Rich get Richer and Poor get Poorer
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In today’s world people want to be healthy, happy and well educated and most want to own some type of capital. They also want to be well paid for the work that they do and they prefer to pay as little tax as possible. While everybody is happier when the rate of inflation is low and when the economy is growing and everyone is getting better off. In booming economic times, such as we recently have enjoyed, the only problem is that “the rich get richer and the poor get poorer.” Because company profits have been down but the head executives are still getting all the perks, like, stock options, and bonuses that’s capitalism and that is the American dream.
Poverty is a problem the government has been trying to fix. Many welfare programs help the poor, whom are individuals who lack food, shelter, and clothing, with food stamps, and assistance for both transportation and childcare. From 1996 to recent years the policies on welfare reform have become more stringent on receiving benefits, the government has been working harder on training and placing individuals in the work force.
An article by Martin Hattersley says that one in five children in the U.S. lives in poverty, and 1.3 million are homeless, a 100% increase in the past ten years. Over a fifteen year period, the family incomes of the lowest 20% of the U.S. population have shrunk by more than a fifth. The incomes of the highest 20% have risen by thirty per cent and the poorest fifth of the United States population have less than one twenty-fifth of the country’s total income: the highest fifth have approximately half. This means the gap between the rich and poor has broaden throughout the years.
The problem of the poorest of the population is that the fact that they don’t have any ownership of any of the resources. Another problem is the cost of interest, tax and rent which have made the difference between being rich and poor in the world that we live in.
Martin Hattersley stated from an article he wrote that, the Census Bureau figures released in October 1997 show that the average U.S. household had still not regained the income lost in the 1989-93 slump. The average 1996 incomes were virtually the same as 1973’s. There was no gain in income relative to inflation.
In the article “Boom for Whom?” from the Left Business Observer (LBO) said the poverty rate declined slightly from 1997 to 1998, from 11.6% to 11.2% but the trend over the last 20 years has been relatively flat. Poverty has continued to decline as a percentage of average incomes from 43% of the average in 1959 to 33% in 1982 to 28% in 1998. The black poverty rate is the lowest on record and for female-headed households 28% are poor, and 19% of our children live in poor households
Kathryn Larin a policy analyst says that income disparities are hitting families with children the hardest and during the last decade, the income gap between the richest and poorest families grew in 37 states, home to 86 percent of the nation’s population. Nor is the middle class better off than it was. In the country as a whole, the average income of the middle fifth of families fell by $390 since the mid-1980s.
The inequalities of incomes are an important feature of the market economy this is what drives people to work harder and strive for a better life. This is what makes competition work and the person who can best serve the consumer, will profit most and as a result becomes rich.
Still, high-income families gained the most in the 1990s, and inequality grew over the decade. The increase in income inequality has resulted from a number of factors, including both economic trends and government policy. By implementing a wide range of supports for low-income working families state and federal lawmakers can help control the growing income divide. But why should the people work hard and help others who don’t help themselves, this is a big issue with today’s poverty. Is the inequality on incomes the government problem or is it the problem for one self? Is inequality of income fair or unjust? Does how much your neighbor makes matter, it should be a question of self interest of an individual the drive of making more money and living a comfortable life.
In the article found on LBO, most of the boom years have been devoted to recovering the income losses of the early 1990s. Poor households those in the bottom 20% of the income distribution still hadn’t recovered 1989’s level. And this in a time when GDP was up almost 30% after adjustment for inflation 14% per capita, after accounting for population increase but that barely compensates for the widening of the income gap from the early 1980s into the early 1990s, which is mainly the result of the arrival of poorer immigrants it went mainly into the pockets of the richest 5%, whose incomes are up 22% since 1989, with more than half of it coming in the last 5 years.
The new economy has many college graduates, professionals, and specialists that have obtained greater pay increases than low-skill groups, because of the higher education. Education plays a significant role for the economy and for people who do not complete high school are unstable and poorly paid in the job market. People with a higher education statistically will make more money. The government provides education and many ways for students who are willing to acquire a degree. It should not be that difficult for one to further their education for bettering one self. Education also helps for a better and more efficient work force. In the past couple of years after the stock market fell into a slump the country has been in a slight recession. How do we fix the problem in this new economy with falling poverty? The first step in dealing with the current recession is to recognize clearly its cause. The cause of the recession was the collapse of the stock market. This ended the investment boom in the technology sectors; soon firms will be unwilling to commit themselves to long term investments. This will in turn lead to lower output of the countries GDP and because of the decline on tech investment people will soon have to make up for their lost stock market wealth, if they are to have sufficient savings to support their retirement, children’s college, medical emergencies or other financial needs.
Increases in government spending will have to be an important activity because these expenditures are under the direct control of the government, and therefore the benefit from such spending is guaranteed. Repairing public schools in poor areas will encourage education for the younger generations to come. Help the unemployed get jobs, different policies that help boost economic growth. Until the economy can sustain a positive long term goal the United States will stay in a recession for many years to come. But with different fiscal policies and programs we should be able to tolerate the necessary functions of a strong economy.