Vast economic disparity is harmful to the US economy

Thanks for challenging this notion and for participating in this debate, 16kadams. (1) Income inequality may or may not be increasing. As inequality has increased, the wealth of the poor has also increased. Between 2000 - 2010, inequality has actually decreased. Let us be clear about the evidence; the above-mentioned assumption is simply erroneous, since poverty maintains its level if not getting more rampant in the US. [http://www.npc.umich.edu...] And economic income inequality has, on the long term, been on the rise in the past two-three decades. [https://www.cbo.gov...] Here is an incredible fact: If the typical American family still retained the same share of income that they did in 1970, they would earn about $45,000 more per year. Significant privileges have come to rich, for being perceived as job creators at the center of the economic universe. The language and metaphors we use to defend the current socioeconomic arrangements is telling. This discourse obviously was not chosen by accident, and it is only honest to admit that when a CEO calls himself a "job creator", he is not just describing how the economy works, but more particularly, he is making a claim on status and privileges that he deserves. Speaking of special privileges, the extraordinary differential between the 15 % tax rate that capitalists pay on carried interest, dividends and capital gains and the 35 % top marginal rate on work that ordinary Americans pay is difficult to justify without a touch of deification. We have had it backwards for the past 30 years. The notion from my opponent which states that inequality has decreased is flawed. According to Emmanuel Saez, an economics professor at UC-Berkeley, and his research, U.S. income inequality has been increasing steadily since the 1970s, and now has reached levels only experienced in the year of 1928, not accidentally before the "Great Depression". This also indicates a crystal-clear correlation between global economic crisis and vast inequality. How can a vast inequality not be detrimental when the facts tell us that inequality peaks just before a recession occurs, like in 2007 and 1928 just before the two world recessions. (2) Inequality can be good and bad. If people are unequal because one group is more productive, it is good. This means inequality exists because of economic growth. If it is due to inheritance, it is bad as they are unjustly wealthy. The current inequality is "good", meaning our economy is not damaged because of it. I concur to your viewpoint that economic inequality is not intrinsically malevolent to the economy; if the average American enjoys increasing wealth, i.e. a growing GDP per capita, then there is no problem. Although the increase in income has not been distributed to a wider range of the population. Concentration of wealth. The counterargument that may belie your argument is the profound ethical unfairness in the distribution of income. As long as everyone benefits from the economic growth, regardless of how big the profit pie may be, then everything is fine and dandy. However, this is not the case in reality; in the US, the wage of ordinary workers has stagnated if you take into account inflation over time, while the rich now receives substantially higher wages compared to the 1970s. [http://inequality.org...] Low and middle class individuals gradually experience less wealth. Thus, so-called "bad" economic inequality is undoubtedly present in the US and is currently damaging the economy. Tax is not necessarily a deterrent to innovation and productive behavior. [http://www.yourarticlelibrary.com...] This is a myth created by Wall Street speculators pressuring for lower wages without regard to actual economic figures. [] Even though it is frequently claimed that income tax is a disincentive for people to work because it takes money away, it is not always true according to these reliable sources. Again, let me make myself abundantly clear: An utopian model in which everybody is equal economically is most certainly undesirable. Entrepreneurship is driven by additional profit. That being said, there is an ethical limit of how great the profit for business leaders may be. Immense gains for the top 1 percent of incomes are given at the expense of stagnating wages for the middle class. And economists unanimously agree that a strong middle class is of vital importance to economic progress. Therefore, the government, which is the tool to creating a stable economy, should be efficient and offer political solutions toward more economic equality. Let us put the US In comparison to the world to see how other nations with different levels of economic disparity perform in terms of other socioeconomic scales. Rich industrial countries in which people enjoy greater economic equality, performs better regarding social cohesion, social mobility, life expectancy, infant mortality rate and last but not least economic growth. [http://scholar.google.dk...] [http://inequality.org...] Countries with stronger social cohesion has lower inequality. Strong local communities as well as a strong bond across America are essential/desirable in running a stable and well-functioning nation. Inequality leads to more social evaluation anxiety, a strengthened status insecurity and a heightened social insecurity. And when it comes to equality of opportunity where the US has one of the weakest, it is also interconnected to the wide difference in income in the US. The distance between the steps on the social mobility ladder has at an increasingly speed been enlarged in the same pace as the economic inequality has increased. Less income differences derive either from low income differences before tax (e.g. Japan, Switzerland) or by means of progressive taxation systems taxing the rich more (Sweden, Iceland). This is not fabricated data but presented by UN officials. [http://youtu.be...] So, if rich people in countries like Sweden contribute more in tax, how come that they do not have a low economic growth? This indicates that there are other more prevailing factors in relation to economic growth, such as low economic equality. (3) Low tax rates on the rich spur economic growth. Substantial evidence proves my opponent"s statement to be misguided, if not fallacious. This idea is wrong-headed in the sense that there can never be enough super rich people to power a dynamic economy and spur economic growth. Somebody like Don Thompson, CEO of McDonalds makes 10000s of times as much as the median American. But he is not capable of buying 10000s of times as many products. His family owns 3 cars, not 3000. In other words, he cannot purchase a sufficient amount of anything to make up for the fact that millions of unemployed and underemployed Americans cannot buy new cars, clothes or occasionally enjoy meals out. Nor can he make up for the falling consumption of the vast majority of middle-class families that are barely squeaking by, hurried by spiraling costs, and trapped by stagnant or declining wages. As a side effect, this additionally contribute to the issue of vast economic disparity which by the majority of American economists are proven to impeding the economic growth of a nation and its citizens" opportunities to be master of one"s own life. Rich people do not create jobs. Jobs are simply a consequence of an eco-systemic feedback loop between customers and businesses. When the middle class thrives, businesses grow and hire and subsequently owners profit. Tax is rather an investment for the health of our society than a burden for the individual. That is why taxing the rich to pay for investments that benefit all is such an expedient deal for the middle class and the rich. In a capitalist economy, the true job creators and the real drivers of our economy are middle class consumers. If the middle class thrives, economic growth will spur. If the upper class only contributes with a low tax rate, economic growth will not spur. I also want to debunk the myth asserted by neo-liberalists that if the rich get richer, wealth will eventually leak down to the middle class. This trickle-down theory which defends tax cuts for the rich, is invalidated by pure economic figures that actually tell us the exact opposite. [http://www.economicshelp.org...] --- Summary --- As you have mentioned, precautions have to be taken, like economic disparity is not bad in itself since a small inequality incentivizes entrepreneurism and leads to higher productivity as a whole. Nonetheless, the very essence of the proposition I put forward "Vast economic disparity is harmful to the US economy" remains irrefutably valid.