Affirmative action. Quotas. Race-based scholarships. Women- and minority owned business set-asides. These and other policies were intended over the past quarter-century to remedy patterns of racial, ethnic, and gender inequality in the US economy. The explosive issue of what to do about these remedies cannot be understood without reference to a broader pattern of widening economic inequality across all of American society. Widening group-specific disparity has gone hand in hand with widening general inequality.
The attack on affirmative action in public and private employment as ‘reverse discrimination’ against white males must be understood within the context of declining real wages faced by many white males. The charge that policies aimed at improving the employment prospects of 1 woman and minorities are unfair to the majority in general and white men in particular is a charge that must be considered in the context of the evidence of narrowing job prospects for the middle class. On the one hand, there is a mounting concern about the decline in the availability of good jobs for persons with less than a college education.
This is a concern for the majority of Americans at the middle of the income distribution whose earnings have remained stagnant during a period of unprecedented shifts towards greater economic inequality in the United States. Many hard-working white Americans are falling behind because their income from labor, which accounts for a large share of their total family income, is not growing. On the other hand, there is opposition to preferential treatment of special classes of Americans who undeniably have been deprived of the economic benefits of full participation in the economy in previous eras.
The handicap that many disadvantaged racial minority group’s face results from the cumulative effects of explicit state-enforced efforts to retard their progress. The damage lingers across generations, in part because the remedy for preferential treatment is inexact, benefiting some but not all members of racial minority groups. Thus the gap between the majority and the minority continues to widen. The conventional wisdom about general inequality is that for much of the post World War II period the distribution of income has remained fairly constant.
There are wide variations between the incomes of families at the top of the distribution and families at the bottom of the distribution, but those variations remain largely stable through time (Levy, 1987). Two implications can be drawn from this evidence of a stable income distribution, a distribution where income growth is shared among all persons coupled with little apparent mobility from the bottom to the top. The first of these implications is the suggestion that during the 1950s and 1960s economic growth, expanding job opportunities, improved education and the like benefited all.
The second of these implications is that the benefits were not strictly redistributive; while families at the bottom of the distribution may have been better off in an absolute sense, they were still at the bottom. The inequality of the United States has caused some economists to question its duration. For example, this inequality may predict the next inflation rate, and also the market trends in its economy. Furthermore, the aptitude of the economy can be further explained in the division of income classes.
When we are given this social and political context, this inequality will injure the economy; and this has its origin, when the divisions of income between classes are too dramatic. In this circumstance, we are able to view the distribution of wealth in the market’s agenda, and the consumer demand. Furthermore, when this is taken into account, we are able to have a new agenda, which we see the demographic of how the distribution of wealth has affected this political perspective. In these issues we are able to ascertain the motives which have made the distribution of wealth and income, unequal in respect to market trends in the economy.
From this agenda, we are able to criticize the different priorities which it has created, in order to have a new social and political perspective in this platform. Once again, when we have looked into this agenda, we can view this coincide with the idea, that the distribution of wealth has not been able to monitor its monetary funds, in so far, as it is reflected in the economy. We are able to have a new scope on where the distribution has divided the classes, and where exactly this would have its later impact on the US, who would perceive this distribution of wealth as injuring the state of its market.
According to Bradsher in Journal Record, “Federal Reserve figures from 1989, the most recent available show that the wealthiest 1 percent of U. S. households with net worth of at least $2. 3 million each owns nearly 40 percent of the nation’s wealth” In this circumstance, we are able to detect a new movement which the wealthy have created, who have been encouraged to spread their capital gain in selective market. And those who have remained at the lower class have not been able to sustain an aptitude for expense, because he or she incapable to gain this knowledge due from their income.
For example, we are able to detect the numerous advantages in having a new class of income, in order to incorporate both agendas– lower and higher earning incomes; as a median class or demographic, it would be able to balance the market trends and decrease the inflation rate. Furthermore, from this stance we can this class be able to have a different agenda, in so far, as each one is able to enumerate his or her motivation as a consumer in respect to the case of supply and demand.
Once again, when a class has been able to sustain a new living and come to the choice of its healthiness tan, we have a new priority of interpreting the statistical information in order to remunerate its demographics. We are able to have a new choice, which there is a new continuance. According to the author Isbell King for example, in her book The Wealth and Income of the People of the United States: “… the per capita wealth is a matter of no particular significance.
They attach primary importance not to totals or averages but to questions of distribution… ” When the distribution of wealth and income out weigh each other than the classes begin to divide, in so far, as each one has been unable to have a new standing with his or her economy. For example from this argument, if the lower class has remained unable to spread their capital, and the higher earning class has spread their capital in a market with a lower consumer demands, than the two of these classes have created a different lifestyle.
They both would be unable to diversify their strength of this economy, because each one has a particular errand in being a consumer, and there is no mediator to decide the equality of this, or in order to maintain the market share of the consumer. Furthermore, in this direction we can these classes have anew social and political impact, in which they would be able to handle the different agendas of themselves. The two extreme classes would be able to have an agenda as a consumer which reflects his or her own income and lifestyle.
Once again, from this context we are able to see this have an understanding, where the economy is being treated as an expansive market, when in fact it is not. There does not seem to be equality or a formulation which could help to predict, the consumer managing his or her products. If the consumer has been able to sustain his or her living during a point in the market, where inflation rates begin to rise, that he or she would be hesitant to share gross pay with this market.
Therefore, it is imperative that the government realizes that wealth inequality is the reason for market trends, or the division which clarifies the diversity of its portfolio. In this evidence, business would be incapable to cater to the median of classes, because there would be a social and economical conflict between the lower and higher class. Furthermore, in this stance, we can view this in a different opinion, which there would be a new agenda: the consumer would have the ability in deciding for him or herself, the numerous advantages of having a new market to reflect the median income.
Ultimately, the consumer must be ready to have a different agenda in the market, in order for the economy to sustain a low inflation rate. Furthermore, inequality is expressed, at least in the US, by the management and priority of wealth. In regarding this ability; and there will be a new agenda in becoming the consumer. If the nation is able to equal the consumer’s demand, not only in the higher class, but also with the lower class, than they would be able to strengthen their economy and have a different aptitude in this regard.
For example, according to Professor Riswold, “People with higher income, have most of their income left for productive investment” The trends in income inequality are typically examined over the past quarter-century, since about 1970. This starting date was very important since the early 1970’s mark the beginning of the global economic downturn (Wallerstein). As an American citizen I’m also concern about the issue of increasing income inequality in the United States. Is this issue acceptable to our society?
According to Posner, the society becomes more competitive and more meritocratic; income inequality is likely to rise simply as a consequence of the underlying inequality, which is very great between people that are due to differences in IQ, energy, health, social skills, character, ambition, physical attractiveness, talent, and luck. Public policies designed to reduce income inequality, such as highly progressive income taxation and middle-class subsidies, are likely to reduce the aggregate wealth of society, and therefore should not be adopted unless rising income inequality is a social problem.
Economist had sited two important aspect that explain regarding the increased of income inequality in the United States these are the “technological change” and “globalization”. Most economists believe that the best explanation for widening inequality was a shift in employers’ demand for labor linked to the introduction of new production techniques. Innovative management practices and new technologies, such as personal computers and improved communications, caused a surge in demand for highly skilled workers.
Technological innovation put competitive pressure on employers to change their production methods in ways that required a more entrepreneurial and more skilled work force. Throughout the 1980s and 1990s employers persisted in hiring more highly skilled workers even though rising wage differentials made this strategy more expensive than ever. The resulting surge in demand for highly skilled workers pushed up the relative wages of such workers (Burtless). Moreover Posner stated that the higher the average income in a society, the less likely is inequality to cause envy or social unrest.
The reason is that, given diminishing marginal utility of income, people who are well off do not have a strong sense of deprivation by reason of their not having an even higher income. If, moreover, their income is rising, they are more likely to derive satisfaction from a comparison of their present income to their former income than to be dissatisfied by the fact that some other people’s incomes have risen even more. And it depends on average income (and hence on the wealth of society as a whole), on whether incomes are rising (at all levels), and on the particular way in which the income distribution is skewed.
Finally, rising income inequality in the United States is due to the part to increased immigration, since immigrants, legal as well as illegal; tend to work for lower wages than citizens. Immigrants do not, however, compare themselves with wealthy citizens, but rather with the much lower wages they could expect to earn in their countries of origin. Rather than immigrants envying wealthy citizens, many citizens are hostile to poor immigrants! Therefore, the problem of “income inequality” should not be confused with the problem of “poverty”.
Since poverty in the United States can be considered as a pseudo-problem. Poverty is a genuine social problem, because by definition it signifies a lack of the resources necessary for a decent life. It is only tenuously if at all related to income inequality, since one could have zero poverty in a society in which the gap between the incomes of the worst-off members of society was huge; imagine if the poorest person in America earned $100,000 a year and the wealthiest $1 billion.
The more competitive and meritocratic a society, the more intractable the problem of poverty. The reason is that in such a society the poor tend to be people who are not productive because they simply do not have the abilities that are in demand by employers. It is unlikely that everybody (other than the severely disabled) can be trained up to a level at which there is a demand for his or her labor, and so there is likely to be an irreducible amount of poverty even in a wealthy society such as ours, unless we provide generous welfare benefits which will discourage work.
The questions we have addressed are prompted in part by a concern that public policies designed to reduce or eradicate racial economic inequality have lost their moral and intellectual standing in past decades. Such policies as affirmative action, racial preferences and various forms of set-aside programmes are viewed by many as both unnecessary and unfair. Other policies, such as welfare expenditure programmes intended to reduce poverty generally, have lost political support in part because they appear not to work either in reducing general inequality or in reducing interracial inequality.
Current public policies on racial inequality are deeply rooted in a conceptual framework that points to the cultural and human capital deficiencies of blacks. These cultural and human capital deficiencies include lower educational attainment, lower labor force attachment, higher rates of female-headed families, and poorer skills that leave racial minority group members concentrated in certain occupations and industries that pay low wages. Conspicuously absent in recent discussions of how to address the widening economic gap between white and non-white families is the role of discrimination and continued barriers to advancement based on race.
Also absent is recognition of the historic role of unequal wealth and ownership of productive resources. Instead, much is said about what needs to be done to improve the aspirations, the motivation and the moral behavior of poor blacks, and conspicuously little is said about other determinants of social and economic position. Our empirical analysis establishes that unequal pre-labor market and extra labor market discrimination, along with continuing unequal treatment of equally qualified families, lies behind the persistent earnings gaps between black and white family heads.
Our empirical analysis verifies that racially unequal incomes and earnings persisted into the 1990s despite substantial public policy interventions during the 1970s. Our empirical analysis reveals as well that widening gaps within racial groups coincide with widening interracial inequality. In essence, then, the problem to be remedied — widening between-group inequality — is exacerbated by widening within-group inequality.
Laws that promote redistribution of wealth, tax inheritance heavily and attempt to mute the impacts of unearned advantage are often promulgated with an equality of opportunity ideal in mind. One of the largest threats to the ideal of equal opportunity is the persistence of group advantage from one generation to the next via wealth accumulation. Young home buyers, for example, do not begin with equal access to credit. Those from families with assets are able to secure loans through down-payments obtained from family gifts and loans. Those from poor families must struggle to obtain down-payments through savings.
Even if today’s society could miraculously be purged overnight of discrimination as a factor affecting the distribution of rewards, past discrimination might continue to affect the competitive capacity of individuals who are from inscriptively differentiated groups. Historical discrimination that excluded members of a particular ethnic or racial group from desirable options, or from resources they might otherwise have obtained, can disadvantageously affect their descendants’ ability to engage in today’s equal opportunity wars. Our empirical conclusions are pessimistic.
Pursuing the path already established offers little or no hope for near term equalization of incomes between races. Worse, our central conclusions suggest that the cause of the persistent inequality most probably lies in pre-labor market or extra-market forces, rooted most probably in historic discriminatory institutional forces. Thus, even if there are immediate remedies such as affirmative action that might hope to reduce current income inequality, it is uncertain that those efforts will necessarily yield permanent reductions in racial economic inequality. Our focus has been on income and earnings.
When the debate widens to embrace the fact that unequal wealth is far more pronounced than unequal income and to recognize the longer-term negative impacts of unequal wealth on pre-labor market and extra-labor market inequalities, then we believe wealth redistribution remedies will take on an increasingly central role in policy discussions of racial inequality. To understand how this policy shift must come about, recall the path that previous discussions have taken. So, where do we go from here? The century is coming to end and, in terms of the trend in income inequality across this span of time, it might be likened to a “roller coaster ride.
” From reaching the apex of the ride in the first part of the century, to hurtling down the slope during the decades of the mid-century, only to begin to climb again in the last quarter of the century, the ride, like any other roller coaster ride, has been memorable. Will inequality in the years ahead continue upward, level off, or even decline? The uneasiness over inequality, whether or not it continues to level off or begins to grow again, can be tolerated for two additional reasons. First, despite the seeming unresponsiveness of the politicians in Washington, D. C.
, some changes affecting the economic situations of Americans have been forthcoming in recent years. The raising of the federal minimum wage and the Earned Income Tax Credit, the passage of the balanced budget and tax cut acts of 1997, and the other legislative efforts, while meaningless to many Americans, do mean for others that someone is listening in Washington. As long as gestures such as these are evident, income differences will be accepted. Second, as long as the nation’s economy continues to perform as it has in the mid-1990s, concern over inequality will be held in check.
Even if many of the jobs that are created in the economy pay low wages, there are many that pay high wages, offering an incentive for those with the ambition to pursue them. As we have seen mentioned in the press and in the literature, for many Americans, working longer hours, even at the same wage rates, is one way to raise incomes. Inflation has been kept at bay and interest rates have remained low, permitting even those in the lower part of the income distribution to purchase cars, homes, and other consumer durables.