Thursday, October 17, 2019

Read the attached article and answer the questions Essay

Read the attached article and answer the questions - Essay Example It can be seen that the Gini coefficient of some countries is close to 0.0 while others are more than 0.5. This is because of differences in the income inequality. Countries like South Africa have a high rate of inequality which brings the Gini coefficient to 0.6 while Scandinavian countries like Sweden maintains the Gini coefficient for disposable income at 0.25. Beddoes goes further to show that the economic differences of the countries around the globe are increasing; for example in America, Gini for disposable income has shot up by 30 percent as from 1980. In China, the Gini coefficient it has gone up to 0.42, which shows an increase of nearly 50 percent. Sweden is no exception, since the Gini coefficient for disposable income increased to 0.24. Because of the differences of the economies of the countries, others being poor and others rich, the economic inequality has risen as from the 19th century to the 20th century. The first cause of income inequality is because the countries which were rich economically started intensifying as from the 19th to the 20th century than the poor nations (Beddoes 4). This can be supported further by the sprout of the industries which brought in rural to urban migration. Another cause is the treatment of people in the middle and bottom of the income distribution as compared to those one at the top. The ones at the top were bailed out when they fail to pay their debt while those in the middle and bottom would lose their assets. Furthermore, the tax levied on people of different level causes big inequalities; it is evident that the rich and the poor are taxed at the same rates. In European countries, the income inequality rose because of the industrial revolution, which can be explained by the fact that mill workers’ incomes were high as compared to rural workers (Beddoes 9). On comparing this to America, it is seen that the income difference widened mainly because of education that caused the higher income class to rise higher than the lower income classes. The education factor also has a racial factor, where minorities received lower education levels than majority racial identities. The same education factor is also seen in many other countries like Asian countries. Other factors in the American system include taxes that favored higher income individuals over low income individuals. According to the Beddoes (23), there are three main strategies that would be used to reduce inequality in both developed and developing economies. One of the first reforms needed is to curb cryonism and enhance competition in emerging markets. This can be done by reducing the powers that monopolies have and spreading competition among all markets. Having a freer economy, which can be achieved by freeing monopolistic markets, would go a long way in reducing inequality. This can also be done in advanced countries by removing subsidies from big corporations, which would serve to balance up the economy. The second strateg y proposed by the (Beddoes 23) is to have targeted and progressive social spending, especially in countries with emerging economies. Beddoes suggests that a shift in social spending factors in all economies would reduce inequality. For example, one of the best models is the Latin American one, where countries are encouraged to spend more in education and investment opportunities in talented individuals. The last

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.