The Problem with the Income Disparity

Topics: Capitalism, Economic inequality, Income distribution Pages: 5 (1854 words) Published: February 17, 2013
Khylinn Hayes
Professor Grolemund
Research and Writing
11 February 2013
The Problem with the Income Disparity, or:
An Eagle-Mounted Buddha Mediates a Duel between Marx and Robespierre

In our society there exists a horse that has been beaten well past death. This horse has been pulverized into the planes of oblivion, the Fields of Asphodel, or so far into the cosmos that it no longer even resembles a horse at all. Instead, it manifests in protestors, history, and politics. The name of the horse is income disparity, more specifically the ever-increasing gap between the wealthiest citizens of America and the poorest. The problem here is that while this is not necessarily a good thing, it is not inherently bad either. Without differences in income, there is no socioeconomic diversity – everyone making the same amount of money regardless of occupation is nothing other than Communism. The challenge lies in finding a middle ground, and balancing the income gap without challenging our democratic ideals. If the problem is not solved the right way, it will inevitably solve itself through whatever means necessary. This is in keeping with how the free market economy of the United States always reaches equilibrium, as economies of the past have always done. We aren’t doomed to fail, and our economy won’t collapse, but if the income gap continues to grow at an unsustainable rate some rather nasty things have the potential to happen. The income gap must be adjusted before these unpleasant events take place, but we need to maintain caution so as not to damage the capitalistic free market that represents the democratic ideals we hold so dear.

To begin, while the differences in income are a bad thing, there are certain misconceptions that need to be cleared up. While certain groups in the media and the forefront of the debate over income inequality argue of a “1 percent” and the “99 percent”, and these groups certainly do exist, what needs to be mentioned is the fact that American income is divided into five quintiles. These income brackets range from the wealthiest to the poorest, with different distributions of the population in each quintile. So, the argument of the one percent and the ninety nine percent is a false dichotomy. It is possible to section the American people into these groups based on income, but the Census Bureau has a much different perspective. Another important fact to mention is the idea of economic mobility. The fact is, nobody is stuck in one income bracket. The same system that created such a large gap is the same system that allows for this to be mitigated or completely solved. In reality, most people will be in each of the different income quintiles over the course of their lifetimes. According to Thomas Sowell, a fellow of the Hoover Institution, Study after study has shown that "the poor" do not remain poor in contemporary America. An absolute majority of the people who were in the bottom 20 percent in 1975 have also been in the top 20 percent at some time since then. Most Americans don't stay put in any income bracket. At different times, they are both "rich" and "poor" -- as these terms are recklessly thrown around in the media. Most of those who are called "the rich" are just middle-class people whose taxes the politicians avoid cutting by giving them that name. There are of course some people who remain permanently in the bottom 20 percent, but such people constitute less than one percent of the American population, according to data published by the Federal Reserve Bank of Dallas. So, from the idea of socioeconomic mobility, it is obvious that the income gap is not as bad as it seems. It is problematic, yes, but both sides of the debate must keep in mind that income disparity is a hallmark of a capitalistic society, and the problem is easily solved and not as bad as it seems due to the principle of mobility. Fear mongers and doomsayers will often proclaim the gap to be an unsolvable monster, and...
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