Throughout history there have always been those who have it, and those that don’t. Yet how do we distinguish between the two groups? There has been a number of ways thought up, such as if a families total earnings are sufficient to obtain the minimum necessity’s to live without extra spending. Another theory is that instead of defining the poor as those who income is too low, they are poor if their incomes are considered too far removed from the rest of the society in which they live. But many believe that poverty refers to a variety of conditions involving differences in home environment, material possessions and educational and occupational resources as well as financial resources. One can also compare the wealth of different nations. You can measure the Gross National Product of a country and then class it as rich or poor, but this does not show the distribution of their wealth. You can also show the human development index, which takes into account such things as literacy rates, access to health care, and life expectancy.
The Way in which people view the world, among other things, is influenced by your position in society and your wealth. Those who live in the rich industrialized countries of the north have labeled the twentieth century as an era of economic miracles. Since the beginning of the twentieth century the average value of goods and services has risen by about 20 times, while the products of industry have grown 50 times. In 1989 there were 157 billionaires and 2 million millionaires. There are now 233 billionaires. The poor see it a different way. There are 100million homeless, 400 million people undernourished, and two billion people drink and bathe in contaminated water. The poor also suffer from environmental damage done by the wealthy.
In 1960 it was stated that the wealthiest 20 per cent of the population were 30 times better off than the bottom 1 billion. In 1995 they were 150 times better off approximately. Karl Marx believed that the rich elite linked inequality in to unequal property rights and exploitation of labour. The neo-classical-economists of the early nineteenth century recommended that income should be related to productivity or who gets what depends on who owns what. This new theory didn’t solve inequality.
Nowadays the developing countries get done over by the developed countries on an international, national and local scale. Internationally they face adverse effects from being unequal partners in the world market and trade agreements. They are also affected by trade unions in industrialising countries as well as declining terms of trade. They get affected on a national scale as few resources trickle down from the rich to poor, causing inequality within these countries. This can be measured by the Lorenz curve at the end of this report. On a local scale there are often inequalities in the tax system. Infrastructure and regulations favour the rich few over the poor majority.
Causes of Economic Inequality:
Poor people are unable to satisfy their basic needs such as food, water and shelter, while rich people are able to satisfy their basic needs as well as afford additional comfort goods. This gap between the rich and poor is extremely important and must be solved. The poor are a wasted, valuable human resource when they are unable to have adequate education to contribute their skills and thoughts to society. If this gap continues to expand then social unrest can occur which can result in strikes and riots. There are many reasons why inequality exists, for example the normal functioning of a capitalist economy means that there will be inequality as do government economic policies. There are also always discriminatory policies regarding gender and races and changes in housing markets and the effects of urban structure all contribute to inequality. There is often people who have rich parents and so receive...