Social Inequality… and the Economic Crisis

[AlphaCentauri]

Michel Morkos Al-Hayat - 16/02/09//

American Paul Krugman, the 2008 Nobel prize winner, advises President Obama's administration to give top priority to fighting income inequality among US citizens. This is an interesting issue, not only in the US, but all over the world, where poor or rich countries are trying to promote equality by offering small loans or providing health, education and welfare services.
With the mounting repercussions of the global financial and economic crisis and the expectation that the current year will be economically tough worldwide, inequality has been propelled back to the forefront, especially in advanced countries. The issue is complicated, because it is hard to measure inequality, now that comparing living standards has become more precise with the income of employers taken into account when calculating inequality indicators.
During the last two decades, the income inequality gap widened and poverty increased. The club of the rich OECD countries published in October 2008 a report entitled "Growth and Inequality," which discussed income and poverty distribution in the 30 member states. In conclusion, two opposite groups emerge: Sweden and Denmark have a more equal income distribution, while Italy, Portugal and the US appear as societies with deep inequality gap. Moderation appears in Northern Europe, Belgium and France, with Spain, Britain and Japan recording better levels. Apparently, inequality started to increase in Germany and Canada in the past few years.
In the 1970s and 1980s, income distribution changed in OECD member states. The living standard had been closing in, but started to widen among segments of society. It started to deviate and inequality remained "moderate" until 2000 when it started to widen in Canada, Germany, Norway and the US, while decreasing in Britain, Mexico, Greece and Australia.
As a result of the economic boom at the start of the third millennium, governments sought to establish social justice by offering more education, health and welfare services. Indeed, they have gone one step further, allowing financial institutions to provide personal soft loans. However, the rich got richer, while the number of poor did not decrease.
In its report, with the rich turning richer, the OECD believes that the poor benefit from redistribution policies. However, redistribution mechanisms are ineffective. The poor in rich countries, with the highest inequality in income distribution, are increasing, as is the case in the US where fighting inequality should be an interesting topic to the administration.
A new inequality emerges in rich nations where the rich are outnumbering the poor. This is upper inequality. In light of this new form of inequality in income distribution, more attention must be given to the richest transforming world, the world of "business rich." These people create their wealth from their huge salaries and not their company income. In America, they currently form an independent social fabric. This fabric is creeping into France as well. This wealth creation was one of the main reasons of the global crisis that led to the collapse of their institutions.
Inequality seems to be multidimensional. Income inequality, the most widespread, takes on many forms and can in time be hereditary. It is very likely for the son to inherit his father's living standards in France, Britain, the US and Italy. Income inequality among generations and the digital gap are on the rise. This is not to mention housing inequality, which sounds important in rich countries, whether it comes to owning houses or distributing houses according to occupancy - denser among poor. However, housing policies in a country like the US drifted from their goals and created a subprime credit market that led to the global financial crisis followed by a recession. This increased the numbers of the homeless and unemployed.
In order to avoid the repercussions of the great economic crisis, concerned institutions and governments are trying to maintain the level of funds and bids to decrease income disparity and social need. Income redistribution policies aim at reducing inequality and change the living standard of many people through lending and tax cuts. Whatever were the reasons for the inequality gap (globalization or other reasons), adopting correct government policies can change the situation. Cuts and social loans play an important role in correcting income equality, but public services (health, compulsory education, social housing) contribute to about half of the correction.
The closer we get to equality, the fairer is the tax system, the higher the social lending and the more decent the public services.


http://english.daralhayat.com/business/02-2009/Article-20090216-7f9cc11d-c0a8-10ed-0002-753821976925/story.html

[OHdem10]

1. Unregulated Capitalism by its very nature creates a society

of haves and havenots, haves and have MOFRES. The same rich get richer
and the poor get poorer, while the middle class will slowly vanish.

Capitalizm is the best system we have but unregulated it can create
some undesirable consequences.

It is competitive system which means there will always be winners and
losers. Its sort of like a bottle of milk. --if left under circumstances
the cream will rise come to the top of the bottle. Same with capitalism
the best, the more efficient, the MOST productive rise to the top.
The greater numbers do not.Since all human beings are not born with
exact same degrees of drive, intuition, Intelligence--Capitalism
can separate the wheat from the chaff real fast. Thus winners and losers.
There is nothing wrong with this.

However, when building and or governing societies, a good society
will at least try to promote as much democracy as possible.
It is up to the leaders evaluate, weigh risks, yes after careful
study, adjust regulations on Business which make for a more fair
solution and or resolutions which will result in a more fair
application of the rules.

In our set-up at the present, we have nodel in which the Investors
crack the whip telling Industry--"make us more money" The
Businesses hop to knowing they have been told they only have
to concered with the Stockholders (Investors). The business man
then must use every tactic and strategy he can to increas profits
increase earnings. If necessary send jobs overseas, outsourching
etc. Bring cheaper labor into country (H 1-B visa) etc. The
Bjusiness man has been freed of any allegience to any country
I thine one can ger the picture. Likewise, Bad Spicnach, tomotoes
and Penut Butter have culprits of Detruction. gfI could go on and on.

Suffice it to say.In an unfetteed Capita;istic System the Elites
Business are soon running things. Their interests are not the
interest of Society as a whole. Governments job to welfare of
the people. No oversigjht or interfience from Government and
you have the rich getting richer and the poor getting poor get
poorer and the Middle Class lose out altogether

_

[hope1954]

2. Krugman

this guy is a genius, of course the neocons would never admit to it