that in 1998, the richest one percent of households had 38% of all wealth and that the gap between the most wealthy and the least wealthy becomes constantly larger. This shows the extent of the inequality that exists in regards to wealth. It also shows how the wealthiest people make up only a small amount of the total population, yet have over one-third of the wealth. This shows that inequality does not exist only in regards to income, but is equally concerning in regards to the distribution of wealth.

An article published in the New York Times titled "Movin' On Up" argues a point that provides further clarification on the issue of comparing those in the lower percentage in regards to wealth and those in the higher percentage. The article argues that those who compare the lower percentages to the higher percentages make the incorrect assumption that the same people remain in the lower percentage. This makes an interesting point, which is that as long as everyone is ranked from highest to lowest, there is always going to be a group that is highest and a group that is lowest. However, this does not mean that the individuals in the lower percentages remain there. Instead, the individuals in the lower percentages may be temporarily there because of various reasons. They may also be on their way to increasing their wealth and moving up. This indicates that the gap between the rich and the poor may not be as static as some sources suggest. The article "Movin' On Up" also provides data to substantiate its claim that the lower wealth quintiles are not immobile. This data refers to the University of Michigan's Panel Survey on Income Dynamics. This study tracked over 3000 people for over 15 years, starting in 1975 and ending in 1991. The study found that only five percent of the "bottom dwellers" remained at that level after 17 years, including that almost 30% had made it to the top fifth. The study also found that those in the bottom levels were often there due to unemployment, retirement, or other circumstances. The main point suggested by the study is that there is no standard set of individuals who are at the bottom and will remain there. This indicates that the gap between the rich and the poor is not as simple as some sources suggest, especially when it is considered that at any given time, there will always be a group who are the richest and a group that is the poorest, with these groups constantly changing.

Alexander Stile's article "Grounded by an Income Gap" was published in the New York Times in December, 2001. The article starts by recognizing that inequality is on the increase and then considers why this is occurring. The suggestion made by the article is that inequality is a natural result of the economy. This refers to the fact that the economy rewards entrepreneurial skill, education, knowledge, and talent. This means that those with these talent, entrepreneurial skills, education, or knowledge gain financial success and this leads to greater financial success. In short, the economic system means that the strong become stronger, while the weak become weaker. The article then considers whether inequality is actually a problem that needs to be fixed. This provides both sides of the argument to show that for some, there is a need to fix it, while for others it is not considered a problem. For those who believe that inequality is a problem that needs to be solved, there are concerns that inequality is the source of people's dissatisfaction. Others believe that the problem is poverty, with people living in poverty having such limited resources that they are held back and are not able to achieve their potential. This refers especially to the link between education and success, with individuals lacking the income to be educated having their own financial success limited as a result. On the other side of the argument, some argue that the growing inequality is really just a result of demographic changes, with this especially related to the growth of the labor force and the fact that the prime labor force is growing due to an increase in immigrants and older workers. These arguments add complexity to the issue of inequality by raising questions about whether inequality is necessarily a problem.

The issue of poverty is again raised by Ray Boshara in his New York Times article titled "Poverty Is More Than a Matter of Income." This article focuses specifically on asset poverty, noting that asset poverty is rising. This means that even though income poverty has been rising, this is not a real sign that the situation is improving. This is true because asset poverty is rising, meaning that individuals own fewer assets. This creates a false sense of improvement, since most measures look at income levels, not asset levels. The article also notes that low income levels result in low asset levels since families on low incomes cannot afford to buy assets. These low assets may actually result in the family appearing to live above the poverty line, since income would not be required for a mortgage. This means that a family may be able to get buy on a low income. However, the family on a low income does not have the opportunity to get ahead, meaning that they are likely to remain at the same level. In addition, this means that the family has no assets to fall back on if the income levels are reduced for any reason, such as unemployment, accident, or illness. The end result is that the family living just above the poverty… [END OF PREVIEW]

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