Wealth Gap

9 September 2016

Gap There are the rich and poor in every period in human history and everywhere in the world. Has the disparity between the rich and poor existed since ancient time? How does the disparity between the rich and poor come out? Has the disparity between the rich and poor became more narrow or wider?

Although some people think that the gap between the rich and poor is more narrow because of the development of human society, the fact is that the disparity between the rich and poor is gaining because of the change of the structure of workforce, Matthew Effect in economy, unscientific social welfare system, unreasonable tax policy and knowledge explosion. Many people think that the rich-poor gap is more narrow today because of the development of human society. In their opinions, human civilization made great processes with the pass of time.

Wealth Gap Essay Example

People have paid more attention on equality and human rights and have taken measures such as establishing income tax policy and social welfare which are protected by law to create a fair society. But the fact is not as same as their wishes. As Roger Bootle, a chief economic adviser to professional services firm Deloitte and Touche, says that the gap between the richest and poorest could become worse (Roger Bootle). The first reason for the increasing disparity between the rich and poor is the change of the structure of workforce. As people can see, today is a technological time.

The knowledgeable or skilled people can find high paying jobs, on the contrary, the uneducated people have to do simple job and get low pay. In fact, this fact is only an apparent phenomenon caused by the change of the structure of workforce. Today, technology improves the efficiency of production a lot. Many jobs which used to be very simple and need many workers become more complicated and need only a few workers now because the content of technology in the jobs has increased. So these jobs require staffs to have much more knowledge than before so that they can equal to these jobs.

The process of simple jobs becoming complicated jobs is called the change of structure of workforce. In other words, the number of complicated jobs has increased and the number of simple jobs has been reduced because of the improvement of technology. In The Reason The Rich-Poor Gap is Widening, Ross Gittins reports a fact that the number of people in professional occupations grew by 27 percent, the number of associate professionals grew by 26 percent and he number of managers grew by 12 percent in Australia (Ross Gittins).

The phenomenon that the number of complicated jobs has increased is really existent and it is also happened in other countries too. Because the competition of simple jobs is keen, many uneducated people are unemployed. The uneducated people get a little pay or even no pay and become the poor naturally. Take the case of China, Dexter Roberts points out a fact that the closures of many Chinese manufacturer are mainly hitting lower-value, labor-intensive exporters that pollute heavily and use energy inefficiently(78). It means the number of simple jobs for uneducated people is reduced in China.

So many worker in these factories will lose their jobs and it will become more and more difficult for them to find new simple jobs. Many rural migrant workers have lost their jobs and go back to their hometown in China. So the change of structure of workforce result in many uneducated people lose the chance to get pay and widen the rich-poor gap at the same time. The Matthew Effect in economy is increasing the degree of the disparity between the poor and rich while the change of the structure of workforce is increasing the number of the poor.

The term Matthew Effect comes from a story of parable. As Marie Rippel says in The Matthew Effect and Teaching Reading, the idea behind the parable become a maxim which is the rich get richer and the poor get poorer. (Marie Rippel). Specifically, Matthew Effect in economy means the rich can get richer because of their fortunes and the poor will be poorer because of their destitution. The Matthew Effect can widen the gap by affecting the next generation. If a child’s parents are poor people, they can not afford a good education, good food or good medical care condition for their child.

Their child still can not do complicated jobs and get high pay in the future because the child have no chance to receive a education to grasp necessary knowledge or skills. The possibility of their child falling ill is also much higher than the children in rich family because of the child’s poor growing condition. So the child may not change the situation of the poor family and may be a poor person like his or her parents. The phenomenon keep going, poverty will be passed down from one generation to another generation. So the family will never get out of poverty and only have to be poorer.

The Matthew Effect also can widen the gap by disturbing the poor to earn money with their assets. The rich can use their disposable money to do somethings which can bring them more benefits, such as banking, investment. It means the rich can earn more money by managing money. The more assets the rich have, the easier for them to make money. The poor have a little or even no disposable money, the only function of their money is offering the daily cost of their families. So they have no chance to earn money from their asset and it also will be harder for them to earn money.

Matthew Effect in economy is consisted of some aspects like these, it really can widden the disparity between the rich and poor. The third reason for the increasing disparity between rich and poor is the unsound social welfare. What is welfare? As Bent Greve point out in What is Welfare, the word welfare comes from wel fare, it is from well in its still familiar sense and fare, primarily understood as a journey or arrival but later also as a supply of food (Williams 1976, 281), and has historically been related to happiness and prosperity, where as its current understanding first emerged in the 20th century(51).

Modern social welfare mainly means government redistribute the whole social fortune in order to help the vulnerable groups by establishing revelant law. So the goal of social welfare is obviously to help the vulnerable groups which includes the poor. As the opinion in Goal of Social Welfare, the goal of social welfare is to fulfill the social, health, and recreational requirements of all individuals in a society (Goal). The social welfare can narrow the rich- poor gap by redistributing the social fortune, on the contrary,the unsound social welfare will not work and even widen the rich-poor gap.

A character of unsound social welfare is that it can not redistribute social fortune effectively. For example, if the strength of a unsound welfare system is not enough, it will not really redistribute whole social fortune. The poor still can not get enough help from the society. Another character of a unsound social welfare system is that it can not really change the poor’ s situations with the limited money. Some countries are developing countries, the money spend on social welfare is not enough because of these countries’ underdeveloped economies.

The benefits the poor get from government through social welfare is so little that it can not really make a difference in their lives and change their bad situation a lot. A reasonable social welfare system should use the rich’ s money to help the poor. It should increase the level of helping the poor so that the benefits can really provide a chance to the poor to let them change their lives. A reasonable social welfare also should help the poor more than just giving the poor a little money.

If government can not afford a sound socual welfare, the welfare should spend on some measures that can really change the poor’ s situations such as offering a chance of receiving a good education to children from poor families or providing a chance of receiving a training to the poor so that the poor can get jobs and change them bad situations rather than just giving them a little money as benefits to make them can sustain lives. An effective social welfare can have a positive effect on narrowing the rich-poor gap. The unreasonable tax policy also play a important role in the problem that the rich-poor gap is wider.

As social welfare systems, one of the basic functions of tax policy is to redistribute the whole social fortune, it is the source of funds of social welfare. As Janet Novack saya in Tax Shelters 2. 0, bad tax ideas which like viruses tend to mutate and claim new victims (126). A bad tax policy will widen the rich-poor gap rather than just do not work. The income tax is one of the most important tools for governments to narrow the rich-poor gap. But many countries’ tax policies are not perfect, some of them even are very unreasonable.

The common characteristic of unreasonable income tax policies is that the tax policy is no use adjusting the balance between the rich and the poor. Some tax policy do not fit the change of the development of society and economy. Some tax policy will not work effectively because they have no basis in fact when government make it. Because of the development of economy, many countries’ bill will become more and more depreciatory. So the starting line of income tax should be raised in time. Only in this way can the income tax really use the rich’ s money to help the poor.

As Lindy Paull, a managing partner of Pricewaterhouse Coopers and former chief of staff for Congress’ Joint Committee on Taxation, says in Read My Lips, taxes are going to go up one way or another and the new tax policy will get hit will be higher –income people first (102). So if a income tex policy can not be revised in time, it will become a unreasonable tax policy. Take the case of a Chinese tax policy which is obeied four years ago, the income tax collection starting line is 800 yuan at that time. It means if people’ s wage is higher than 800 yuan, they should pay tax for the extra part of their wages.

In New Tax Law Needed to Narrow Income Gap, China Daily point that, the threshold of the old tax has not been raised since the personal income law was adopted in 1980. At that time, a monthly salary of 800 yuan was beyond the imagination of most Chinese people who lived on a monthly income of just tens of yuan (In New Tax). But most Chinese’ salary is higher than 800 yuan some years later. The old tax policy do not change until 2005. It means many people whose wage is not high have paid the income tax for many years and the rich have paid much more little tax than they should pay.

The old tax policy is a unreasonable tax policy before 2005. The tax policy which have no basis in fact such as the tax policy with a wrong taxation target also can widen the rich-poor gap by many ways. The result of these wrong tax policies is as same as the tax policies which are out of date. They all fail to take enough money from the rich and still take money away from the poor. These kinds of unreasonable tax policy all can not work and help the rich-poor gap become wider and wider in some way. The most essential and important reason for the increasing gap between rich and poor is knowledge explosion.

Human knowledge become more and more with the development of huiman civilization. As a Daniel says in Knowledge Increased, according to research studies, the summation of human knowledge is now doubling every eight years now. 80 percent of all the scientists who have ever lived are still alive today. They add 2000 pages to man’s scientific knowledge every minute and the scientific material they produce every 24 hours would take one person 5 years to read. There are almost half-million new books being published every year (Daniel). The fact that the amazing increase of knowledge is called explosion of knowledge.

The new knowledge change people’s lives enormously and become more and more important to production. Knowledge can impove the efficiency of production so that the factories in every kinds of industries all can produce more value in a short time than before. Many work which is used to be done by worker can be done by machines. Controlling these machines only need a few workers who possesses knowledge and skill. The important change in factories causes the change of the structure of workforce and a fact that many uneducated people can not get jobs. The knowledgeable or skilled people can produce more value in a short time, so they get high pay.

The uneducated people or the people do not have enough knowledge to produce much more little value or even have no chance to produce value, so they get low pay or even no pay. So the knowledge explosion make a important difference between people, it make the rich-poor gap wider. All in all, the Matthew Effect in economy, unscientific social welfare system, unreasonable tax policy, the change of the structure of workforce and the explosion of knowledge all make contributions to the fact that the rich-poor gap is much wider today. It is very harmful to the stability and development of human society.

As the founders of America writes in The Declaration of Independence, “we hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. ” But the larger rich-poor gap has kept people from pursuiting happy lives fairly. So we should pay enough attention on the social phenomenon and try our best to take measures to reduce the disparity between rich and poor so that we can live in a peaceful, fair and compatible world.

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