Is inequality harmful for growth?
Effects of Income Inequality on Aggregate Output. Washington.
Economic growth in a cross section of countries.
There are number of evidences related to the cross section of the companies which clearly states that inequality in economic terms is the result of the adverse social and economic outcomes. Persson and Tabellini (1994) state that inequality in society reduces the economic growth, and mainly in the democratic countries. However, this statement was argued by the Barro (1996) on the ground that this situation occurred only in the poor countries.
Generally, inequality in society is defined as the gap which occurred between the earnings of the richest members of society and poor members of the society. However, gap not only arises between the financial figures, there are some other inequalities and unfairness also such as inequality related to health, justice, basic resources, etc. There are number of societies across the globe which increasingly becomes the unequal and unfair. This occurs even though evidences show that economic inequality mainly challenges the personal and social wellbeing, and it also affects the safe functioning of the societies. The most important causes of the inequality in societies are the macro-economics and psychosocial factors which contribute in maintaining the same.
Social Justice can be described as the situation in which dominant population suffers inequality and this happen because of their relative position in power structure of the country. Social inequality is considered as that way through which unjust actions are conducted in the society (Honor Society, 2016}.
Structure of this essay mainly discusses the concept of the justice which plays important part in any discussion which deals with the organization of society. This question of justice arises at the time when there is unequal distribution of income and Wealth in the societies of USA, Australia, New Zealand and other countries. In context of this discussion, this essay mainly focuses on the question whether society is just or unjust.
Inequality and poverty are different but completely related concepts, and in this context poor means an individual who does not have sufficient resources in terms of functioning at the level which is socially acceptable. Generally, national poverty levels are measured through the percentage of the population which holds the income or wealth less than the benchmark thought in context of representing the minimum requirement of the individual to flourish. United States of America established the threshold for poverty in 1960s, and this threshold based on the cost related to the nutritionally adequate but plain food consumption basket. The actual threshold in this context have been adjusted in terms of inflation but applied in equal manner across the country instead of the fact that there is great differentiation in the cost of living from one city or state to the next (Stiglitz 2013).
The poverty rate in U.S. fell from almost 22% in the early years of 1960s to the low of 11% in the mid years of the 1970s, and after that period this rate differentiate between the 11% and 15% and this mainly depends on the economy of the state (Census 2017b). The World Bank track down the poverty levels across the globe from large number of years and this is grounded on the original income threshold of single U.S. dollar a day. Recently, the standard related to the risky poverty has been adjusted for showing the power of purchasing related to the national currencies and also by considering the inflation with extreme poverty and this inflation are presently defined as the income below the 1.90 international dollars a day (World Bank 2017). However, poverty is defined as the important issue of the society, but this is not the main topic of this essay. This essay mainly defines the issue of economic inequality.
Economic inequality is the concept which measures the position of individuals in the society as compared to position of other individuals and groups. Generally, it can happen that those individuals who stand at the bottom of the income distribution can be considered as both absolutely and relatively poor, but it is possible to imagine such society in which absolute poverty can be removed even in those situations when relative poverty (inequality}can still present.
The inequality in context of this discussion deals with the income, wealth, and prestige of the individual and groups. Economic inequality includes both the terms that are income distribution and wealth distribution, at that time when these economic variables have no intrinsic value. It is necessary to understand that income inequality also relates with the different valuable factors such as good health, longevity, education, and general satisfaction and happiness. As stated by the Skidelsky and Skidelsky (2012), there are number of studies which show happiness of the individual mainly relates with the rising of the income up to the level of threshold, and after it reach to the level of threshold rise in income level does not provide any contribution in the level of happiness and life satisfaction (Markus& Lederman, 2015}.
This is also the fact that those who have higher income enjoy good health, better education, and also the opportunity to take part in the social and political lives of their communities. As defined by the sandel (2012}, money cannot buy everything, but still equal distribution of income can serve as the proxy in terms of distribution of the wide range of desirable things. At least there is one type of inequality; however such inequality is not well represented by the disparities in the income and wealth. Therborn (2013} also states the type of inequality which deals with the unequal socio-economic positions which emerge because of the race, sex, religions, etc. All these factors ultimately result in the increasing inequalities in income or wealth. In the united States of America, situations in the society for African-American man are very different in comparison of the European-American man even they both have same education and same age.
Similar situation occurred in the society of the Australia, which means, there are number of studies which clearly reflects the unequal practices occurred in the societies of Australia. As per one report, following are the facts and figures in context of income inequality (ACOSS, 2018}-
- Some individual with the highest 20% of the income scale lives in the household with almost five times of the income in which some individual lives in the lowest 20% of the income scale.
- Even in some maximum situation, some individuals in the highest 1% of the income scale lives in the household with an income which is averagely on the week basis is 26 times of the income of any individual who fall in the scale of the lowest 5% of the income.
This can also be understood in another way, as any individual who falls in the highest 1% earns that much more amount in a fortnight which is earned by any individual fall under the lowest 5% in the whole year.
Australian society in context of the wealth also face issue related to the inequality, and facts in lieu of this issue are stated below-
- Those individuals who fall under the highest 20% slab of the wealth hold almost 2/3 of all the wealth, and those individuals who fall under the lowest 50% hold only remaining 18% of all the wealth.
- The average wealth in terms of the household in context of the wealthiest 20% is almost 5times more in comparison of the middle 20%, and almost 100times more as compared to the lowest 20%.
It must be noted that, Australia stands on almost 5th highest number in the world of people who hold the ultra-high wealth (ACOSS, 2018}.
Similar situations occurred in the society of New Zealand also, as there is high poverty and widening gap between the rich and poor. It is also deemed as the major issue in the society of the New Zealand. Poverty levels in terms of child are almost two times in comparison of 30 years ago and inequality in terms of income has increased very much. This inequality in income and poverty is deemed as the sign of injustice, and it also contravenes the values related to the kindness, social inclusions, the right related to the human dignity, and the development of the cycle which results in the better future.
It is necessary to understand that Poverty and high inequality hurts all the individuals in the society, but it affect only those who face it. Social and economic cost in this context is huge that is almost $8 billion per year. It is very difficult for the individuals to get better opportunities, and especially at the time when gap of rich and poor is wide. It is important that tax and welfare system make sure that each and every individual in the society get opportunity to flourish themselves (NZCCSS, n.d.}.
The justice and injustice of inequalities
In maximum societies there are some specific shared beliefs in terms of determining what is just and unjust in the society. In other words, these social beliefs determine what is fair and unfair in the society. The basic issue in this context is understood after studying the numbers of examples related to the social inequality such as there are some people who live better lives as compared to others or they have healthier lives as compared to others. The main question arise in this context is whether these social inequalities affects the justice (Paol, Ferreira, & Peragine, 2013}.
Discussing the issues related to the social justice is considered as complicated issue, as this concept involves two judgements that are moral judgement and sociological judgement. Moral judgement states that inequality is not fair, and sociological judgement states that unfairness needs to be remedied by the changes made in society. It is not fair that some children are born with disabilities as they did not deserve this, but it is not considered as social inequality or social injustice. The actual social injustice happens when there are things and actions of the individuals and groups cause negative impact on the lives of the disabled individuals and make their life more difficult. There are number of things which require the social changes such as behaviour of people towards the disabled people, as there are number of individuals who show sympathy or there are some who neglect the disabled people. As there are people who neglect the disabled peoples and conduct bad behaviour with them such as ignore them, insult them, and treat them unfairly. All these activities required the social changes, which means, they demand changes in the society. Since these remedies involve the changes required in the use of resources, and it is deemed as unavoidable trigger which resist and conflict with those who stand against the social change.
When inequality in nay context is present then injustice is also present, which means, it is an unfair inequality that could be remedied. There are some powers present in the societies which operate in those situations which restrict the adequate remedies. Injustice not continued because of the inactivity of law, but it actually increased because of those individuals who are not willing to pay for the cost related to the remedy provided for injustice because they have sufficient power in avoiding doing these things. The combination related to the inequality, injustice, and power results in the increasing of social inequality, and this combination is known as oppression.
The United States is considered as the land of opportunity, and even in case it is not exactly right that every individual holds the equal opportunity in the United States then also there are number of opportunity for those who work hard. This can be understood with the help of the example of the lazy farmer who ends up with the little amount of produce at the end of the summer, and this is the reason exerts stated that poverty is the fault of those who are poor. Those who are rich and successful hold the right to spend their amount as they want, as this amount is earned by these individuals with their own efforts and it is completely injustice to force them to help the poor. On the basis of the principle that two wrongs cannot make the right thing, it can be said that, it is not fair to take from the rich for providing it to the poor even though poverty is itself unfair. There are number of experts who argued that poverty itself represents the deep injustice. There are some other cases also in which poor people in which poor individuals wasted their resources and opportunities available to them, but maximum poor people does not bear the responsibility for their situation, and especially poor children does not bear any responsibility for their deficiencies. Maximum inequalities in the modern society of America are the result of the injustices in those ways in which our institutions and rules are organized instead of the result of the lazy or careless behaviour within the fair process (SSC, 2009}.
Some other experts stated that the main issue is the self-destructive behaviour in poor communities is emerged mainly because of the misery and alienation resulted from the objective deprivations, disadvantages, lacks of opportunities individuals bear in those communities. There are quite abruptly separated views and also encourage number of political disagreements which done in terms of reducing the poverty. Whether this matters that individuals believe that inequality in unjust, and exerts stated that this matters. Whenever individuals or groups believe that something is unjust they make efforts to change those social institutions and social practices who think that such inequalities are just.
Generally, individuals are often doing such things which go against their personal benefit and that is the time they think that such practices are necessary for justice. There are number of rich and powerful individuals who believe that it is completely unjust in the rich countries that poor children does not get the sufficient food, and government can use the taxes for providing the enough food and health care to the poor children’s. This is the only reason because of which figures are quite high in terms of deciding who deserves what, and what type of inequalities can be considered as the justified inequalities, what type of violate principles in terms of justice, and what actions are conducted in context of redressing the injustice. It is necessary to consider the different ways in terms of understanding the reasons which result in inequality in the injustice. A useful difference between two types of thinking related to the fairness of what people get is apprehended by the languages fair play and fair shares.
Inequality in society is defined as the gap which occurred between the earnings of the richest members of society and poor members of the society. However, gap not only arises between the financial figures, there are some other inequalities and unfairness also such as inequality related to health, justice, basic resources, etc. The issues related to the social justice are considered as complicated issue, as this concept involves two judgements that are moral judgement and sociological judgement. Moral judgement states that inequality is not fair, and sociological judgement states that unfairness needs to be remedied by the changes made in society. It is not fair that some children are born with disabilities as they did not deserve this, but it is not considered as social inequality or social injustice. The actual social injustice happens when there are things and actions of the individuals and groups cause negative impact on the lives of the disabled individuals and make their life more difficult.
Generally, individuals are often doing such things which go against their personal benefit and that is the time they think that such practices are necessary for justice. There are number of rich and powerful individuals who believe that it is completely unjust in the rich countries that poor children does not get the sufficient food, and government can use the taxes for providing the enough food and health care to the poor children’s. All these activities required the social changes, which means, they demand changes in the society. Since these remedies involve the changes required in the use of resources, and it is deemed as unavoidable trigger which resist and conflict with those who stand against the social change.
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Stiglitz, E. (2013}. The Price of Inequality: How Today’s Divided Society Endangers our Future. New York: W. W. Norton and Company.
Therborn, Goran. 2013. The Killing Fields of Inequality. Malden: Polity Press.
World Bank, (2017}. World Development Indicators Databank. Available at: data/reports.aspx?source=world-development-indicators. Accessed on 10th September 2018.