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The Government Should Reduce The Gap Between Rich and Poor to an Advisable Level

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Before I start my essay, I would like to introduce some abbreviations and special proper noun that appears in my speech. The first one is OECD. OECD is the abbreviation of the Organisation for Economic Co-operation and Development. Basically it is an intergovernmental economic organisation with 36 member countries, promoting economic growth and world trade. The second one is the Gini coefficient, which stands for the inequality level, for example, level of income. The Gini coefficient of zero expressed as perfectly equal (eg. everyone has the same income) and the Gini coefficient of 100 percent expressed as a maximal inequality (eg. one person has all the money). The third one is social mobility. The meaning is just as the name implies – the movement of people within the social stratification or in other words, the social hierarchy.

How would you feel if you were one of the 800 million people who went to bed starving each and every night? At this very moment, countless people are forced to bear the pain of poverty and starvation, through no fault of their own, while millions of individuals in developed-countries binge on excessive amounts of food. These same insatiable people waste enormous amounts of money and resources to maintain their exorbitant and disgustingly luxurious lifestyles. When five cents may seem absolutely insignificant, in certain parts of Africa, it can actually feed a family of four for over a week; for us, five cents is nothing, for them it is a matter of life and death. So how would you feel if you were one of the 168 million children aged between 5 to 17 who has to work so that they can have money to survive and they can not attend school because of that. In situations like that, the government must take into account to reduce the gap to an advisable level to balance the society.

To begin with, wealth gap undermines the equality of opportunities. Picture in your mind you are parenting your child. What would you do when you are parenting your child? You would leave the children unattended for so long, for example: just kicking a ball around a park that such aimless days as time well spent? Or instead you would spend the money to send your child to an algebra camp or learning music or performing arts? So here is the point: different opportunities. This sort of enrichment to the kids aimed at ensuring to give the best possible start in life. It is kind of like starting a life racing competition which every parent wants a good start by providing financial support in potential, and it seems that the race is being won by the rich. One sign of this is richer families can invest more in their next generation, which can lead to an unequal status in opportunities and different opportunities may affect them differently in their outcomes in their adult life. The data from the U.S saw rising income inequality between the 1970s and 2007. According to the researcher Sabino Kornrich and Frank Furstenberg found that the poorest 10 percent of the American spent on their child has increased 23 percent, whereas the richest 10 percent of the families spent on their child has increased about 132 percent during that period. It is like an investment to the children from the wealthier family. So what is the impact? According to Sean F. Reardon from Stanford University, he said “The achievement gap between children from high- and low-income families is roughly 30 to 40 percent larger among children born in 2001 than among those born twenty-five years earlier.” And here is the graph that proves that.

Here is another data that shows a child’s family income plays an important role in determining the child’s income in the future. This figure shows the opportunity that a child’s future earnings. The green bar represents the children’s adult income less than $28900, which is the bottom 20 percent of the earnings distribution and the purple bar represents the children’s adulte income more that $81700, which is the top 20 percent of the earnings distribution.The horizontal axis represent the parents’ income level. It shows that children born into low-income families are more likely to remain poor, and children who were born in well-off families are more likely to stay well-off.

To conclude those data, the income level of the parents is increasingly linked with how well their children do in education and that leads to how well they will do in their life and as Nicholas Lehman wrote last year, “Opportunity is increasingly tied to education, and educational performance is tied to income and wealth.” So the government should reduce the wealth gap between rich and poor to give equal opportunities to the next generation and to make society fairer, equitable opportunities and unbiased.

Secondly, inequality is bad for economic growth. Recent OECD researchers states that in OECD countries, the average increase in inequality of 3 points of Gini points is estimated to have cut in GDP by 8.5 percent recorded over the past decades, which in other words means it would drag down the economic growth by 0.35 percent per year for 25 years.

One of the main reasons from the OECD researchers state that high inequality leads low-income family to invest less in education and skills. They found that the bottom 40 percent of the children missing out on pricey educational opportunities, which leads to less productive employee, which causes lower wages, which means lower participation in economy which means it is bad for economic growth.

Here is a linear graph that shows the relationship between inequality and the average predicted numeracy skills of people from low, medium and high parent education background which is PEB. From the graph we can see that as inequality rises, there is little change in the numeracy skills of people from medium and high parent education background. In contrast, people who are from a low parent education background decreased when the inequality rises.

Another reason is that inequality leads to economic instability. The rich people spend a smaller proportion of their income than the people on low incomes spend a lot so that the rich people save money but poor people spend money. This leads to a reduction in demand. Thus, the imbalance between supply and demand is likely to trigger an economic crisis. So it is important to reduce the inequality.

Thirdly, the gap between rich and poor will cause lots of social problems. So what is the relationship between inequality and social problems?

On the one hand, inequality may affect people’s well-being. Many people fear that inequality undermines societies, making society a worse place to live and I fear that as well. I think one of the reasons is that the disadvantaged group of the society may feel injustice or hatred the rich because of inequality. What can happen is that can breeds more crime. I think it is really easy to think of that because, for example, if you have a society which has a large division between winners and losers, probably the losers will think the game is not played in their benefits and they are not going to play it by the social rules. That’s why it breeds more crime. It also proved by the World Bank: “In some parts of Latin America, more equitable income distribution has contributed to reducing violence.”

On the other hand, countries with high income inequality have low social mobility. According to the Great Gatsby Curve, it shows a negative correlation between social mobility and income inequality in some countries. And as mentioned before that the children from well-off families are more likely to stay at well-off and vice versa. What that means is that people are less likely to rise or fall in the system of social hierarchy as a low social mobility, especially if you are really rich or really poor, you are more likely to stay in that way and the effect is that according to the OECD report, it says that” it can stifle upward social mobility, making it harder for talented and hard-working people to get the rewards they deserve.

Furthermore, social mobility will cause changes in social structure, which in this case low social mobility will generates an unbalanced and unreasonable social structure — the pyramid-shaped social structure. In this pyramid-shaped social structure, a very small number of upper rich people occupy an excessively high proportion of the total wealth of the society, which can cause social instability as mentioned before. Therefore, from those two points, the government should reduce the gap to make a better society.

Rebuttal: as I mentioned, inequality is bad for economic growth, so the government should reduce the gap between rich and poor. But it actually has a good side of it, which inequality is good for economic growth, for example, the most obvious way that inequality derive growth is that it allows the entrepreneurs, for example, like Apple’s Steve Job’s, to enjoy the rewards of their risk taking. So the government should not reduce the gap between rich and poor. However, there are two weaknesses, the first one is the economic growth is bad for the environment. For example, London smog of the 1950s, it is caused by the increased consumption of fossil fuels, which can lead to poor air quality, people’s wellbeing. The second one is it is still bad for the poor people, even the economy is growing. For example, big companies like Nike and Adidas, they employ cheap labor, slave workers in India and Thailand, they only give a tiny bit of money that they can only survive from that money, they are not going to be rich. And the company which got heaps of money because of that, which promote the economic growth, but it is really bad for the poor and they are not going to change from that. So I think from the counterargument that the government shouldn’t reduce the gap because it is good for economic growth. Even inequality is good for economic growth, I think disadvantages is bigger than advantages, so I think the government should reduce the gap between rich and poor.

In addition, the government should reduce the gap to an appropriate level, not too small like everyone is equal. The reason is really simple, just imagine if you are working so hard and I am sleeping while I am working but we get the same amount of money. So no one is going to work hard anymore and the productivity is going to be really low or zero, and there will be no development in the societies.

In conclusion, because of three reasons as previously stated, the first one is the inequality of opportunities, the second one is it is bad for economic growth, the third one is it will cause lots of social problems. To sum up, I think the government should reduce the gap between rich and poor. 

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