Income inequality trends and economic impacts

Income Inequality

Even though the United States has a serious economic problem right now, most people seem to believe that it should continue to operate as a free market economy system. Letting the government take over Fannie Mae and Freddie Mac was something that had to be done in the eyes of most people. Whether it was a good or a bad choice is not up for discussion here from a personal opinion standpoint. What is up for discussion, however, is whether the free market economy is a good idea - whether the U.S. should continue to operate that way and whether other countries should consider operating that way if they do not already do so. In countries where the government runs everything that ties into the economy there are fewer problems to some extent. There are no financial crises like the one that has just befallen the United States. There are no bailouts of large companies or stock markets.

There are also fewer inequalities when it comes to how much money people have. This is likely the largest problem that free market economies have. There are people who are filthy rich, and there are also people who are broke and living on the streets. The country will say that most people are somewhere in the middle, but in reality those individuals are much, much closer to the 'broke and on the streets' scenario than to the 'filthy rich' scenario - and there really is not any way to do anything about it. The individuals who have a lot of money and power are not obligated to share anything with those who have nothing, although some of them do so willingly. If the government were controlling everything there would not be such a disparity where income is concerned, but there also would be no real economic freedom, either, and that would be unfortunate.

Some individuals have grown up in countries where they do not really have any freedoms now, so they do not know any different. For people who have grown up in a free market system to go back to a government-run system, however, would likely not go over well at all, and there would be fighting against it. Having a free market economy is one of the things that makes growth possible, although there is also inherent risk in it. More than one company can offer services, and the competition of more than one or two companies will help to keep services competitive and prices low. Competition, however, can also have its problems. Because of the way that some products are packaged and structured, and the multiple steps that are needed between the beginning product and the consumer, there are several areas where competition can become a problem and individual companies can get too much of the market share, thereby causing a problem for others who may want to get involved in the same type of service (Preston, 2001).