Poverty Imbalance the Gap in America's Distribution Thesis

  • Length: 6 pages
  • Sources: 4
  • Subject: Economics
  • Type: Thesis
  • Paper: #16831564

Excerpt from Thesis :

Poverty Imbalance

The Gap in America's Distribution of Wealth and the Socioeconomic Consequences

The United States often characterizes itself in the context of political rhetoric and public displays of patriotrism as the wealthiest and greatest nation in the world. Unfortunately, the wide variance of living standards represented in this plurality suggests that this is an experience reserved only for those with the means. Quite to the point, the poverty that a substantial percentage of Americans live with everyday indicates that this apparent enormity of wealth is not accessible to all. Indeed, the discussion here centers on the understanding that 50% of all of America's vast wealth is possessed by no more than 1% of Americans. This means that the wealthiest individuals in America on their own control more wealth than entire communities and regions. And as the discussion hereafter will show, this is a trend with serious and negative consequences for the people of the United States and, increasingly under the terms of globalization, the people of the world.

Thesis:

That such a substantial amount of wealth is controlled by so few is responsible or the array of economic crises faced by Americans today, suggesting that a failure to distribute wealth effectively to broad swaths of the consuming public, to infrastructural maintenance, to small business development and to public administration and aid have all contributed to a collective decline in the American standard of living.

Argument:

At the center of this discussion is the understanding that economic growth is wasted when not properly paired with effective ways of equal wealth distribution. Certain entrenched inequalities permeating domestic and global culture tend to reinforce the intolerable conditions facing the poor. Among them, the orientation of our nation and, increasingly, the global community, toward market capitalism has had the tendency of reinforcing some of its most problematic normative realities. Socioeconomic inequality and the persistence of poverty amongst demographics distinguished by features such as race, ethnicity and geography are a natural byproduct of this system. This accounts for the relative failure of 'economic growth' to address the issues of poverty. As the discussion here denotes, there is an absolute connection between these two conditions, but that this connection may not be defined as simply as it often is in the arena of policy development.

To the contrary, as the text by Rodrik (2000) remarks, understanding this correlation is muddled "to the extent that measures of income distribution vary, the changes do not seem to bear any systematic relationship to economic growth. In some countries (such as Taiwan, Bangladesh, and Egypt) growth has been accompanied with an improvement in Gini coefficients; in others (such as Chile, China, and Poland), Gini coefficients have gone the other way." (Rodrik, 1) This challenge is underscored by a detectably modest, if not inverse, relationship across the global community between the proliferation of private growth strategies and the continued and deepened plight of the poor. These help to transfer already meager wealth from the hands of the world's poor to the hands of the wealthiest few.

Today, certain measures suggest that economic growth does have the impact of reducing poverty but that studies also tend to indicate that this correlation is not as strong as it had been historically. Evidence abounds that economic growth as an initial strategy in developing contexts did have a detectable improvement on distribution of wealth. The globalization of free market capitalism appears as less sensitive to domestic realities though, taking a universal approach to market systems. According to the study by Stevans & Sessions (2005), "the effect of economic growth on changes in poverty has either diminished or remained unchanged over time, e.g., the 1980s economic expansion in the U.S. had no affect on poverty. Using a formal error-correction model, we find that increases in economic growth are significantly related to reductions in the poverty rate for all families. However, growth was found to have a more pronounced effect on poverty during the expansionary periods of the 1960s, 1970s, 1980s, and 1990s." (Stevans & Sessions, 1)

This may suggest that certain elements of 'economic growth' have changes in recent decades such that the wealth thereby created is less effectively distributed. As further research tends to suggest, this is because this growth may be increasingly effected by policy orientation which disregards the public agencies designed to level said distribution.

To this end, Galbraith (1998) makes the argument that, as an insular crisis, poverty is primarily informed by the presence of a population's collective isolation from the opportunities abounding in other parts of the community. According to this categorization of the majority of our poor, the problem is almost entirely a demographic one. However, this logic falls short of a reality in which very specific social conditions omnipresent in a diversity of regional and structural settings can be shown to present a myriad of explanations for the persistence of suffering.

There is more rationality to the dismissed category of case poverty, in which the condition can be attributed to "some quality peculiar to the individual or family involved." (Galbraith, 236) Galbraith describes these as being any number of variable factors such mental deficiency, alcoholism, working class immobility or discrimination. In this explanation, it can be seen that poverty is a problem which, whether caused by internal or societal conditions, cannot be drawn to a single origin. Instead, the explanations for poverty are numerous and nuanced. This condition alone is sufficient to make the case that a single solution such as an emphasis on broader economic growth roundly misconstrues the complexity of the problem of poverty. We may be capable of recognizing a tangled web of causes for poverty that are unique for every individual or family. A common factor for all should be the potential to earn, though. And to the point, this is the area in which so many demographics are inherently disadvantaged regardless of the scale of economic growth precipitated by government policy and market behavior.

In the Glabraith text, this entrenched failure of capitalist systems to truly aspire toward collective wealth or equal opportunity is a defining force as we venture toward addressing poverty. Galbraith indicates that to the perspective of some theorists, poverty, "as general affliction, . . . was ended by increased output which, however imperfectly it may have been distributed, nevertheless accrued in substantial amount to those who worked for a living." (Galbraith, 235) This is a concept that the author will go on to refute though. In building his case for the endorsement of a collective investment focused on the public sector instead of into the further privatization of resources implied by 'economic growth', Galbraith makes the contention that it could not be considered a balanced measure to the epidemic problem to allow individuals afflicted by poverty greater access to financial opportunity. The author asserts that the absence of the public sector in the process of uprooting the foundational causes of poverty creates a circumstance in which the impoverished are unable to properly channel opportunities for advancement allegedly stimulated by economic growth. He contends that "poverty is not remedied because the specific individual adequacy precludes employment and participation in the general advance. Insular poverty is not directly alleviated because the advance does not remove the specific frustrations of environment to which the people of these areas are subject." (Galbraith, 238) In many ways, those 'specific frustrations' are rooted in a lack of resources and opportunities, both blocked by the persistence of America's wealth imbalance.

Counter-Thesis and Counter-Argument:

Those who would differ from the assertions made above might be inclined instead to argue that the current distribution of wealth is a product of 'supply-side economics' in which benefits to the wealthy will ultimately 'trickle down' to lower rungs of the socioeconomic ladder. Federal priorities over the course of the Bush Administration…

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