Income and Economic Inequality Essay Example

in the society with continuously have an advantage over the poor in the society. Politicians can initiate social welfare programs which help improve the living standards of the poor. Social welfare programs can help redistribute wealth in the society by targeting low-income groups in the society.

Taxation can help mitigate and redistribute wealth between the poor and the rich in the society (Nkumunue 67). Some taxation policies favor the rich. The income gap increases when the rich and individuals with higher incomes are taxed lowly by the government. Taxation has a huge negative impact on individuals that receive lower incomes. The rich on the other feel a very small impact when the government taxes their incomes. The government can reduce income inequalities by setting higher rates for rich individuals and reducing the amount of tax paid by the poor or individuals receiving low incomes. The incomes collected after taxing the rich can then be used by policy makers to reduce inequalities that exist in the society. More schools, for instance, can be created and empowerment programs supported that motivate individuals in low socioeconomic classes to demand better pay. Supporting education through incomes generated by the rich empowers individuals in low-income groups to receive higher pay after improving their skills.

Unfavorable accesses of opportunities increase inequality in the society (Bogotch and Carolyn 94). Opportunities in the society range from inability to access employment opportunities, job promotion opportunities and the opportunity to trade fairly in the society. The rich have developed and advanced social networks that easily allow them to access income generating activities. They can easily secure employment in high rewarding jobs in most cases due to connections

or ability to access information that relates to high-income activities. Since the rich in most cases dorm friendships based on their social classes, they are unlikely to share such opportunities with the poor.

In a capitalist society, the rich will focus to satisfy their self-interests by accumulating and exploiting the existing opportunities. The rich try to protect their wealth by limiting access to the entry of new businesses in the market. The rich for instance will try to control the market by buying small businesses. They thus end up developing a monopoly in different areas within the market. As their incomes increase due to little or no competition in the market and those of other individuals in the society, remain constant, the gap between the rich and poor continues to increase. Reducing the large gap requires appropriate government intervention that can limit the amount of market the rich can control to allow entry of other businesses in the market. With many businesses in the market, companies are likely to offer higher salaries that can help reduce income inequalities that exist within the society.

The rich are unlikely to argue for policies that will cut down their wealth and incomes to reduce the existing gaps in the society. Developing initiatives to reduce income disparities reduces the growth rate of the economy (Adams 1).It is important that the poor and low-income earners are rewarded highly for performing fruitful jobs. They will argue that the rich should work their way up and not top rely on welfare programs that place the burden on the government. The government can use the amount of money in social welfare programs to create a

good environment where business will flourish to create more employment opportunities for the poor.

It is through investments by the rich that unemployment is reduced and hence an important step towards reducing inequalities. Taxing the rich, as they argue will only reduce economic growth and reduce their willingness to create more businesses and jobs. The rich hence consider it necessary to tax both the rich and the poorly without favor. As such inequalities in income are a result of the unwillingness of the poor to take strategic measures to increase their earnings. The poor for instance should pursue education to increase their skills and hence bargain for higher incomes which in the long run will reduce income disparities in the society.

Income inequalities as is seen above can either be vertical or horizontal. The rich and the poor differ on the causes of income inequalities in the society. The differences in the levels of education and skills determine the amounts of incomes receive. Individuals with lower levels of education will receive lower pay when compared to those with higher levels of education. Taxes may also be either progressive or regressive and hence have an impact on the distribution of incomes and wealth (Friedman 263). Higher taxes for the rich and lower taxes for the poor reduce the income gap. Eliminating discrimination by gender and race increases access to opportunities.

Opportunities for income generation among the poor help reduce unemployment and increase their levels of income. Reducing the income inequality gap in the society should both be both a government and personal initiative. Whereas the government will create policies that increase available opportunities and eliminate discrimination in the economy,

the individual should take advantage of such opportunities. Self-development, through education and training, is also important in increasing the incomes of the poor within the economy.

Works Cited

1. Adams, Richard H. Economic growth, inequality and poverty: Findings from a new data set. Vol. 2972. World Bank Publications, 2003
2. Friedman, Milton. Price Theory. New Brunswick, NJ: Transaction Publishers, 2008. Internet resource.
3. Mattei, Ugo, and John D. Haskell. Research Handbook on Political Economy and Law. Edward Elgar Publishing, 2015.
4. Nkumunue, John B. New Theory and Practice of Capitalism: New Market Theory, Investment, and the Path to End the Global Economic Crisis. , 2014. Print.
5. Varoufakis, Yanis. Foundations of economics: a beginner's companion. Routledge, 2002