Inequality in the US: Government Interventions

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Table of Contents

Introduction
Why the government should care about the rising inequality
Reversing the trend
Conclusion
Works Cited

Introduction

Different studies have highlighted the increasing inequalities in the US (Freeland 60; Packer 1; Bernasek 1). Such studies tend to show that inequality has always been a part of the US economy. However, the rising gap between the rich and the poor has widened at unprecedented rates in the recent past. Today, many rich people earn the largest share of income than the rest. Consequently, there are social, economic, and political repercussions associated with disparity in incomes. Such impacts have profound effects on society and could explain why governments should care about inequality. Therefore, the issue of inequality in the US is a topic of profound interest to policymakers, economists, society, and other scholars. This essay focuses the growing inequality in the US and possible interventions by the government to avert the trend.

Why the government should care about the rising inequality

There are major economic, political, and social reasons why the government should care about the widening gap of inequality in the US. The well-being of citizens may directly rely on inequality because of its many dimensions. For instance, inequality presents itself in income gaps, wealth distribution, healthcare provisions, exposure to environmental risks, and gaining access to justice among others. In the case of justice, inequality may undermine the rule of law in the US.

On this note, majorities tend to consider unequal society as highly unfair in resource distribution. The poor masses in such societies experience utility loss while the rich thrive because of their high status. In this case, inequality becomes unfair to the poor masses because they have limited opportunities for mobility.

It is difficult to achieve equal opportunities in a society, which is deeply rooted in inequality. In most studies, economists have focused on poverty and neglected inequality and its related impacts. To this end, studies (Bernasek 1) have indicated that poverty, as a manifestation of inequality in a society, causes poor standards of living and health. In addition, it affects individuals and limits any potential progress of a society by restricting chances of attaining quality education for competition in the labor market. While poverty might be responsible for several factors in enhancing inequality, one may also observe inequality in nontrivial aspects. For instance, poor children may not have economic means for better education relative to children with greater wealth. In turn, poor children with limited opportunities in society may find it difficult to achieve equality.

Inequality affects politics of the US. McClintock argues that the rise in economic inequality undermines the US fundamental beliefs and democracy, which claim freedom, equality, and justice (McClintock 1). Economic power tends to influence political power even in highly developed democratic nations. In the US, economic power has worked well during political contributions. This situation creates far-reaching impacts as scholars begin to look at it as Winner-Take-All Politics perpetuated by organized money (Packer 1).

The result has been powerful political forces with no interest of the public and not interested in fixing public issues. Consequently, the US political system has created a dangerous pathway that would plunge the country into instability as witnessed during the recent debt-ceiling debacle. This resulted from “ideological rigidity bordering on fanaticism, an indifference to facts, an inability to think beyond the short-term and the dissolution of national interest into partisan advantage” (Packer 1). Hence, economic and political repercussions of inequality could create different drawbacks in society.

The growing gap of equality has persisted for the last 40 years. This implies that it could be impossible to use simple political rhetoric to fix the trend. As few people accumulate more wealth, they become extremely powerful and influential, which make it simple for them to influence political decisions. In most cases, such political decisions would allow them to amass wealth to the point that it would be difficult to address causes and effects of inequality (Packer 1).

As countries become highly integrated through markets, communication, and transportation systems, Americans begin to reach out to the world in search for new investment opportunities (Friedman 470). They look for countries with low labor costs and other favorable environments for foreign investors. Consequently, they have been able to outsource some business abroad. Some critics have linked the rise in globalization to the increasing inequality in the US because of outsourced jobs.

Reversing the trend

Although many politicians and some experts discuss inequality in the US, few of these opinion leaders have ideas on how to reverse the growing trend of inequality. The major challenge is that no one can agree on causes of inequality and its solutions. Moreover, a study by Freeland established that the wealthy group had a loose connection with the masses and were unlikely to be concerned with issues regarding inequality (Freeland 60).

At the same time, others have argued that impacts of inequality may not be completely detrimental (Bernasek 1). Such studies have claimed that inequality acts like an economic incentive, which drives people to productivity for higher wages. Therefore, without inequality individuals would lack incentives to be productive. Supporters of inequality also claim that the rich use their increased wealth for further productions and investments, which facilitate economic growth and job creation.

McClintock argues that the government should raise the minimal wage to reduce the gap between the rich and the poor (McClintock 1). He points out that the underlying causes of inequality include globalization and developments in technologies. These factors are likely to persist into the future. Therefore, only individuals who can utilize the artificial intelligence will prosper.

While many politicians express their concerns about inequality, majorities of them simply do not know how to tackle the problem. Consequently, they turn to short-term solutions like higher taxes for the rich while others deny that inequality does not exist. Meanwhile, some scholars assert that raising the Federal minimum wage will help in curbing the rising inequality (McClintock 1). This would result in high spending power among the masses. Generally, the US economy is consumerism, but the minimum wage for the masses is too low to spur any meaningful spending among consumers. Therefore, a raise in the Federal minimum wage will enhance the spending power of the majority and facilitate economic growth and job creation.

The government may review its economic policies and create higher marginal taxes to fix inequality. However, making investments in critical areas for young people could help in reducing the problem.

Many have recognized loopholes in the tax regime that favors the rich at the expense of the middle class. Such loopholes benefit private interests, equity, and interest deduction on mortgage will only favor the rich who purchase luxurious homes. A policy that promotes fairness without exemptions would be progressive for the US inequality. Deregulation of the entire system could also help. For instance, there are restrictive rules, which protect lucrative jobs, such physicians from mass competition.

Parker observed that the past forms of lobbying were highly effective relative to current ones (Packer 1). Lobbyists achieved results, but only after struggle. Hence, legislative advocacy requires active involvement of lobby groups.

Conclusion

Various studies have documented the rising inequality between the rich and the poor. Today, inequality has started to have its effects on society. It divides society based on incomes, residential neighborhood, and consumption patterns. The rich and other elites are detached from impacts of inequality in society. Consequently, it is difficult for them to understand effects of inequality. The masses consider the society as unfair in wealth distribution. They also believe that not much would come from their efforts when the system offers no means of mobility. Inequality results in the pursuit of elusive dreams because many politicians discuss it but they do not understand its causes or impacts. As a result, they are unable to offer any meaningful solutions. It also undermines American democracy and fair opportunities for all.

Meanwhile, inequality continues to create widespread gaps in society and unbalanced economic systems that reward the rich and leave the rest with nothing to spend.

Effective reforms in the law could alter the US growing trend of inequality. Eliminating a tax regime system that favors the rich could fix some challenges. However, the government must review minimal wages to protect the masses and check the income gap variation. Further, effective review of economic policies coupled with strong legislative advocacy could eliminate the challenge of inequality in the US.

Works Cited

Bernasek, Anna. Income Inequality, and Its Cost. 2006. Web.

Freeland, Chrystia. “The Rich are Different from You and Me.” Atlantic Monthly 308.1 (2011): 60. Print.

Friedman, Thomas. Globalization: The Super-Story. New York: Farrar, Straus & Giroux, 2002. Print.

McClintock, Makai. Income inequality in the United States: An argument for raising the federal minimum wage. 2013. Web.

Packer, George. The Broken Contract: Inequality and American Decline. 2011. Web.

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