According to Krugman, wealth inequality is a social and political problem rather than an economic problem. Most of the corporations replace the top management personnel with people who are financial well-up even when they do not possess the required qualification. The qualification for promotion is the background since most of the C.E.Os comes from wealthy families. This continues to widen the gap between the rich and the poor. The top management from many companies continues to enjoy luxurious life and numerous benefits in kind while the average employees continue to be exploited in the payments, thus widen the gap between the poor and the rich (Krugman 2002). This becomes a social problem because the few barons control the largest share of the economy wealth while most of the citizens leave under severe poverty. The danger is that despite the fact that this inequality is identified, few people speak about and therefore, the inequality continues to increase over time.
In United States, the income inequality has continued to grow at an alarming rate. There are several issues that are termed as the causes of the widening gap. The gap between the middle class earners and top earners is the main cause, although there gender and race also play a key role. There has been great divergence between the salaries increment awarded to average workers as compared to the increment in top management.
According to statistics, the salary increment of top earners, who comprise of 1% of the total US population, receives 392% compared and tax rates are reduced to 37%. This is in contrast to 60% accorded to middle classes Americans, who comprise 40% of the population. Racial and gender equality also result to the disparity in income though they are on reducing edge. Most of the women consider other factors besides wages (Krugman 2002). They take less demanding careers, willing to work for government and other non-profit organization that pay less as compared to private sectors. They end up receiving lower salaries with minimal chances of promotions. Asian American races stand a higher chance to receive higher wages than the rest of the population while African Americans receive the least even if they hold similar qualifications.
[...] To start with, wealth inequality has much to do with social factors than the economic factors. The wealth and general income disparity can be associated with basic social factors, which include gender, race and, educational background. In American society, there are sectors that discriminate employees based on these issues despite the fight on equality. Most of the women prefer to take career options that are not so demanding and also avoid working for longer hours or away from the residence. [...]
[...] Asian American races stand a higher chance to receive higher wages than the rest of the population while African Americans receive the least even if they hold similar qualifications. There are different methods that are used to calculate inequality difference. The main one is gin coefficient index, which calculates income inequality to scale. Inequality difference is indicated by the level of gin. The greater the number the higher the inequality, zero indicates an equality illustrating that everyone has equal income while one indicates a perfect inequality, that is, one person possessing all the incomes. [...]
[...] The danger is that despite the fact that this inequality is identified, few people speak about and therefore, the inequality continues to increase over time. In United States, the income inequality has continued to grow at an alarming rate. There are several issues that are termed as the causes of the widening gap. The gap between the middle class earners and top earners is the main cause, although there gender and race also play a key role. There has been great divergence between the salaries increment awarded to average workers as compared to the increment in top management. [...]
[...] Higher income earners are taxed at favorable rates while low income earners taxes continues to exploit them therefore, reducing their income margin hence wider gap is created. In conclusion, wealth inequality impact to the economy results from political and social issues. The US government must work with economist to ensure that wealth equality is attained to avoid concentrating resources to a few individuals. Policies such as new deal that control the wealth of individuals should be implemented. Reference Krugman Paul. (2002). For Richer. Retrieved from http://www.nytimes.com/2002/10/20/magazine/for- richer.html?pagewanted=all&src=pm retrieved on 30th April Larry M. Bartels. (2008). Unequal Democracy: The Political Economy of the New Gilded Age. [...]
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