Vast economic disparity is harmful to the US economy

The growing income gap between the affluent part of society and the less fortunate is arguably one of the most defining challenges of our time. Therefore, this debate is of vital importance to everyone, regardless of socioeconomic background. Gini-coefficient indicates how great the economic inequality is in each country. The US is ranked on 92th place amongst developing countries in terms of economic inequality. We are even valued to have one of the highest Gini-coefficient in the world. It is higher than nations like Uganda and Bolivia which respectively have 43.0 and 44.7 while we have 46.0. [1] This unequivocally shows that the income distribution and economic inequality are immense in the US. And the thread of inequality to our economy will be explained excessively in the next paragraphs. That is why our existing policies are so upside down. When the biggest tax exemptions and the lowest tax rates benefit the richest, all in the name of job creation, it only results in the very fact that the rich get richer. This assertion is sustained by substantial and unambiguous economic figures. Since 1980, the share of income for the top 1 % of Americans has more than tripled, whereas our effective tax rates have gone drastically down by fifty percent. [2] If it was true that lower taxes for the rich and more wealth for the wealthy led to job creation, today we would by drowning in jobs. And yet, unemployment and underemployment has in recent years been at record heights. And if you look at the unemployment and income distribution statistics in the period from 1950 to 1970, it tells us that the unemployment and the economic inequality were low while the economy was stable. [3] This corroborates the very necessity and validity of the societal ambition of more economic equality. The outcomes of great economic disparity is indisputably detrimental; it weakens social cohesiveness, it encumbers macroeconomic growth and finally it impairs social mobility. Contrariwise, a more equal society provides a stronger and more stable market economy, and it ensures opportunities for a better life for more people. Thus, a whole bunch of initiatives working toward breaking this negative trend of higher inequality must be considered. These include regulation of the financial sector, a progressive taxation system, better access to education, universal health care insurance, fiscal policies directed toward less unemployment, an active labor market policy and finally a prohibition on financial support to political parties from companies in order to curtail its current unproportioned influence on the Capitol Hill. All these aforementioned recommendations are as a matter of fact from the well-respected economist, Joseph Stiglitz. A rationally strong state is required in order to attain greater economic equality. I want to challenge the tacitly accepted Chicago school-based assumption that government intervention in the best case breeds inefficient results and in the worst case brings deleterious effects on the market economy while the invisible hand of the market is the universal solution to everything. This is not a zero-sum game. The state and the market are preconditions for one another. They are both partners in a dynamic economy with a blooming middle class. Unregulated markets do not always create the best results and are thus not the most suitable framework for society. Even neoclassical economists such as Hayek and Friedman would concur that an absolutely free market economy without any government is merely hypothetical imagination and devoid of any chance of success. So, government intervention is an expedient means to protect citizens from recessions by regulation of the financial market and unemployment by means of boosting public investments, according to Keynes and his General Theory of Employment, Interest and money [4]. And finally, the state is imperative in order to keep the economic inequality under a reasonable level by the redistribution of income. Stiglitz contends that deficit expenditures, when it is implemented properly, can be major stimuli to economic growth and in point of fact alleviate long-term federal debt. [5] When economic growth is back on healthy terms, this leads to increased tax revenues, which eventually diminish the necessity for government to borrow money. The key is to devote these resources on things like education, technology, and infrastructure that lay the groundwork for future economic expansion. We will not remain competitive with other countries for long if we don"t have decent roads, efficient airports, adequate clean water supplies, and sufficient school facilities. To make the middle class grow and thrive is by any measure the single shrewdest thing we can do for the middle class, for the poor and ultimately for the rich. This is beneficial for America. This is a step toward realizing the American Dream. This is beneficial for every single American individual and well-being of society as a whole. All these points will be elaborated in next round. I have high hopes for a thought-provoking and rational discussion. Let me finish off by quoting William Penn: "In all debates, let truth be thy aim, not victory, or an unjust interest." List of References 1-http://hdr.undp.org... 2-http://www.ibtimes.com... 3-http://stats.bls.gov... 4-Keynes, John Maynard " The General Theory of Employment, Interest and Money (1936) 5-Stiglitz, Joseph E. " Whither Socialism (1994), Stability with Growth (2006)