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Wealth and Income Inequality Are a New Problem

I have been hooked about discussing every nook and cranny relating to business and economy for a while now.

wealth-and-income-inequality-are-a-new-problem

Individuals had questioned their parents at some point in their lives about the goal of attending school. The parents always answered they need school to get phenomenal jobs in the future. So, they can receive much wealth than these individuals’ parents were. And then, the parents will be satisfied to know that their children will enjoy living with a lot of wealth.

Acquiring wealth can be done in many different ways. Having a job, founding a business, or even trading stocks online are options for people to pave their way into wealthy individuals. These actions generate incomes that they can use to produce more capital or change them with goods to consume. Now, it is acceptable that people mess up the definition of wealth and having many incomes all the time.

In essence, having more incomes doesn’t translate into having more wealth, even though it is right in most cases. Also, the definition of wealth is all accumulated assets an individual has. Stuff like stocks, properties, and income belong to this list. But income is how much money an individual receives in a certain period, such as a year or three months. So, these two things are complementary but different.

“Wealth consists not in having great possessions, but in having few wants.”

— Epictetus

The Event That Widen the Gap

wealth-and-income-inequality-are-a-new-problem

In the past few centuries, the difference between the world’s richest and poorest nations wasn’t that great. The top wealthiest countries have around four times the wealth of the most impoverished nation. As a rule, colonialism and Imperialism were the norms for governments to acquire wealth during that time. These are the dark chapters of humanity, where people enslaved people with lesser power.

Back in the days, the gap between the wealthiest countries and the nations they exploited isn’t that wide compared to this day. Nowadays, the most prosperous country has at least 100 times the most impoverished country made within the same amount of time. This inequality is the result of the industrial revolution.

Since the industrial revolution, the importance of having machines and knowing how to operate them become more critical than ever. Nations with ample machinery and quality individuals could skyrocket the output, making nations without competitive tools unimportant. So, the power of machinery widens the inequality gap by making more products to buy.

“If you go back to 1800, everybody was poor. I mean everybody. The Industrial Revolution kicked in, and a lot of countries benefited, but by no means everyone.”

— Bill Gates

People Are Affected Too

wealth-and-income-inequality-are-a-new-problem

Based on recent reports, the top 1% continue to receive more income every passing year. This finding means that all the profits from doing labor are being outpassed more by CEO entrepreneurship. However, saying that this recent news is a bad thing is still up for debate. And the one who should be debating is the experts.

A theory suggested that the world is moving in the right direction. The percentage of money the rich make increases, but the amount of money the middle and lower-income households make is also improving. Likewise, lower and middle-income families must educate their children to have essential skills to help them climb the ladder of wealth.

Nowadays, jobs requiring a mediocre amount of skills are hard to find. Most of the works offered need either low talent or high tier skill to apply. For this reason, society pushes people with more skills than rudimentary and less than experts to work as a low-tier skill worker. Then, these individuals' true potential won't show up, making climbing the wealth ladder harder.

But Is It a Plague or a Cure?

wealth-and-income-inequality-are-a-new-problem

After the industrial revolution, the widening of the inequality gap signifies that the economy is moving. By producing more output, the company will make more profit. Therefore, the CEO will make more money. If the economy isn’t moving, the CEO won’t receive payment. And the first thing that companies do to save themselves is to fire the employees. As a result, widening the gap give the money to the workers.

Yet, arguing that the real evil is the corporates’ owner is not entirely wrong. People have been demanding that the rich be taxed more to give more benefits for the less lucky. People could use these benefits to provide themselves with food or healthcare, and these supports could make them look for a better job. For the most part, this argument is also logical.

Economists had long debated whether the governments should tax the riches more or not. They also disagreed about the inequality in wealth and income. Some of them believe that inequality is too broad, and some don’t. But they all agree on one thing— extreme inequality will result in catastrophic disaster for the respective nation.

What Should People Do?

Widening the inequality of income and wealth may be an outrageous idea for ordinary people. But individuals should know that these matters are complex and intricate. So, the best course of action is to believe in what experts told us to do. If they thought that people should criticize the government for not being just in economic policy-making, people should listen and spark protests against the government. We should not debate it, but we should understand and prepare the best for it.

© 2020 Azka Fariz Fadhilah

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