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What Is Economic Inequality?

In oil producing Persian Gulf states, economic inequality has funded the development of luxurious private islands in nations where most people have low incomes.
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  • Last Modified Date: 15 September 2014
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Economic inequality refers to financial disparity. It is rare to find a society in which everyone is in the same economic class, meaning every person has equal amounts of financial and material resources. It is common, however, to find that there are people with wealth and income differences that result in some living in abject poverty while others live in extreme luxury. This is often the subject of debate because the effects may extend into areas of life that should not be impacted by economic status.

If an assessment is done of most societies, it will be found that some people are poor, others are rich, and there are numerous classes in between. When assessing peoples' finances, it is commonly discovered that not only is there a disparity between classes, but the top class has significantly more than each of the other classes, especially the lowest. This entire situation is referred to as economic inequality.

There are usually two primary focuses when considering economic inequality. First, there is wealth, which is a measure of the money and material possessions people already have. Wealth has the potential to greatly impact the manner in which people live because it can determine what they are able to purchase and what they are able to do at present. Those considered wealthy, therefore, tend to have much better standards of living than those in lower economic classes.

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The second important financial indicator assessed when considering economic inequality is income. Some people have little or no wealth because they have little or no income. Although it is not always the case, it common to find that those with the most wealth and the best standards of living are also those with substantial inflows of money.

The economic inequality in some places is much more drastic than in others. For example, in countries where there is a lack of social service systems, the disparities may be most obvious. While some people are extremely wealthy, others may suffer inhumane situations such as starvation and lack of basic necessities. In countries where there are social service programs, the gap between the lowest economic class and the highest is generally narrower, but there are still major differences in the lifestyles of the groups.

Economic inequality is the subject of debate for a number of reasons. A major argument often raised is that income and wealth disparities affect peoples' access to items and services that should be available to everyone, such as food, health care, and legal representation. Another problem often associated with economic inequality is the ability for the wealthiest individuals to influence the political atmosphere, which affects all of the economic classes.

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anon287133
Post 5

China is a perfect example that capitalism can thrive right alongside of communism. The rich are in the government, there is no middle class and the poor are left with nothing.

comfyshoes
Post 4

Oasis11-I feel that some of these government programs contribute to the disparity between the wealthy and the poor because receiving government housing subsidies in which a person gets 75% or more paid by the government sounds like a great plan, but many of these families get used to the subsidy and find it more challenging to get out of government housing.

A better solution is to offer a temporary subsidy for a certain amount of time as well as job training in a field that is in demand so that they could find higher paying work.

This helps the poor person move up the economic ladder because education is often the great equalizer with respect to economic inequality.

Also money management and personal finance classes are important because not everyone manages money well which is another reason for the disparity between rich and poor.

A great book on this subject is the Millionaire Mind that explores the common misconceptions of the wealthy and explains how their spending habits are much more frugal than the middle class person.

For example, a middle class person might lease a car in order to drive a higher end vehicle, but a wealthy person might buy a used car and keep it for many years after it is paid off.

oasis11
Post 3

Bhutan-You really have to ask, is increasing economic inequality a serious problem?

People should realize that a capitalistic system that we currently share in the United States is the fairest system in the world.

At no other place in the world do you have people that grew up poor, became successful in society and made a great living.

America values and rewards individualism and hard work which is the cornerstone of any economic success.

While there is some degree of wealth inequality, you also have to remember that not everyone exerts the same effort which is why the hardest working people are often rewarded in a monetary fashion because the successful people do the work that the unsuccessful don’t want to do.

Successful and wealthy people see opportunities in everything. For example, a person with a strong work ethic might look at working at McDonald’s as a opportunity to possibly own a franchise because that is a requirement for all franchisees, while a person with poor work ethic might look at working at Mc Donald’s as beneath them.

So I feel that the inequality of wealth in the United States is a bogus one because 50% of the population pays no taxes and there are a variety of programs to help the poor.

Bhutan
Post 2

Subway11-I agree with you, but sometimes a society can remain poor but equal and still be unjust.

For example, in Cuba a communist country that essentially made all of its citizens poor and equal with the exception of the government officials.

It is believed that Fidel Castro possesses over nineteen mansions that he repossessed from wealthy people when he turned Cuba into a communist regime.

Here he claimed that he needed to fix the wealth inequality and resort to an extreme redistribution of wealth.

This wealth distribution was stealing from the rich and taking it for government purposes. People need to realize that you cannot ever reach true social economic equality because in the case of Cuba the wealth inequality is so great because the dictators ruling the island have all of the wealth while the general population is limited to rations of food.

Here the purpose of communism was to equalize everyone and this social justice experiment made everyone poor so in that respect it did make the distribution of wealth even but not among the government where the disparity could not be greater.

subway11
Post 1

I believe that in third world countries like Haiti there is discrimination and poverty.

Most Haitians do not go beyond a sixth grade education because education beyond that is not mandatory.

This alone creates an enormous social economic problem because the wealthy go to other countries to study while the poor have no options.

Many live in shanty towns with tent homes. The living conditions are so bad for the poor that many succumb to cholera a disease that was eradicated decades ago in the United States.

This disease causes death due to bacteria in the water. Here the Haitians do not have the basic services and security that a government is supposed to provide and the inequality of wealth between the corrupt government and its people is criminal.

The people do not have a chance to find reasonable work and their living conditions are horrible.

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