Truth About The Income Disparity Essay

1939 words - 8 pages

Truth about the Income Disparity
Recently, President Barack Obama announced his plan to rein in the compensation of executives and raise tax rates on capital gains. This has again brought the topic of America’s widening income gap to the front page. While it is true that the wealth of America has long been dominated by a small number of people, most Americans do not see it as economic inequality or an obstacle to the development of the economy, which can be explained from two aspects—culture and economy. Instead, the real problem is the workers’ slow-paced wage increase, especially compared with the rising health care costs.
Admittedly, most of the household income and wealth in ...view middle of the document...

As to the reasons behind poverty, the individualistic reasons were weighted much more than the external social factors (Ladd and Bowman, 29). So in conclusion, the idea of equality to Americans is more of an issue of the equality of opportunity instead of the distribution of income and social status.
Some skeptics, however, might doubt the “equality of opportunity” in America. As in the article “The Growing Gulf between the Rich and the Rest of Us”, Holly Sklar condemned that the “rules” sometimes are rigged to favor politically powerful group, like Bechtel, which obtained the hurricane reconstruction contract without any bidding even though it is famous for over cost and awful work (309). Whereas it is true that corruption does occur, it does not necessarily follow that giving the contract to Bachtel had nonsense because only a big and powerful company that has enough capital and capability could do such a huge project as a hurricane reconstruction contract. But on the other hand I do agree that if you choose a big company, at least choose a company capable and responsible enough. Yet, people with some socialism value will probably suggest otherwise and argue that the work should be divided among regional construction companies. It can be done and actually would be better to offer the reconstruction work to several local companies since it can boost the local economy. But giving the contract to a national and competent big company can also benefit the local economy. After all, the company will always have to buy some amount of raw materials and hire personnel locally. Moreover, compared with those local and small companies, big corporations do have advantages on capital and skills. Cooperation between local and national companies, however, might be a good compromise to resolve the conflict.
To some extent some scholars find the term “income inequality” inaccurate and misleading to describe the current growing income gap. Although it is acknowledgeable that the gulf between the rich and the rest of America is growing at a dramatic pace, I still maintain that the term “income inequality” exaggerates or mistakes the current situation of income gap. As estimated by Mr. Reshef, the income disparity from 1980 to 2005 was largely due to the rising pay in the finance sector, and the percentage can be as high as 21 percent (Devis and Frank, A1). Yet, as Fred Whittlesey put it, because in most cases those CEOs and CFOs are managing the largest public corporations across America, or even the whole world, “we might expect these individuals to be at the top of the pay hierarchy”. The pay for company executives or top talents in the finance industry is the reward for their skills, personal hard work and the risk they take (Ip and McKinnon, A.2, and Ladd and Bowman, 29). Here you might argue, “how about those people living under poverty line? They have nothing, and their life is at real risk.” Admittedly, compared with poor people, CEOs and highly...

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