- /Wealth, Poverty, And The Economic Divide
Wealth, Poverty, And The Economic Divide
Wealth, Poverty, and the Economic Divide
Inequality has always been an issue around the world, and the United States of America (U.S.) is no exception. The economic inequality throughout the U.S. has the top one percent of the population owning half of the world’s wealth, while the poorest fifty percent of the population own only one percent of that wealth. In addition, this inequality has not remained stagnant but actually has been continuously increasing for decades. The disparity has divided people into separate classes, where their lifestyles completely differ. With an unequal distribution of wealth, the upper class is thriving with more than enough amenities to survive on, while the poor have the bare minimum or less. Lately, the economic distribution of wealth in the U.S. has been a very popular debate. There are three ideologies that discuss this issue. The idea of Communism is that money should be controlled by the government, so society will be equal. Socialism’s key idea is income should be distributed evenly amongst the population, and no person will earn more money than another. In contrast, Capitalism argues that instead of making everyone equal, the wealthy should support the working class. The issue with complete Socialism and Communism is the possibility of an individual lacking the incentive to work hard if someone who does less will be just as wealthy. While I believe there needs to be some inequality throughout society, there should only be enough to generate competition between individuals; therefore, the capitalist perspective gives a more idealistic economy, creating profit both for the wealthy and lower classes.
The foundation of the current economic divide is based off of class struggle. Karl Marx, a German philosopher, believes that the rich are taking over the aristocracy, and Communism is how to save society. The bourgeoise – the wealthy class – are taking over power and all means of production. Throughout Manifesto of the Communist Party, Marx describes this rise of power and how “[t]he bourgeoisie…has put an end to all feudal, patriarchal, idyllic relations” (Marx 4). On the other side of class structure, the proletariat – the working class – are being oppressed by the rich. While company jobs, whether it is factory, agriculture, or any other labor, are being worked by the proletariat, the bourgeoisie are keeping the profit for themselves. The rich, who own the big businesses, are focused on making money even though they have enough to last them a number of lifetimes, whereas the poorest half of the population are stuck working for a minimal pay. Since society is built off of how much wealth an individual possesses, this separation gives political and social power to the top one percent, which leaves the working class in a state of servitude.
Karl Marx believed the solution to economic inequality is through revolution. In order for the power to be back in the hands of each individual, the proletariat needed to revolt against the bourgeoisie. Instead of reallocating the upper classes’ wealth, Marx suggests the elimination of all private property. Therefore, the money will be in the hands of a government working for the people. Marx states Capitalism is unstable and, in order for there to be changes, requires a revolution instead of reform. In today’s society, Marx’ idea of the working class revolting against the rich would also mean individuals would need to give up all ownership of their homes and businesses, and the government would have complete control of money and land.
One problem with society is the misconception that poverty is a choice. Some individuals believe being poor is a result of laziness and a desire to not work. However, this is an inaccurate representation of the lower classes. Poverty is not always structured around an individual but, in many cases, a result of a poverty-stricken community. John Kenneth Galbraith, an advocate for Socialism, in “The Position of Poverty,” compares two types of poverty: case and insular. Case poverty is centralized around an individual and can be the result of psychological or mental health. Case poverty only affects the wealth of the one person characterized by it. In contrast, insular poverty is far more popular. Insular refers to the poverty of a group of people, specifically people located in disadvantaged communities.
There are many flaws with Socialism and Communism, but Andrew Carnegie’s version of Capitalism forms an ideal society different than Marx and Gabreith. Carnegie was a steel tycoon during the gilded age (19th Century) and can be considered one of the richest men in the world during this time. During his time as the owner of his own steel manufacturer company, he saw first hand the law of competition. The Law of Competition allows for companies to compete against each other in order to have a fluctuation in the market. It forces companies to focus on how they spend expenses. Carnegie says “[t]he law may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department" (Carnegie 5-6). This law promotes Darwinism and the idea of survival of the fittest. It makes people work harder and spend more money in order to make the most of what they have. It increases the size of the “pie”. The pie is the movement of wealth through hands increasing the amount people are able to consume.
In “The Gospel of Wealth,” Carnegie argues that wealthy rich men should be the individuals that distribute the wealth, because they have the power and capability to do so. He believes that the wealthy class has the foundational skill to spread money. He states that the wealthy class have the “talent for organization and management [which] is rare among men” He says that the wealthy have “superior wisdom, experience, and ability to administer” the wealth to the poor (Carnegie 15). Carnegie believes that instead of inherited wealth being passed down generation to generation, the rich should give their wealth to public services and not just hand out money to the poor. Carnegie donated his money to colleges, research institutions, and libraries. By doing so, the money would be given to those affected by poverty. Carnegie understands that there will always be wealth inequality, he just believes that the wealthy should help out the poor in order to bring the gap closer socially.
After contemplating the different perspective on improving society’s economic structure, I agree with Carnegie and his view that society should be capitalistic. Carnegie’s Law of Competition forces people to work harder, and with the movement of money, you are not going to see the imbalance of political power only in the hands of the wealthy. In order to minimize the inequality gap, the wealthy should give their excess money to organizations that help the community prosper regardless of socioeconomic status.
In 1776, Thomas Jefferson wrote in the Declaration of Independence that “all men are created equal,” unfortunately, this is not true in modern day America. Milton Friedman, in Created Equal, says that “everyone should have the same level of living or of income” (Friedman 5). Friedman goes on to argue people should not be divided socially by the amount of money they make. People with more wealth have more power socially and politically, and power is a way of control. Today, therefore, the top one percent have the power to make the lower classes struggle and work for them, leading to more profit. At the time Jefferson wrote the Declaration of Independence, he did not account for the level of economic disparity influencing the political landscape today. However, in order to shift some of the political power back to the lower classes, the movement of money needs to incorporate smaller businesses and low end communities. I do not believe this is accomplished by handing money to the government or by distributing everything evenly. Consumers, particularly the upper class, should instead put more money into the flow of the economy by using their excess wealth.
Los Angeles, California, is an example of how economic distribution has a polarizing dynamic. Los Angeles (LA) is a condensed county known to have some of the poorest communities only miles away from some of the wealthiest cities the entire country. LA has impoverished cities, like Compton, which may lead people to believe LA is a poor area, but inequality within LA alters the data to make the county look wealthy. Communities like Bel Air, Brentwood, and Pacific Palisades raise LA’s income per capita. In Compton, the average income per resident is $13,847; while in Bel Air, just twenty-five miles away, income per capita averages $123,105. This shows how poverty can be centralized in small areas. This situation can be resolved if the wealthy show support to these low income areas. I agree with Carnegie that the wealthy should donate their money to public groups that could benefit the poor.
There are many individuals born into poverty, while others are born into family dynasties. In the families where wealth is passed down through generations, such inheritance contributes to the uneven distribution of wealth. Commonly, the upper class rule over corporations and hand down the power to relatives. Instead of the rich passing down money to their children, I believe they should donate to schools, which would benefit not just their children but all children. By advancing the research institutions, libraries and education system, society will be able to improve together and foster growth of all individuals, regardless of whether they were born in a family that guarantees large inheritance.
Society as a whole is currently allowing for an economic divide and needs to improve its financial foundation in order to build a more equal economy. The competing views of how to alleviate the pressures associated with the wealth distribution disagree with whether everyone in society should be equal in their financial earnings and savings. However, the degree of inequality is something society can improve. Although the U.S. today runs on a capitalist philosophy, I believe society should lean more into the key ideas of Carnegie. To create an ideal economic society, the rich need to utilize their excess wealth, creating more movement of money and allowing for an increase in consumption by all social classes. With a closer balance of social classes, the power will be spread out and not limited to just the upper class. Capitalism prioritizes competition between people which allows those who work harder to be rewarded. Instead of trying to erase the economic divide, people should prioritize shrinking the gap between the rich and poor.
I’m a freelance writer with a bachelor’s degree in Journalism from Boston University. My work has been featured in publications like the L.A. Times, U.S. News and World Report, Farther Finance, Teen Vogue, Grammarly, The Startup, Mashable, Insider, Forbes, Writer (formerly Qordoba), MarketWatch, CNBC, and USA Today, among others.