The Issue of Income Equality in the US

By

SOC 100: Intro to Sociology

April 29, 2012

A major social problem in America today is its inequality of the distribution of income. "Income inequality refers to the gap between the rich and the poor. The United States has the most unequal income distribution in the industrialized world, and it is growing at a faster rate than any other industrialized country" Bernard Sanders (1997). What's really going on with the economy? - Unequal distribution of wealth and income. [ONLINE] Available at: www.usatoday.com. [Last Accessed 04/27/2012]. Society defines this social issue as the disparity between the few at the very top of the income ladder, and the many at the bottom. Recently, the Occupy Movement has defined this problem has fight between the 1% and the 99%. The social classes that are most impacted by this disparity pretty much cover the spectrum as we are all affected. The most latent effects are probably found in the poor, in single-mothers, and in the minority classes. Those are the classes that have the least amount of economic and social power at the onset. A persons clothing, housing and educational opportunities usually depend on their class, but that is a direct reflection of their income. A person does not gain any class or power without their income being taken into consideration. The only problem is, is that there is also class inequality, which further prohibits people to earn an equal income. Income inequalities in a society are a source of a variety of social problems in that society, almost without regard to the absolute level of income in the society. This follows the sociological idea that extreme inequality leads to a set of psychological conditions that in turn produce the harm in question. “A huge share of the nation's economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.” Dave Gilson and Carolyn Perot (2011). It's the Inequality, Stupid. [ONLINE] Available at: http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph. [Last Accessed 04/27/2012]. This social issue has changed drastically over time. While there has always been poor people and those well-off, there has always been a history in this country of upward mobility. There has always been a strong middle class that had previously held the economic power in the country. Life for the rich never has been better. In the last 20 years, the wealthiest one percent of American families saw their after-tax incomes more than double. The very rich now own a greater percentage of the nation's wealth than at any time since the 1920s. While the wealthy are becoming richer and the number of millionaires and billionaires is skyrocketing, there is another reality. Since 1973, 80% of all families have seen their incomes decline or remain stagnant. The average American today is working longer hours for less income--and has every reason to worry that the future will be even worse for his or her children. Tami Lihby (2011). Global income inequality: Where the U.S. ranks. [ONLINE] Available at: http://money.cnn.com/2011/11/08/news/economy/global_income_inequality/index.htm. [Last Accessed 04/27/2012].
A wide range of social problems are worse in societies with bigger income differences between rich and poor. These include physical and mental illness, violence, low math and literacy scores among young people, lower levels of trust and weaker community life, poorer child well-being, more drug abuse, lower social mobility and higher rates of imprisonment and teenage births. Greater income inequality seems to amplify and intensify the effects of social status differentiation -- bigger material differences creating bigger social distances. So the most common trigger to violence seems to be people feeling disrespected and looked down on. Although social class imprints its effects on us from earliest childhood onward, greater inequality makes these effects more marked. But inequality does not harm the poor alone. The effects are so large because almost everyone is affected. The benefits of greater inequality are biggest at the bottom of society, but a number of studies suggest that a large majority -- perhaps 90% or 95% -- of the population benefits from greater equality.
In order to improve the problem of income inequality and all of the social ills that go along with it, the first thing that is needed is an adjustment in the basic values of society. We need to move from a nation that values money and greed based on individual wants, to one that puts a greater emphasis on more altruistic values. It should be against the social norm to horde billions of dollars for yourself, all the while fellow countrymen are starving in the streets and unable to provide the basic necessities of life for themselves. Instead, those people are celebrated as the models of what we all should want to achieve. This is fundamentally a flawed value.
Once the change in basic values can occur, it would be much easier to implement other actions that could interrupt the income inequality cycle. The first of these items would be to tax wealth. There is a simple fairness argument for taxing wealth. A large part of government expenditures are to protect wealth. This includes part of what we pay for law enforcement, diplomacy and the military. Those with the most to protect should pay their fair share for the protection. The accumulation of wealth is a good thing and should be strongly encouraged up to a certain point. We need to differentiate the level of wealth that makes a family financially independent (perhaps 1 to 5 million dollars) from greater wealth. The latter is only helpful if it is going to those who know how to invest it productively. Warren Buffet is the obvious example. Taxing wealth progressively at low rates and with a high deductible will gradually help to take it away from those who cannot invest it wisely while presenting little problem for those who can.
Power corrupts because it can be used to obtain unfair advantage. One way to address this is a balance of power. That is why unions are important. They can and have abused their power as has every other powerful institution in this country. That is an argument for limiting power across the board with checks and balances. It is not an argument for a single minded attack on labor.
Income inequality is a social issue that has a range of associated issues and problems. This is probably one of the single largest problems that we face moving forward as a society. We must change our thinking in the way we attack the problem, otherwise, the result could lead to mass protests, disruptions and ultimately possible armed conflict. This is what history has taught us.