Rich, poor growing apart

October 21, 2008
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A new report says the gap between the rich and the poor is getting wider, and that the gap is biggest in the United States.

The problem, of course, isnâ??t new. Broadly speaking, the greater oneâ??s education and skills, the greater their value and income. The gap has been widening as the global economy increasingly rewards knowledge rather than physical skills.

How should this be solved? If incomes of the wealthy are redistributed to those with less, incentives to invest and take risk are stripped away.

On the other hand, many also argue for a moral responsibility to ensure that the poorest-paid receive at least the basics, such as health care and a decent home. Still others fear social unrest if gaps widen far enough.

What do you think?
  • I think I have read something like this... H.... G... Wells or something like that. in risk of sounding Socialist, we (as a human race) use to look out for eachother and take care of eachother. now, it is, if you have money, you can invest in things like education, if you don't (even if you have the intellegent), too bad. The parents have to be almost Street Poor or filthy rich for their children to go to college and get it paid for. Your average middle class family cannot afford knoledge without going into debt. Not because they are not smart, but they don't have the finances to invest in this valuable resource we call a college degree.

    On the subject of the Finanacial Gap. I am not supprised. Capitalism only works when there are checks and ballances. When we all look out for eachother and ensure that absolute power and/or absolute free rein does not happen like it has JUST happened with the Banks and Housing industries. This is not a Left or Right view, so please, don't assume I am talking from one side or the other. I just feel that we should not give hand-outs, but hand-ups. Those who can do the work, shall be rewarded, but those who cannot, should not be a financial drain on our economy for long.
  • I agree with Random. We live in a welfare/warfare state. Both sides are draining the economy thru taxes, welfare/social programs, and military intervention and foreign aid. Who benefits? The elite, wealthy, ruling class in this country at the expense of the middle class. We are a two class society, rich and poor. Few benefit at the expense of many. Sad times we are living in. It's overdue time for the American people to wake up and rise up against the socialism that is being spread by our govt and those in power.
  • Sad to say we will always have the poor amoung us. You could give everyone a million dollars and some would be broke within time and others would invest and be even better off. Some people want to work some do not. Some single women/girls are choosing to have children that they cannot support let alone themselves. We all cannot be CEO's or heart sergeons. Poor is relative - Ask Bill Gates and he probably thinks most of us are poor.
  • If things go on as they are now, I predict a huge redistribution of how people spend their time for pay. The only worthwhile occupations will be those that have the potential for huge wealth. Nobody gets rich in the building trades, teaching or retail sales, so those occupations will go unstaffed or become last-resort jobs for the unmotivated. Medical specialties will focus on boutique medicine or things that are unquestioningly reimbursed by health insurance companies, and nobody will go into general practice, preventative medicine or gerontology. Universities will focus on things like entrepreneurship and finance, or applied science (funded by large companies needing products brought to market quickly); subjects that only have value through the future teaching of that subject will not get any interest from the few university students that have money to attend in the first place. Even philanthropy will change: the uber-wealthy will not feel it is their responsibility to give back to those who, through no fault of their own, have no opportunities to become rich, but will throw their money at causes like curing diseases the rich might eventually get, supporting the arts so they have society fundraisers to attend or making sure immigrants are taught proper English so they don't have to learn to talk to their servants in their own languages.

    OK, this is a bit extreme, but my point is that I do not see the wealthy exhibiting an attitude of social responsibility on ANY level unless forced to do so by the tax system. Greed is rampant. Profits are increased by laying off good workers and shipping jobs overseas to cut costs, not by the much-vaunted risk-taking that lower taxes are supposed to encourage. Risks are only taken by inventing new ways to cook the books so as to make the company appear more profitable than it actually is. Even the middle class, the mainstay of university degrees such as philosophy, English literature and history, will be forced to adopt the value of accumulating as much money as possible or face total annihilation.
  • Honestly, why is everyone so focused on the income gap between rich and poor? It's not the gap that's important, it's the poverty level. We need to move the needle on per capita income among the poor. How does the income of the wealthy even factor in? If the gap continues to widen but the per capita income of the poor rises faster than inflation, wouldn't that be a good thing???? Stop focusing on slicing the pie so that everyone gets an equal share and start focusing on making the pie bigger, so that all gain.

    I'm a member of the evil upper class. As my income has risen, so has my charitable giving. Yes I am putting more money in the bank than I used to, but I'm also giving more to charities (and no, Middle Class, not to the arts. My giving goes first to the church and then to help those in need, like the homeless. Or to provide resources for students in poor neighborhoods - check out How is that a bad thing??? Redistribute the wealth, take more from me in taxes, and guess what? I'll have less to give to charities, but I'll still give the same %. But percentages don't pay the bills, do they? If I have fewer real dollars to give, the charities I support are going to get less money. And don't tell me that only the wealthy have money to give. I gave roughly the same % of my income to charity back when I made 1/10th of what I make now, so don't tell me it can't be done. As Dave Ramsey says if you can't live on 90% of your income, you can't live on 100%.

    Middle Class - what percentage of your income do you give to charity?

    While I may vote for Obama, it troubles me that his tax returns show that it's only recently, when he began to make millions from his books, that he gave more to charity than just a few percentage points of his income. That seems hypocritical, doesn't it?

    Read Revolutionary Wealth by Alvin and Heidi Toffler for a better understanding of the poverty issue.
  • The income gap is one of the absolute biggest fallacies. The whole idea that the rich and the the poor are two separate castes of society and that those that fall into those groups remain in those groups are false. You all should read the income mobility study created by the Department of the Treasury. The highlights are as follows:

    58% of those in the lowest income bracket had moved to a higher bracket by 2005. 29% of those moved up two brackets.

    42% of those in the middle bracket moved up a bracket from 1996 to 2005

    30% of those in the top bracket fell to a lower bracket by 2005.


    There are tons of statistics to pore over in this report!

    The point is that comparing the top income bracket to the bottom income bracket over a period of years will you tell nothing about what is actually happening to the individuals who make up that bracket.

    A couple more things I want to point out. The idea that capitalism only works when there are checks and balances is ludicrous. First of all, capitalism in its pure form has never been attempted. There has always been a mixed economy with government influence. Capitalism is the most productive system there is because it guarantees that scarce resources with alternate uses will be put to their most efficient use.

    Also, the idea that the current financial crisis was caused by capitalism is completely wrong. It was the government's cronies and their nationalized loan lenders of Freddie and Fannie that caused this to occur. Under a free market banks would not have made those sub-prime loans as the risks would not have been worth it.
  • That last post is true. What bank would give a loan to an unqualified borrower at a rate that does not compensate for the risk? Why are credit card rates high? Due to risk of default. Why were mortgage rates low? Because they were required to be.

    We are quickly becoming socialistic and a welfare state. When an able bodied person can sit home and collect a check instead of working, we have a problem. There is no right to sit home and raise children. If you want children, then be prepared to earn income to support them. And don't waste time telling me about teen pregnancy and all that junk. People make decisions and decisions have consequences. Unprepared people have sex without thinking that you have sex and 1) you can have a child or 2) you can die. Dumb. Don't tell me birth control was not available, as there are plenty of places to get it for free. Don't tell me you can't take the pill because you smoke--if you want to smoke, stop having sex or find another form. Anyway, enough digression on too many children.

    The problem we are facing now is the result of years of labor demanding wages that could not supported in our new world economy. When the buying public will not pay the price that is required to cover a rising cost of production, then the company must cut costs to maintain profit. Too many people seem to forget that companies do not exist to provide jobs. Companies exist to provide a return on investment for their owners. Absolutely nothing more. Companies need labor, but they only need labor at a rate that the same labor will support in the market. Gee, how ironic that the same group of people who used to be in the middle class and have seen their jobs go overseas to cheaper labor, helped push those jobs over there because they forced the price of American goods too high in comparison to the price of alternative goods.
  • It would be nice to think that the greater one's education and skills, the greater their income. Sadly, it is not so. Particularly if one works in the corporate world where individuals possessing more than one Master's Degree are made to stay in low level jobs and paid high school wages, while their supposed peers are allowed to advance far higher on the ladder and paid wages higher than some PhD's earn, simply because they played politics along the way. The educated are forced to live in poverty and the non-educated gain undeserved wealth - a sad disparity also contributing to the wage gap.
  • If you choose not to learn how to use your education to rise in the corporate world, then that is a choice. Many master's degrees have no relevance to specific jobs, so to make such a broad statement borders on useless. If I have a masters in math and work in sales, so what? If I have two masters, math and biology, and work in accounting, so what? Masters and doctorates must be relevant. Every wage study out there shows that higher degrees earn higher income. Where you are correct are those PhD's who stay in the academic world which does not pay as high as the private sector.
  • Maybe if we were not putting $300,000 sculptures in White River Park, we would not have to talk about closing some parks! What are we thinking? This is what makes the gap look even larger - that a city organization could spend money on a luxury like that in a time like this, when some people are struggling so much - its downright shameful. Ditto for the ugly rubber art we have spread out all over the city. How much money was wasted on those?! I don't even care if it was public money or private money - it would be better spent elsewhere.
  • True. Your point is well understood. Mine were very specific to the needs of the business. And it is a business in which someone with a Master's in Math and a Master's in Biology might be working in accounting.

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