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Abstract

Today, inequitable wealth distribution continues to derail development in numerous continents and must therefore be addressed by both developed and developing countries. Addressing the problem of wealth distribution in both developing and developed countries goes a long way in eradicating numerous social economic challenges. This research paper focuses on addressing the problem of wealth distribution. In order to answer questions regarding the role of governments in enhancing equitable distribution of wealth adequate knowledge must be analyzed. This research paper is based on numerous surveys carried out on various social-political sectors such as health, ethnicity, and education. The paper goes further to explain the relationship between these sectors and wealth distribution. It is subdivided into various sectors with special attention accorded to the literature review which is drawn from detailed research activities and true statistics.

Thesis Statement

This research paper answers the question whether the government should reduce income differences between the rich and the poor. It goes further to explore the interrelationship between equitable wealth distributions and other social economic sectors such as education and health. In addition it explores the impact of ethnicity and party affiliation on the distribution of wealth.

Statistical Details

The paper is based on numerous research activities that have demonstrated that there exists a very close relationship between equitable wealth distribution and eradication of illiteracy, disease as well as negative ethnicity. Owing to attempts to enhance equitable distribution of wealth in both America and Africa for example, the level of women aged between 25-44 years dying of HIV aids decreased by 61% and 67% for black and white women respectively. This paper is thus geared towards exposing the numerous advantages that come with equitable distribution of resources based on true research statistics.

Regarding education and wealth distribution, the paper is advised on the role played by bodies such as CDE in providing leadership and guidance towards the attainment of higher education standards. It focuses on the role played by resources in eradicating challenges that hamper education. In California for example

Purpose of study

This research paper is particularly significant in aiding government policy makers with regard to wealth distribution. It analyzes the advantages, disadvantages as well as setbacks towards such an endeavor. This paper will therefore provide a strong foundation upon which informed decisions can be made by government agents. The paper also provides explanations regarding common phenomena associated with inequitable wealth distribution therefore giving hope to both developing and developed.

Political parties’ affiliation also indicates a very close correlation with government policies on wealth distribution. Unlike in 2008 a remarkable decline in youth support was noted from 66% to 60% for Barack Obama mainly because there were claims that his government had failed in reducing the wealth gap between the rich and the poor. Such factors will therefore continue to influence the political scene explaining why wealth distribution is a key consideration in major government policy decisions.

Literature review

Article 1 the Foundations of Liberal Policy: The Inequality of Wealth and Income

This article was written by Ludwig von Mises. The article advances the assertion that the most criticized form of social injustice is the inequitable distribution of wealth. The author argues in this article that there exits four categories of people with regard to income distribution: the poor, the rich, the very poor and the very rich. This article offers an objection to the proposal that equal wealth distribution would yield any better economic results. The author argues that those with moderate earnings far outnumbers the rich and that striking an income balance would be quite a difficult task. However, the article appreciates that such endeavors would help raise people’s living standards.

Ludwig further observes that those who advocate for equal income overlook the most key factor that is the total available for distribution. He argues that the total annual income is not independent of the social status but is as a result of existing institutions that would be quite difficult to change. The article thus explains wealth inequality as a product of individual’s attempts to live within their means. An individual will always attempt to produce what is in demand at the lowest cost thus creating institutions that end up bringing about the wealth inequality.

Ludwig also suggests that any attempts to change the existing institutions and modes of production would yield worse economic crisis than is the case currently. To the author, unequal distribution of wealth is thus a significant condition for any meaningful economic activity. In addition to this argument the author also observes that it is only unequal wealth distribution that can accord the rich luxury. He dismisses the notion advanced by many authors that luxury is a form of social injustice. Unlike such authors who argue that luxury is an enjoyment at the expense of the poor, Ludwig sees it as a means through which income is spread from the rich to the poor. In addition Ludwig sees Luxury as an important social tool through which future necessities are brought to focus. In his argument he provides the example of an indoor bathroom that was earlier considered as a luxury a few generations ago. Today it is considered a necessity in most English houses. Other examples provided by the author to justify luxury as the path of economic activity include automobile. He thus asserts that any economic advancement comes into existence first as a luxury of the rich thus justifying luxury.

Article 2. To Fix Income Inequality, The Have-Nots Must Become The Do-Something

This article was written to counter Derek Thompson’s article that suggested that wealth inequality as a problem. Unlike Thomson the author of this article sees two different things first that the term wealth inequality lacks substantive meaning since wealth accumulation is not a problem. Second is that the problems people encounter are social dysfunction and poverty and cannot be solved by distributing wealth from the haves to the have-nots. The author successfully argues that such challenges could only be solved if the have-nots woke from their economic slumber and begin to do something.

The author firmly asserts that redistribution of wealth among the poor would do nothing to eliminate what bedevils people. He thus proposes establishment of strong and stable institutions that would enhance free engagement in trade as the only solution to the economic crisis. As was the case with Ludwig the author does not see luxury as a social injustice but rather he observes that sooner luxury goods will be found in common place. The author thus criticizes the socialistic idea of wealth distribution by mimicking the darkness of the Korean peninsula at night as the result of wealth distribution. In addition the author also criticizes Greece and Spain as having an unemployment rate of about 25% after implementing the socialistic idea. Democratic systems, according to the author are far from such socialistic thoughts and would only implement such policies at their own economic peril.

This is an article based on actual research findings in the US appearing in Los Angeles Times. The article asserts that wealth inequality has continually been on the rice since the 1920s against the will of most Americans. This article provides research findings such as those conducted by Edward Wolf of the New York University that 85% of wealth in the US is owned by 20% of the population. Edwards’s research also shows that the bottom 40% of the population owns nearly nothing. Such findings, according to the article leaves the government at a cross road on deciding whether there is any need for wealth re-distribution. The article also provides responses from a sample of 5000 respondents on their feelings regarding the economic anomaly.

According to the article most Americans we aware of the wealth inequality but underestimated the wealth gap. It also provides that most Americans wanted the wealth gap reduced so that the top 20% could own only about 30% of the wealth and the bottom 40% about 25% of the wealth. The article observes that most Americans wanted to live in a more equal country than it currently was. Most of them observed that Sweden for example was much better than the US. Although most Americans observed that policies attempting to address wealth re-distribution would create other crisis they seemed to favor such policies.

Summary of the Three Articles

The first two articles provide an economic viewpoint on wealth distribution .The two authors are opposed to wealth re-distribution and argue that it would do little to address the problem of poverty .They also propose that such an endeavor would end up creating an economic crisis. The last article is a summary of research findings regarding wealth inequality in the US and contains shocking revelations regarding wealth ownership. It also contains the views of most Americans .Americans in general are of the view that wealth inequality should be addressed by adopting economic policies that enhance reducing the wealth gap between the rich and the poor. All the three articles appreciate the fact that policies that would involve taking from the rich and giving to the poor would create other social, economic and political challenges. 

Hypotheses

People with higher education are more likely to support government action on reducing income differences is the first hypothesis for this study. This proves otherwise with the statistics that was collected by the General Social Survey since most of those who agreed are high school graduates who are 1306 as compared to those who are in college levels and beyond where only 738 agreed to support the government in reducing income differences between the poor and the rich.  63.9% of the high school graduates are for the government’s idea.

The second hypothesis of the study forecasts that African-American are more likely to support government action on reducing income differences. With the statistics that the General Social Survey came up with, it is easier for Americans to support the government in reducing income differences. This is as a result that the Americans will be comfortable to have in power a government that will implement income equality for the sake of economic growth of their country.

The third hypothesis foresees that Democrats are more likely to support government action on reducing income differences. General Social Survey statistics democrats support the government for the act of reducing income gap between the poor and the rich. A prove of these is also evident with the research carried out by the university of Santa Clara. They proved that not unless a community loses its character of demo-cratic, then there is no tolerance of too much stratification. The relationship between the political influence and the income are related. It is also witnessed that those who win the elections are not the wealthiest candidate.   The wealthiest are only out to be heard but not expressing the interest of those who elect them.

Methods

Overview of General Social Survey

Approximately 10,000 people have been the targeted sample size up to 1998.  An increment to 25,000 was expected in 1999. With such a sampled population of 25,000, it has facilitated the results to be available both at provincial and national levels and probably a group of special population such as visible seniors and minors and disabled persons 

Participants

According to the survey that was carried out by the General Social Survey a group of people from different backgrounds were chosen that summed up to 4901 people (Davis & Smith, 2011). These backgrounds revolved around education, party affiliation and ethnicity. Out of the sampled population, a good percentage agreed with the fact that the government should reduce income difference between rich and poor. In education sector, 738 people were sampled from college and beyond college, 1306 people were high school graduates. As party affliction, 961 were democrats, 658 were republican and 409 were neither republican nor democrats. Considering ethnicity, 1539 were whites, 304 were African American and 189 were other ethnic groups.  All these samples were selected randomly.

Materials

During the survey, a lot of questions regarding whether the government should reduce the income differences between the poor and the rich were raised. All these were aimed to weigh out the dependent variable-"Equal Wealth: should the government reduce
income difference between rich and poor?" – is influenced by the independent variables which are education, party affiliation and ethnicity. These took about two weeks. Some demographic information like level of education, ethnic group and party affiliations was also included in the survey. These demographic questions gave a direction to which the answers were to follow. The questions were kind of closed once. An individual was to either agree or disagree with respect independent variables.

Procedure

A chi-set test was used to analyses data by the General Social Survey group. All the missing systems were not included thereafter; a contingency table was produced by for the sake of statistics analysis. These summed to 4901 results that were used for analysis. After the frequency was obtained from each category of respondent, percentages, valid percentages and cumulative percentages were calculated. They were as follows; frequency table was obtained by using the analyzed functions to describe the obtained samples. Thereafter, contingency table was obtained by use of crosstabs function. Then null hypothesis or individual independent variable was tested by use of chi-set statistic function.

Discussion

Unequal wealth distribution in the past 25 years has widened between the poor and the rich in America. This not only has it has led to lower economic growth but also it has led to income redistribution at the ethnics to be looked unto. According to Alan Greenspan, there has been a drastic growth in the wealth and income inequality.  Since 1975, the standard measures of wages and real income of the least educated and the poorest Americans do experience a drop in their living standards. 

In the first hypothesis, “People with higher education are more likely to support government action on reducing income differences” is not true since most of them don’t expect to be paid less or equal to those who have lower level of education. Eventually, however, there has been a decline in the demand of low-skilled workers (those who have lower level of education) according to the view of the economists. The lower demand has been as a result of technological changes which have made firms to cut down on low-skilled labour as they raise the demand of workers who are highly educated. As a result higher boom has been realized in the economy despite the widening of income gap between the poor and the rich.

African-American are more likely to support government action on reducing income differences. Most of African-American supports these as a result of globalization. Low-skilled African-Americans workers have realized higher competition from both low-paid workers who are immigrants and those who lives in other portions of the world. Their products compete with those of Americans. Despite the globalization, the effect has not been negligible. Therefore most of African-Americans think that they are less important that the technological effects in transforming the inequality in wages eventually they are willing in plenty to support government in the reducing income gap between the poor and the rich

Democrats are more likely to support government action on reducing income differences. Most democrats are wealthier therefor they are not at the feet of the poor who seeks government support to reduce the gap in incomes.  The low-paid workers are always democrats, the only challenge they face is that they lack the political voice. Lack of political voice makes it difficult in the provision of a platform for them to express their grievances. Another challenge to reducing income gaps between the poor and the rich is that the Americans have lost sights in the important moral arguments that can reduce the economic inequalities instead they don’t service the self-interest of the poor.

Recommendation

After the repercussion that comes by as a result of a wide income gap between the poor and the rich, the following will help to sort out the situation. One the communal and the individual charity play a big role in this, though the reduction of inequality depends upon the power of tax, regulations and transfer of the government. Thus the design- efficacy and efficiency are the key principles that will help in reducing the inequality.

The earned income tax credit (EITC) it the better policy that considers those who works in the poor environment therefore the government should implement it for the reduction of the income gap between the poor and the rich. The best way to deal with wealth inequality is the upgrading of the skills by a program known as political rhetoric which favors education and training of the low-skilled workers. Though it pays the low-wage workers, it fails in the efficacy test.  If both long-term and short-term narrowing of the income gap is to be realized, the old-fashion redistribution of income policies should not be dumped.

Conclusion

The wish of the government to regulate and reduce the income gap between the poor and the rich should be given high priority. The reduction in the gap will help to reduce issues of one fulfilling his or her self-interest and forgets about the other poor. Fairness will also rise without consideration of some factors like level of education. Desert and public comparison or sympathy will as well be implemented fairly.

Therefore as we consider the equality in the level of wealth and income, government should ensure that everyone attains the level of education that meets the standard of the technology used in their economy. If these cannot be attained, they they should not dump what the low-skilled workers can do as a result, each and every person will live a life standard that is neither lower nor higher than the normal living standards expected. Another factor is the government should enhance the equality in all aspects of live independent of race be it an American of African-American, there should be fair treatment to all. Finally being a democrat or a republican should not be a basic determination of the level of the income one earn. Unity will help as everyone is considered equal during wealth distribution. Eventually if all above is done, there will be a narrow income gap between the rich and the poor since no one will be putting his or her interest ahead of others but rather consider all equal.

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