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Economic inequity is also called the gap between the poor and the rich, wealth disparity, income inequity, or the income and wealth difference. It is referred as the various distributions of income and wealth between or within individuals or populations. Typically, the term refers to the inequality among groups and individuals within a society, but it can also mean inequality among nations. Economic inequality issue involves opportunity equality, life expectancy, equality of result, and equity. However, economic inequality is different between societies, economic systems and structures; for example; socialism or capitalism, and historical time (Creedy, 2006).
For many years, the society of America has cherished competitive people by holding a belief that individuals who succeed in their life are those who work hard. Society also believes that these workers have the best ability while individuals who suffer with poverty are those who do not have the ability or do not work hard. However, the distribution of wealth in America is so divisive because of the system of ranking individuals or groups according to their economic and social statuses below or above others with very minimum social mobility or movement, from a class to another. It is due to the attitude of the American citizens insisting that the core root of the country’s poverty is immorality: America is able of ignoring its 37 million who are impoverished. Moreover, they maintain that the United States is structured systematically to retain these individuals in the lower class. In fact, the executives of Google can easily breathe with their stock of multi-billion dollars knowing that their status and power will be retained by the country’s economic system that stigmatizes and oppresses the poor (Lindsey, 2009).
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The majority of American citizens are suffering from untrue consciousness: a mindset that all Americans accept the system of political-economic while obviously remaining open to its harm. The majority of the citizens of America do not recognize how unequal their country is; America has reached an inequality level that is considered extraordinary, as compared to other countries of the Third World. The top 20 percent individuals control 84 percent of the wealth of America. Further, it has been demonstrated that those in the extreme power and wealth position like the executives of Google who have taken the bigger share of resources and they have the control over the political sphere (Ryscavage, 2008).
The citizens of America are proud of their economic system; they believe that it creates opportunities for all to have better lives. However, their belief is clouded by the fact that the persistence of poverty is in all the parts of the country. Moreover, anti-poverty efforts by the government have developed some progress but have not ended the issue. Similarly, times of firm economic growth that create more jobs with higher wages have assisted in reducing poverty in America but it has ot eliminated the problem. The federal government has defined a minimum income amount necessary for the maintenance of a family of four people. This figure fluctuates depending on the location of the family and the cost of living. In 1998, a four individual family, earning less than $16,530 annually, is considered poor. The percentage of poor people in America reduced from 22.4% in 1959 to 11.4% in 1978. Since then it has been fluctuating in a fairly narrow range. In 1998, it was maintained at 12.7% (Ryscavage, 2008).
In 1998, over a quarter of black Americans (26.1%) were poor; even though distressingly high, the figure reflected an improvement from 1979 when the number of classified poor black Americans was 31%. The figure of 1979 had been the least rate since 1959 for this group. A family whose head is a single mother is most likely to be poor. Partly because of this phenomenon, one out of five children (18.9 %) living in America in 1997 was regarded as poor. The rate of poverty was 36.7% among black American children and 34.4% among Hispanic babies.
Various analysts suggest that the American figure of official poverty overstates the actual level of poverty because they only measure cash income and does not include certain assistance programs of the government like health care, food stamps, and public housing. However, others point out that these government programs do not cover the entire family’s health care or food needs. Moreover, there is always a public housing shortage. Some say that even Americans citizens with income level above the official poverty sometimes do not eat; they skip food to pay for things like clothing, health care and housing. However, others argue that sometimes individuals at the poverty level receive money from casual work that is never included in the official statistic records (Lustig, 2005).
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It is obvious that the American economy does not divide its rewards equally. In 1997, one-fifth wealthier Americans families were accounted for 47.2% of the county’s income. In contrast, the one-fifth poorest accounted for 4.2% of the country’s income, and the poorest 40% earned 14% of America’s income. Despite the American economy being prosperous as a whole, the issue of inequality concern persisted during the 80s and 90s. Increasing international competition threatened employees of the majority of traditional manufacturing companies, and making their wages stagnate.
The opinion that poverty is connected to several misfortunes like crime, despair, and illness is known all over. The Bible has different references to poverty. For example, the Kings of Israel were judged by the way they treated the poor. Jesus favored the poor and their family over that of the powerful and rich. Some churches have also held the stand that poor people deserve charity and alms, and no one should treat them unkindly. The idea that the poor people refuse to work and are lazy relates to the argument that they will opt to commit crimes since they consider it the easy way out. This iis the same as the opinions being made frequently concerning welfare. The majority of Americans believe that if handouts are offered like the welfare, the lower class will not go to work (Ryscavage, 2008).
Generally, there are several other explanations as to why crime and poverty might be connected, other than those explanations, because of the approach of utilitarian rational calculus. For example it is possible that poverty is connected to other factors like malnutrition, resentment, or low intelligence. Because of these factors, poverty automatically promotes crime. However, besides some theories that are indirect, several direct connections between poverty and crime have been expounded on. For instance, if crime and poverty are related, then the countries with high level of poverty have a high rate of crimes. Similarly, crime in America rises during economic depression and reduces whenever opportunities and economic conditions improve (Shahin, 2004).
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One essential determinant in the development of inequity is the individual variation in the access to education. However, education particularly in areas where workers are highly in demand promotes high wage for those with the necessary education. Moreover, an increase in education increases income inequity growth before decreasing it. Therefore, people who can afford education or who choose not to continue with optional education, generally earn much less wages. This is justified by the fact that the lack of necessary education may lead to direct less income and, thus, less aggregate investment and saving. Increase in family wealth and income inequity promotes greater education attachment and dispersion. Individuals at the lowest level of education distribution have further fallen below the average education level. Therefore, the provision of education to American citizens increases income, while at the same time promoting growth because it assists to unleash the potential productivity of the poor (Ryscavage, 2008).
Similarly, trade liberation can change the American inequity from an international scale to a domestic scale. When rich nations trade with poorer nations, the workers that are less skilled in the richest nation may experience a reduced income because of competition. However, the less skilled employer in a poor nation may experience an increase in income. Estimations from one trade economists indicate that trade liberation have promoted significant effects on the rising United States’ inequity. However, economists contend that trade effects on America’s inequity is minor in comparable trade to other causes like the innovation of technology. Lawrence Katz indicates that trade has accounted for 5-15% of the rising inequity income. In particular, he argues that invention of technology and automation has implied that machines have replaced less skilled jobs in wealthier countries. In addition, those rich nations no longer have significant figures of less skilled manufacturing employers, which could be affected by a poor country’s competition (Lustig, 2005).
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