Category: Response Papers (Apr 24) (Page 1 of 2)

The United States is often seen as one of the wealthiest nations in the world today and while this might be true, the question of where most of this wealth resides comes into play. Most of the nation’s wealth goes towards the wealthiest 1%-5% people and the same can be said at the global level (the wealthiest people take home close to fifty percent of the global wealth). With people dying of starvation, homelessness and lack of healthcare and seeing the statistics, an obvious assumption is that there is not an equalized distribution of wealth or a fair one at least. A simple solution would be to increase taxes on the wealthy to either distribute to the lower income levels or increase funding for services for the nation such as free education and healthcare. While this is a logically moral action to take, the capitalist society we live in deems it as “liberal” and “socialist,” which often equates “we’re taking all your hard-earned money and giving it to other people” to the ears of many Americans.

Even though more money will be taken from the individuals who are better- off, that money will then be given to people who probably need the extra money more. In addition, consumers are the ones who fuel the economy, not the rich: businesses won’t thrive if the average consumer can’t afford to purchase it. If a majority of people can afford to buy items and services, businesses will be able to continue to produce and then people will be able to buy more, causing an economic stimulus. This doesn’t mean to give everyone the same amount of money; it just means that everyone should have a right to live and survive comfortably.

Over the years it seems that the wealth of those at the top of the economic ladder continues to steadily increase, while those stuck on the lower ends continue to stagnate. The argument has it that this unequal distribution of wealth can be traced back to corruption, a flawed taxation system, and other loopholes in our laws that favor the wealthy. I believe that removing these influences will certainly be a step in the right direction, but I also think that it’s important to recognize that total equality in terms of wealth can never be achieved in our country, lest we revert to communistic redistribution of wealth from person to person. As a consequence of our free market, capitalist economy, there will always be those who are richer and those who are poorer. However, our job as a nation is to do whatever we can ensure equal opportunity for all, and help create an environment that favors upwards mobility.

One major barrier in creating such an environment is education. It’s no secret that those who receive better education, namely college, tend to earn more in the future. However, college is an expensive institution, and so, as Piketty points out, “wealth… is a huge advantage in getting wealthier.” That said, one very important step we can take as a nation is to increase educational opportunity for those who do not earn enough to receive proper education. This may involve providing full tuition for low income students, or even counseling to help those in school stay in school. These efforts can be further supplemented by job training, employment centers, and other such governmental aide programs designed to help those stagnating in the lower income brackets. Simply adding more taxes on the rich, or even taxing them more “fairly” (despite the fact that the rich pay most of our taxes anyway), will either way be useless unless such programs are developed for the select purpose of increasing upwards mobility in the poor. In other words, instead of placing our efforts towards (at least exclusively) reducing the wealth of the rich, we should be more concerned with identifying the causes behind these cycles of poverty and take action to liberate people from it.

Chapter 10 of the CQ reader discusses wealth and inequality within the USA, which should simply be relabeled as the age old problem, which most likely will never be solved.  Throughout human history, there have been those who have, and those who don’t.  Be they Roman Patricians vs. Plebeians, Medieval Lords versus Serfs, the Bourgeoisie versus the Proletariat, to todays 1% versus the impoverished, humans have always gravitated towards systems where few owned the majority of the wealth, while doing so upon the labor of the many.  Furthermore, US history, spanning from things such as the Whiskey Excise through FDR’s New Deal and Reagan’s visits to the Bronx, has revolved around discussions regarding income and wealth inequality, and what measures should be taken to combat it, and what measures cross the line in the battle.

By definition, Capitalism is the pursuit of private wealth, and this pursuit tends to leave a majority of people behind, so two discussions could be had based off the discussions in chapter 10, either the abandonment of Capitalism, or the reformation of our economic system. Specifically, I am not necessarily concerned or surprised by the fact that in 2012, it was determined that the 1% controlled the most capital since the Depression.  Rather, what I would prefer was investigated, and it does not seem that it has been, is how we are going about creating wealth for everybody.  Simply put, I am unconvinced that taxing the wealthy will accomplish anything except for to increase the size of the welfare state, which will in turn exacerbate the issue at hand.  As in, the notion of 96% of federal taxes coming from the 1% as the text suggests at one point is preposterous in my mind.  These are simply symptoms and distractions of a greater issue.  Within the system that the US currently works under, it is possible for the creation of new wealth.  Rather, we are allowing ourselves to wallow in a system where the minority create and collect this wealth, rather than develop ways for everyone to benefit from this creation.

Historically speaking, increased spending on the military has led to an uptick in the economy, but it would behoove us to investigate alternative methods to find ways for everyone to benefit, including both the wealthy and the impoverished, which does not include exorbitant taxes or the redistribution of wealth.  This solution very well may not conform to increased taxes, such as those Democrats tend to support, or decreased taxes, such as those Republicans tend to support, in that both these systems cause temporary either upturns or downturns in the economy, without effecting the wealth gap or any long term benefits.  Rather we should try to step off the merry go round we have found ourselves in since the new deal, with liberal Presidents increasing taxes and the welfare state four years, and then conservative Presidents reversing these measures every four years, to the point that we have tended to stagnate and make no true progress.

Chpater 10 of the CQ Reader addresses questions of Wealth and Inequality (some such issues I addressed in my response to Chapters 9&11). A commonly heard idea is that life in America today is determined by a “lottery of birth,” meaning that those who are born into privilege are given a disproportionate chance at success when compared to the majority of the public not endowed with wealthy ancestry. The discussion in this chapter, namely in the section “Are parental background and inheritance becoming more important for success?” ran counter to many of the ideas that I had before reading about social and economic mobility in the country.

One reason that America has been heralded as a great nation is that there exists the possibility of upward mobility. Feasibility of realizing the “American Dream” made the United States more equitable than Western European nations, wherein wealth followed a crushing inheritance system, and inequality was assured with rigid class structure. Or so the story goes. It was my belief going into this reading that the United States was perhaps more equitable, but not nearly so permissive as the myth would suggest. In fact, contrary to systems in countries like Britain, where education and rigid de facto class separations serve to administer inequality, in the United States wealth disparity is (I believe) historically related to racial divides and ensuing systemic inequality. Though inheritance and concentration of wealth among the few is an important factor, so too is the inability to garner resources enough to move into a higher income bracket. Piketty claims that, “Wealth, inherited or not, is a huge advantage in becoming even wealthier,” and I tend to agree. Without resources to advance oneself in critical ways—such as getting an education and moving into more “desirable” areas—it is hard to imagine that someone can make it out from the bottom of the American economic system. I will not pretend to know what the solution to combatting this problem is. Perhaps taking a look at the systems implemented in other countries, like Sweden, as mentioned in the chapter, would be beneficial in policy development in the future. Questions of distribution of wealth, independent from income (such as tax and welfare benefits) is a characteristically touchy subject in the United States, but is increasingly important in a time where, “the top 1 percent owns about half of all global wealth and the bottom half less than five percent.”

The chapter brings up the fact that the stagnation of upwards mobility is a falsehood, citing statistics from Harvard economist Raj Chetty who found that, “upward mobility in the United States has not slowed and is actually similar to its level a generation ago.” Though perhaps this is true, to me it begs the question of what kind of nation the United States is attempting to be. Upward mobility a generation ago was at a high of 9%, and if the study is to be believed, then ~9% is where we remain today. The poorest members of our society are thus overwhelmingly condemned by statistics to remain in the underclass—is this the American way? It seems odd to me that discussion of income inequality is a debate of statistics when there is the glaring, underlying issue that the systems in place tend often to promote, if not a lottery of birth, at least a card game in which some are dealt a full hand, while others must fold.

The unequal distribution of wealth in America has been a controversial issue for decades now and is one of the most significant problems that our generation must face. Over the years, it has been observed that the wealth of those at the bottom have experienced little to no growth while the wealth of those at the top has risen dramatically. Have the wealthy CEOs and rich individuals simply been working that many times harder or is there something else at play here? The Occupy Wall Street Movement, which happened a few years back in 2011, sought to not only take action against income and wealth inequality but also against the corruption and enormous influence that large corporations have on our government. Ultimately, our government is unable to pass comprehensive laws regarding these issues due to the might of Wall Street and the billionaire class.

This has led to several weaknesses in different aspects of our government that the wealthy can take advantage of. The Panama Papers, which were released one year ago, exposed the methods by which the very wealthy elite could conveniently store away billions of dollars that would go uncollected by our flawed tax system. This corruption has gone on for far too long but a strong, effective solution to these problems has not yet been adopted. One such proposal by the French economist Thomas Piketty suggests a global tax on all forums of wealth and assets (trusts, partnerships, and stocks) but this idea has drawn controversy because it would lead to having more rich individuals who would spend money a lot more money on themselves rather than investing and helping others. Another proposal, this time by Professor Jacob Hacker of Yale University, suggests raising the top tax rate on the very rich to 45% if their income is between one and ten million or 49% if their annual income is over one billion. This idea would probably cause many large companies to minimize their enormously high pay packages for those at the top of the company. In my opinion, while these might not exactly be the best solutions to the wealth inequality problem in America, it might be a step in the right direction. It’s better to take action than to sit around and do nothing while people keep suffering.

Wealth and inequality has always been a controversial topic within the Unites States, especially with the past election, it being Presidential candidate Bernie Sanders’ main campaign focus. The popularity and support he received attests that this is felt by many. However, it is important to mention that Bernie Sanders was a socialist and the concept of creating a country with little to no wealth disparity is a socialist idea. The United States is a capitalist democracy, not a socialist country. Thus, it is inherent that there will be inequality in wealth.

America is known for its economic fundamental principles of a free trade economy and capitalism which in essence means that the government does not interfere in the economy rather allows economic freedom and consumer choice. In the economic sphere, capitalism encourages economic growth.  Thus, the claim that income inequality prevents economic growth is not valid. Many socialist and communist countries such as the former Soviet Union who promoted income equality and the termination of social classes based on wealth, were able to disband income inequality but were thrown into poverty. Therefore, to correlate income inequality and poverty is inaccurate.

Moreover, to suggest that we should increase the income tax on the rich in order to distribute to the poor goes against our countries capitalist principles. Not only do they pay more tax as it is now, it simply goes against what our country was build on and would turn America into more of a socialist country. I personally believe that instead of just taking more money away from those who are wealthier, there are other methods to help reduce poverty and lessen the income gap by helping those who are in a lower income bracket to earn more by creating more educational opportunities, employment workshops and training etc. We should be directing our efforts on how to increase the wealth of the poor in order to prevent the cycle from repeating itself than simply distributing the wealth of the rich simply because it is an easier option.

The conversation of income equality is a tough one to have because, we know that there is a problem with the distribution of wealth, but there is no clear way to decide how wealth should be distributed without there being opposition from those who are wealthy. Throughout the reading I noticed arguments that the wealth gap has stayed the same throughout the years, when considering the advancements, and modernization that differed between the poor in the 1920s and the poor now, such as access to indoor plumbing, or a refrigerator. I feel that the argument differs from what every other economist and historian argues because they state that as the world advanced, and capitalism became more prevalent, the wealth gap has increased dramatically. I wonder if the wealth gap is really larger now, or if it is the same based off of the new factors.

The question that has been ongoing is how do we make the wealth gap shorter. The wealth gap became so vast in the fist place due to the 1970s Reaganomics. The tax cuts that were created ended up benefiting the wealthy and business owners, while the working class got stuck with the higher taxes. The policy that President Obama developed taxed the wealthy 39.6% of their income, yet with so many loopholes attached to it, it makes it easier for businesses  to count some incomes as capital gains, meaning they are not getting taxed. Although, there is a policy in place that’s wants to tax the wealthy, it does not help to shorten the wealth gap because there are other situations such as offshore accounts. With offshore accounts, big businesses can keep their money tax free and unregulated, meaning the money that they are making is not going back to the economy.

Another question that I have about the increased taxes for the wealthy is will the money go back to improving the welfare system, and give benefits to those who are in the lower class, or will it go to other programs and government policies. What I also want to know is how will we improve the welfare system so that we can help people get off off their feet, and get out of the lower class? My other question is how are we going to help elevate the middle class. Some people and families who are in the middle class are barely surviving because of income, rent, and other monetary factors. We need a plan that is also going to help them, and make them feel less economically burdened. I think that we can create a welfare system like places in Scandinavia, but we have to do it in a way that will fit our population. The only problem is when creating policies that are used to combat the wealth gap,  someone is either going to lose, or the wealthy will try to combat it because it means the government is interfering too much in business practices.

You might still remember the Occupy Wall Street Movement back in 2011. The movement centered on the economic inequality in American as CQ Reader’s Chapter 10 has explored as well. As the world becomes more globalized, many jobs can be done in various countries separately. This also has a profound effect on wages of typical workers. Economic Policy Institute found that, “Since the 1970s, wages for the bottom 70 percent of earners barely grew even as corporate profits rose and as income for the top 1 percent increased 156 percent…” This is not a good news for low and middle class. People struggled to meet the monthly end, while the rich are spending time on the sunny beach enjoying life. So what makes America so unequal and how can we change that?

Historically, people with the most power tend to be richer than others. They hold down money and land from previous generations and make investment on top of it. They grow money with money with different investments or simply interests in the banks. CQ Reader states that, “According to Forbes’ global billionaires list, the top wealth holders have seen their holdings rise at 6 to 7 percent per year from 1987 to 2013.” The wealth holders are not just only working on high paying job, but their money can increase by sitting there. The wide gap in wealth eventually lead to further inequality in economy across all classes. More wealth for a family means the children can afford to go to well-funded public or private schools. With the top education, they can make into prestigious universities and head into international firms. On the other hand, middle or lower class are struggling to pay every bills. Their children might not be able to receive the best education. Often time, some kids need to work during school time to support their families. They are less likely to receive college education than the rich kids. The domino effect affects many generation and lead us to the situation today. As the cycle continues, the rich invests into the economy where the middle and lower class have no access too. The trickle-down theory does not work when the lower class’s wage is staggering. People does not receive the same benefit as the rich does.

I personally believe a huge part of inequality in this country has to do with the old tax system. The tax system has not been updated for centuries. The income brackets are not up to current income situation. The top 1 percent sometimes pay less tax than the middle class because they have various ways to avoid tax or transfer the money oversea to these tax haven. The middle class is struggling to nature their families while paying all the taxes. The country is built upon the strong middle class; we cannot let the middle class to disappear. However, the rich has the money to pay to the government to help out different programs. Some economists argue the economy will be worse if the rich gets tax more. I completely disagree on this. It might be true that the rich invest the most into the current economy and ask for more service. But the real question is how much does these get pass onto the normal people? Are we benefitting from their investments other than getting jobs that are paid in minimum wage? A country cannot be prosperity with a small amount of people. The middle class is the real source of better economy.

Chapter 10 in the CQ reader discusses wealth and inequality. Income inequality is an issue that I believe will be debated about until humans go extinct. And I only said debated. Will it be addressed and combatted? It has been, but the gap in income between the affluent and the poor is widening. So will income inequality be combatted effectively? I’m not sure.

I agree that there does need to be income inequality for the economy to thrive, but not an enormous gap we have now and will continue to have. Yes, economic growth is thriving, but the people that aren’t the wealthiest 1% are struggling. The price of everything is increasing and income isn’t increasing at the rate it should for the people that need it to. The rich’s consumption increases and the middle- and working-class’s consumption decreases. And it will continue to decrease if middle-class stores and restaurants decrease as well.

Education inequality is a factor that adds to income inequality. The rich are provided with the necessary tools to succeed and have the money to do so. The middle and working classes aren’t provided with the same opportunities as the rich. Mayor de Blasio passed the Fair Student Funding and it is helping certain schools, but other schools aren’t eligible or don’t receive adequate funding from the program. Personal responsibilities and choices do increase chances for social mobility. But the same opportunities must be provided for those born in the bottom 5% that are provided for others. Otherwise upward social mobility rates will not increase.

Increasing tax on the rich is too much to ask for. Because if I made $1 billion and I’m taxed 49% of that, I wouldn’t know how to live on only $500 million. And I definitely would have lost my desire to make more money.

We have a champagne class distribution of wealth, and the middle class is diminishing. Soon we’ll have only two distinct sections: the rich and the poor.

Taxes. The scariest T word in this day and age. Well, maybe the second. No one enjoys seeing their paycheck reduced by federal and state taxes, but we need the money in order for our country to properly function. We need to pay for things such as infrastructure and police officers. But we also have a responsibility to take care of the members of our society. The biggest question in this day and age, and most recent election, is: do the rich pay enough taxes?

In his State of the Union address, President Obama said, “… If you truly believe you could work full-time and support a family on less than $15,000 a year, go try.” President Obama has an excellent point. Families cannot survive in this country on minimum wage salaries. It is nearly impossible, especially once taxes are taken out. According to the Congressional Budget Office, in 2013, the United States provides families earning $25,400 a year with $9,600 in government benefits. These benefits are vital for the survival of these families.

These benefits are paid for with taxpayer money. Ron Haskins states, “After all, we’re spending $1 trillion between the federal government and the states on benefit programs, and our tax system is hugely progressive: The upper 20 percent pay over 90 percent of federal income taxes.” According to Curtis Dubay, “… the top 1 percent of households earned just under 15 percent of all income in 2010… they paid 39 percent of all federal income taxes – and more than 24 percent of all federal taxes that year.” The rich currently pay a majority of the taxes in this country already. I agree that they make ridiculous amounts of money, but have they paid their fair share?

Both sides cannot agree on a solution to this problem, but they can agree that there is a serious problem. The more benefits the government gives out; the more tax money is needed to cover the cost of these benefits. That much both sides can agree on. Further delving into the break down of the benefits given out can help us see the ways in which our money is being spent. Do the richest of this country pay their fair share of taxes? Perhaps. They make abnormal amounts of money, and they should pay taxes according to that. The poorest of the country should be required to pay according to what they can. When it comes to giving benefits to the poor, I wonder if there are additional ways to help them when it comes to education and the skills needed to find better jobs. At the end of the day, it boils down to political preference. Liberals wants more political intervention, which comes with a big price and conservatives prefer less political intervention. Who pays for it all is another story.