The Harvard business, highlighted how Americans perceived income

The American dream, “rags to riches,” and “work hard with determination, and you shall the past several decades? The definition of Income inequality, according to the equality trust states that, “Income inequality is the extent to which income The unequivocal distribution of wealth arises with many problems including: unfair income redistribution, political instability, and many socio-psychological dilemmas especially to those affected directly. Moreover, in 2011 a viral study done by Dan Ariely and Michael Norton at Harvard business, highlighted how Americans perceived income inequality and income redistribution. The study proved how wrongly Americans underestimated the extremity of the vastly underestimated the a relatively low income inequality compared to other European Union countries). The participants the equal distribution, with some 92% of Americans preferring the Sweden distribution to the United States” (Ariely and Norton). Knowledgeable about how the economy works in the United States, a complete equal socialist income redistribution would not work nor would it be ideal in this country. In fact, this study also, suggested how the 92% of Americans whom preferred the Sweden pie chart favored some inequality to perfect equality, but not to the extreme degree present in the United States. “All groups—even the wealthiest respondents—desired a more equal distribution of wealth than what they estimated the current United States level to be, and all groups also desired some inequality—even the poorest respondents” (Ariely and Norton). One of the important factors in economics for any society to strive pertains to a healthy middle class. “The presence of a sizable, well-off middle class typically presumes as an important factor in the growth and development of today’s successful industrial economies. The middle class provides much of the labor force for the economy and is a key market for the national product. A large portion of a country’s tax revenue Wilson). No proven argument opposes the view that the middle class continues to decline for many decades in the United States. In fact, in the mid-1980s several researchers noticed a disturbing trend in the United States: the size and perhaps the relative affluence of the middle class appeared to be declining. Defining the middle class as those with incomes between 75% and 125% of the median income, studies concluded that the percentage of middle class households fell from 28.2% in 1967 to 23.7% in 1983 (Foster and Wilson). Proving that since the late 60s a double the 4 percentage point increase at the bottom.” Hinting the continuous middle class shrinkage over the past decades. According to the National Public Radio, “By 2013, families in the upper-income brackets had seven times as much wealth as middle-income families. Compare that to 1983, when the difference was three times as much.” This comes to no surprise as the rich are getting richer and the poor getting poorer. Tax breaks to the wealthy such as, tax cuts on mortgages and estate tax only makes the rich, richer. Instead of trickle down economies and tax cuts on the rich, proposing tax cuts to the poor and middle class will provide a substantial amount of economic leverage thus, reducing income distribution in the economy. The cost of living steadily increases over time as minimum wage continues to slowly increase. National debate over the recent years to increase the minimum wage to a livable wage continues to spark controversy. Poverty substantially is higher in states where wages at the bottom of the distribution are lowest (Stevens and Pihl). The Bureau of Labor Statistics explains, “In 2014, 82 percent of the working poor who usually worked full time experienced at least one of the major labor market problems, earnings continued to be the most common problem: With 67 percent subject to low earnings, either as the major problem or in combination with other labor market problems” (BLS). The political ongoing debate of wage continues to make headlines for political platforms in the democratic and republican parties. Furthermore, does income inequality increase political instability? Many studies show with an imperfect redistribution politicians take advantage of the lower class promising fair economic redistribution for their political campaign. In an influential paper, Allan Meltzer and Scott Richard argued that the median voter’s interest in redistribution will be greater in more unequal societies. “Since self-interested politicians want to maximize their chance of gaining or retaining power, they will strive to translate the median voter’s preferences into policy action. In democratic politics, this mechanism should translate higher initial inequality into higher subsequent redistribution” (Luebaker). The Meltzer and Richard model conducted in 1981 explains how the extension of franchise (that allowed poorer voters to participate in elections) leads to increased redistribution, and hence a greater size of government. However, the most intriguing part of their argument predicts how greater inequality in the primary distribution of incomes shifts voters’ preferences and produces more redistribution. Studies show an increase of inequality creates incentives to engage in violent protests, coups, and other politically destabilizing activities. To further explain the socio-economic relationship, Alesina’s and Perrotti’s socio-economic study conducted in 1996 described “A large group of impoverished citizens, facing a small and with the existing socio-economic status quo and demand radical changes. So that mass violence and illegal seizure of power are more likely than, when income distribution is more equitable” (Alesina and Perotti). In 1996, Alesina and Perotti concluded that “the mechanism linking inequality to growth that received the strongest result from empirical investigation was that of political instability.” Correspondingly, according to a peer reviewed article, “exploring the relationship between socio-economic inequality, political and economic growth,” “Political instability Moreover, in the United States where income inequality dominates the economy, this attributes to general overall poor health. “Greater income inequality “Recent evidence suggests that many other social problems, including mental illness, violence, imprisonment, lack of trust, teenage births, obesity, drug abuse, and poor educational performance of schoolchildren, are also more common in more unequal societies” (Wilkinson & Pickett). Many psychological studies have shown that the unfair disadvantages of the economy detrimentally affects children’s mental and physical health. In a meta-analysis of 155 papers (168 analyses) provides relatively strong support for the claim that higher income inequality has a negative influence on population health, with 70% of the reviewed studies “wholly” or “partially” supporting this finding (Wilkinson & Pickett). Nowadays, dual households where the two heads of the household have to work and socially restricted. Also, health behaviors such as, alcohol and drug abuse commonly found in unfair economies especially with minorities such as, the black and Hispanic communities. “In 2000, the ratio of per capita income of Whites to Blacks was 1.66 and of Whites to Hispanics was 1.97, with 15% of Whites, almost 30% of Blacks, and more than 20% of Hispanics having family incomes below the federal poverty threshold .25 Use of these relative measures seems especially relevant given our interest in examining whether race/ethnicity moderates the associations between income inequality and alcohol outcomes” (Karriker-Jaffe, al). Evidence concludes how income inequality socially and health wise affects many minorities today. Despite all the problems that present themselves socially and psychologically in America, the final question asks: what can this country do to decrease income inequality? Firstly, we Americans have accepted the myth that extreme income inequality is acceptable in our economy. Even when that accounts of becoming part of the top 1%. This form of thinking derives from the embodiment of turning rags into riches. The chances of a disadvantaged child born into poverty becoming the next member of the economic elite are slim to none. History shows that the economy booms when the middle class strives, and the wealth equally distributes out. Additionally, a multitude of studies shows that the amount of income inequality that many face today equates to the same amount of income inequality many faced during the great depression. Increasing minimum wage has the potential to help millions out of poverty: increasing minimum wage does not hurt employment nor retards the economy. Opening government programs to help build policies on building assets is an important way for the working-poor and middle-class to increase assets.Also, readily available effective retirement and saving plans will also help in building assets and increase wealth overtime to the majority of working households. One of the most imperative investments the government must enact on the investment of higher education. Providing higher education at little to no cost to Americans such as, vocational careers increases economic mobility and supports many skilled workers to contribute and unify the economy. Many countries such as Germany, Norway, Finland, and Sweden provide a universally free college education. By eliminating tax deductions to the wealthiest Americans this is possible and increasing taxes respectfully to each individual’s income will also provide stronger welfare programs. For instance, Sweden has a developed a social welfare to eliminate poverty and provide extensive benefits to all of its citizens. These benefits include universal healthcare, government pensions, and other welfare support. Many yearly reports show how Nordic countries have higher standards of living and overall quality of life due to low income inequality. America needs to follow the example of other progressive Nordic countries to tackle income inequality and reinstate the quality of American living. As William Dean Howells once famously said, “Inequality is as dear to the American heart as liberty itself.”


I'm Mary!


Check it out