Growing income inequality in the age of globalization

¶ … Sociology, one of the biggest areas that are receiving continuous amounts of focus is the inequalities that exist. Recently, disparities in income levels have become much larger. This is because the top 1% (who controls the majority of the wealth) is earning more at the expense of the other 99%. These are individuals that have to work every day (often controlling little to no amounts of personal assets). Throughout history, this conflict has often been the focus of different labor disputes and social revolutions. (Winship)

However, globalization is having a dramatic impact with these divisions becoming even larger. In the article that was written by Winiship (2012), he is talking about how these disparities are evolving. Evidence of this can be seen with statistics that were uncovered from the Congressional Budget Office. They found that the income levels of the ultra-wealthy increased from 8% in 1979 to 18% in 2007. While the bottom four categories of income, saw a decrease by similar amounts. These figures are illustrating how there are social divisions that are becoming severe. To fully understand what is happening requires comparing the ideas presented in the article with sociological concepts. This will be accomplished by focusing on: the existence of the problem, what sustains it, the non-sociological explanations, how this is connected to other problems in the world and possible solutions. Together, these elements will provide insights as to the long-term impact of these issues on society and what steps must be taken to rectify the situation. (Winship)

What explains the existence of this problem?

On the surface, the problem with income equality is a situation that has been continually dealt with throughout history. This has an impact on socialist and Marxist philosophies with both focused on addressing these challenges (through introducing new economic philosophies). However, in the last several decades, these disparities have become more severe. This is because the downfall of the Soviet Union and the focus on globalization has given employers greater amounts of flexibility. Over the course of time, this has resulted in more jobs going overseas (with many employees forced to work longer hours for less money). (Mandel)

To make matters worse any kind of assistance that is being received from international institutions (i.e. The World Bank and the IMF) requires that nations are embracing structural changes to their economy. At the heart of this approach, is for a country to reduce trade barriers and liberalize its markets. This has made the situation dire in many regions, with corporations locating to an area to increase their profit margins. The problem is they are not contributing a lot of support to local economies. Moreover, there are large layoffs in regions that have higher labor costs. This creates a situation where workers are exploited in both developed and developing countries (as they are receiving less income). This savings is used to help increase the earnings per share of the company and the wealth of the shareholders. ("The ABCs of the Global Economy")

These areas are showing how the income disparities have become worse. This is because the executives of corporations have the ability to increase their profit margins exponentially. Over the course of time, this will make anyone who owns the common stock wealthier. Most of these individuals include: astute / ordinary investors, employees of the company, directors and family members. Any kind of increase in the price of the common stock (through lowering labor costs) will translate into large increases in personal net worth. This is when these individuals will have more income available to make other purchases in the future. ("The ABCs of the Global Economy")

At the same time, communities will see lower standards of living and decreasing employment opportunities. This will cause these individuals to realize declining income levels and personal net worth. As a result, the existence of this problem is a historical trend that has been made worse by globalization and international institutions. ("The ABCs of the Global Economy")

How is this problem connected to other problems in the world?

The issues with different economic inequalities are having a dramatic impact upon other areas. This is because the overall amounts of spending in one part will have direct results in others. One of the best examples that are highlighting this is the civil war in the Congo (which was discussed earlier). This is demonstrating how the desire of firms to increase their bottom line numbers will have an impact on their activities. As a result, one can easily draw a direct comparison between these problems and the issues associated with income disparities. (Scott)

For example, inside the field of health care, an individual's recovery efforts will depend upon their economic status. As those with more money will have access to better treatment options and services. This ensures that only those individuals with more resources will receive the best care. In the future, this will determine the ability of the person to recover from health related issues. This is illustrating how economic problems are often interconnected with other challenges. Once this happens, is when this will play a role in helping to make the underlying situation worse. (Scott)

Evidence of this can be seen with observations from Scott (2005) who observed, "Class is a potent force in health and longevity in the United States. The more education and income people have, the less likely they are to have and die of heart disease, strokes, diabetes and many types of cancer. Upper-middle-class Americans live longer and in better health than middle-class Americans, who live longer and better than those at the bottom. And the gaps are widening, as advances in medicine and disease prevention have increased life expectancy in the United States. These benefits have disproportionately gone to people with education, money, good jobs and connections. They are almost invariably in the best position to learn new information early, modify their behavior, take advantage of the latest treatments and have the cost covered by insurance. Many risk factors for chronic diseases are now more common among the less educated than the better educated. Smoking has dropped sharply among the better educated, but not among the less. Physical inactivity is more than twice as common among high school dropouts as among college graduates. Lower-income women are more likely than other women to be overweight, though the pattern among men may be the opposite." (Scott) This is showing how economic disparities will have an impact on the underlying levels of health among different income brackets.

What would be a possible solution to this problem that would address its social structural roots?

The best solution is to have regulations that will prevent potential abuses from occurring. Over the course of time, these guidelines will be updated to reflect any kind of loopholes that are being taken advantage of. If this kind of approach is utilized, it will address the structural causes of the problem. This will occur through having provisions in place that will target tools the wealthy (which provide them with economic advantages). (Mills) (Davis 242 -- 249)

At the same time, new programs must be established that will redistribute the wealth to other segments of society in the form of social initiatives. This will be paid for by having a tax on the affluent, their net worth and any income they are receiving. If this strategy is used in conjunction with other areas, it will address the root causes of income disparities. As this provision will ensure that there is a tool to deal with these challenges over the long-term. This is when the influence of the wealthy will be reduced by: using techniques that provide assistance to other segments in society. (Mills) (Davis 242 -- 249)