Tuesday, October 7, 2014
How Increasing Income Inequality Is Dampening U.S. Economic Growth, And Possible Ways To Change The Tide
https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1351366&SctArtId=255732&from=CM&nsl_code=LIME&sourceObjectId=8741033&sourceRevId=1&fee_ind=N&exp_date=20240804-19:41:13 DUE 13 OCT 2014. What is meant by income inequality? What are the economic implications of a majority of Americans unable to pay for basic needs? How does income inequality affect national, state and local government income (taxes)??? Choose one of the graphs in the article--analyze and comment on its' meaning??
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Income inequality is when some people have more money than others. Income inequality is also the gap in income between the rich and the poor. Some economic implications of Americans being unable to pay for basic needs are Americans saving for a long time and not spending money in the market, a boom/bust cycle can occur like during the Great Recession,and a less educated workforce. Increasing income inequality is a risk to a state's finances because of the correlation between income inequality and revenue volatility in the slow growth after the Great Recession. Because income inequality affects education, that also affects the national, and even local, income. Looking at the "Education improves US Potential Growth" chart, we can see that with an increase in education, the US can grow by another 0.5%. Instead of the 2.5% current path, the predicted path with an improved education is 3%. What the author is trying to do by including this graph is persuade readers that education is very important for the growth of this country's economy.
ReplyDeleteThis is Seth Adler
ReplyDeleteWe know seth
DeleteIncome inequality is the major difference in economic status based on a person's income. Income inequality can be seen in the contrast of those who are rich and those who are poor. The actual definition is "an unequal distribution of income among various participants in an economy". Economic implications of Americans who are unable to pay for their basic needs would be the increase in technology leading to less man employment such as the toll booths, which are now currently run by technology, the people that are focusing more on spending rather than saving for future economic troubles, and market troubles such as future recessions/depressions. Income equality affects the national, state, and local government income because in most cases the poor tend to be unemployed and the demand for goods/ the supply for goods would be affect based on the consumers. The overall affect would be based on how the taxes would lead those who are poor into a worsen state with little to no income to pay off debts made.
ReplyDeleteIn the "Who Was Hurt?" chart, it elaborates on the total income group with their net incomes on the range of three different time periods. The chart shows that although time has progressed the main increase is in the upper 90% in the year of 2010, but for the other groups they have all decreased over time. The only benefits came to the "upper" class and the mid and lower classes were actually negatively affected rather than positively affected.
Income inequality is the income imbalance which leads to some Americans living with low income and others with a higher income causing a gap between the rich and the poor. Wealth is not being distributed equally among a population. The economic implications of a majority of Americans unable to pay for basic needs is the future upward mobility of the country's children. That investments in education and skills, which are traits that increasingly decide job market success, are becoming more stratified by family income, which is threatening the earning potential of the youngest Americans.
ReplyDeleteThe distribution of net household income, after transfers and federal taxes, is more evenly balanced than the distribution of market income. Changes in federal government tax policy have also exacerbated income inequality in recent decades.
In the graph, "Ratios of Median Net Worth Relative To Median Net Worth Of a High School Graduate", it shows the benefits of further your education passed just a high school degree. Overall the Median net worth relative to that of a high school graduate has remained the same from 1998 to 2010. Looking at the graph closer, you will notice the Net worth of being a Graduate or getting a professional degree has increased from about 4 to around 6. On the downside, having no high school diploma has resulted in a lower net worth recently from around 0.5 to about 0.1.
In economics, income inequality is defined as the imbalance in income between wage earners in a country. The gap is caused by a shift in economic gain within a society. Uneven diffusion leads to a larger gap between the classes within a society.
ReplyDeleteThe economic implications of a population that cannot purchase basic human needs in lethal. The economy thrives when more money in placed within the economy, so when people become less economically affluent it stagnates economic growth and prosperity. The impact on national, state, and local income tax is also negatively effected. Since wage earners are basically earning less in comparison to the widening gap, the model demonstrates a lower collection of taxes. Majority of the country is not in the top 1% of the national earnings, so as a result any decline in wages leads to a decrease in income tax. Inflation and a gradual decrease in spending power, have caused problems within the value of wages earned. Chart 6 on education and economic growth is correlative because human capital leads to higher earnings. The graph demonstrates the course of education in relation to growth and time. But in 2014 a abrupt increase in education led to higher wages. The study that goes on to explain the graph also supports human capital as solvency for income inequality. The purpose of the graph was just to show how a high education can lead to better wages and economic growth.
Income inequality is the difference in income between people, thus leading to a gap between rich and poor. This gap is the imbalance of wealth in a society and creates higher gap between the classes of a society. There are some economic implications of Americans being unable to pay for basic needs. One of them is the people with less income increase consumer borrowing to sustain consumption until they can't borrow anymore which would create a boom/bust cycle. An increase in or event the current income inequality would affect national, state, and local government income taxes by lowering the amount of money taxes from people. By more people earning less due to this gap, the amount of money they can be taxed would be reduced and therefore causing the gap to increase in width. In chart 4, we see that the people without a college degree are in the lower percentage of the economy in terms of income. These could be people who can not afford to go to college therefore causing them to become an unskilled worker and adding to the income gap. The major gap is in the bottom 20% which is where most of the lower class people are in, this is the gap and the cause of taxes being lowered because they can't afford to pay much. The graphs purpose was to show the relativity of income gaps to the classes in a society.
ReplyDeleteIncome inequality is the unequal distribution of household or individual income across the various participants in an economy, simply put, when some people have more money than the general population does. The economic implications of the situation is essential to the growth of our country and can be seen in a number of way including, the way new technology has altered our daily lives and encourages us to specialize in trade and master specific works, giving us a higher worth as workers. This is bad for those who go into the workforce with no higher education past a high school diploma. The impact on national, state, and local income tax is also negatively affected. The population don’t understand the gap between the main classes has caused for everyone, most commonly seen in the change in taxes. Usually the taxes end up being lowered, as less people can afford to pay higher taxes. Chart 3 calculates the median net worth of differing levels of education in relation to a high school graduate. As expected, increasing levels of education lead to increasing net worths. But the marginal differences among the degrees is the most interesting factor seen in the chart. The differences between the attendance of college, to actually acquiring an associate’s degree is minimal whereas the differences between each additional degree is relatively close in magnitude. Each of the college degrees had increased in worth over time from 2004 to 2010.
ReplyDeleteIncome inequality is an unequal distribution of income within the country. This causes a gap between the rich and poor. Increasing levels of income inequality cause an increase political pressures, which discourages investments and hiring employees. Economic implications of a majority of Americans being unable to pay for basic needs are that Americans spend less money which is harmful to economic growth. Another implication is that those people will not be able to save for the future because they will need their money to pay for whatever they possibly can. Income inequality affects national, state, and local government income in a negative way because they would be taking in less taxes. Lower incomes mean less taxes for the government to collect, which is not good and can cause further problems.
ReplyDeleteChart 7 shows Household wealth by income group. The chart shows six different groups of earners divided by their percentile of income. It illustrates the household net worths of each group in 2004, 2007, and 2010. Five of the six groups saw an overall decrease in household net worth from 2004 to 2010, with only the top ten percentile increasing overall. This graph illustrates that the top ten percentile were not overall not hurt by the recession but really helped since their household net worth went up. While all people below the 90th percentile in income were ultimately hurt by the recession. This graph shows how the different income earners fare after a recession.
Income inequality is the differences between income distributions of individuals within a population. While some income inequality is essential in a market economy, too much inequality can stun economic growth. Without any income inequality, there would be no incentives to grow. With too much income inequality, many people will be unable to pay for basic needs. If Americans are unable to pay for basic needs, they rely on borrowing to sustain consumption. Once the option to borrow stops, the country can see similar circumstances to those of the Great Recession. Income inequality poses a risk national, state, and local incomes. There is a correlation between income inequality and revenue volatility in the slow growth since the Great Recession. This volatility can create inconsistencies in revenue for national, state, and local governments. The "Shares of Income, after Tax and Transfers, by Income Group, 1979-2010," chart breaks down income into five groups. Since 1979, every group has had a decreased share of the total income except the top 20%. While the bottom 80% have seen growth since 2004, they are all still below their percentages from 1979. The top 20% owned almost 50% of the total income, after taxes, in 2010.
ReplyDeleteIncome inequality is the unequal distribution of household or individual income across the various participants in an economy. A small amount of inequality is expected within any market because it keeps the economy functioning effectively. Too much can result in decreased economic growth. Economic implications of Americans who are unable to pay for their basic needs would include people who are more focused on saving their money and not spending it any way possible. When this occurs a boom/bust cycle occurs like the one that appeared during the Great Recession and a less-educated workforce arises that cannot compete in the changing global economy. Income inequality is a risk to national, state, and local governments. Increasing income inequality poses a risk towards a state’s finances especially given the correlation between inequality and revenue volatility in the slow growth after the Great Recession.
ReplyDeleteLooking at the “U.S. Education Is Slipping Behind” chart, it is apparent that about 40% of Americans aged 25-34 has a college degree and when comparing to other countries like Canada, Japan, or Korea the number of people who has a degree is about 10% more over there. This gives the U.S. a bad look when it comes to the education system and to expand the point further, the proportion of degree holders between people aged 25-34 and 55-64 is basically the same. This means that the graduation rates have not changed within the past 30 years, where as Korea has increased their graduation rates by about 50%. With the U.S.’ education attainment falling behind other countries, it becomes more and more difficult for the U.S.’ to be economically competitive within the international market.
Income inequality is the difference in income between the rich and the poor. Over the past years, the gap between the rich and the poor has grown even wider, with the poor getting poorer, and the rich getting richer. the more people that cannot buy necessary goods, the market is more likely to stagnate. The economy is based off of the buying and selling of goods and services, and if people can't afford those goods or services, than we are in trouble. The income tax amount is based off of your annual income. The rich have a higher income tax, while the working poor have a low one. The rich often give to charities to write it off their tax forms, resulting in a lower amount from the income tax to government.
ReplyDeleteI chose to analyze chart 7, Who Was Hurt? This chart shows how the net worth of the population changed between 2004-2010. Overall it shows the 0-89.9th percentile had a decrease in net worth, while the 90-99th percentile had an increase in net worth. This shows that the rich are getting richer, while the poor and the middle class are now worse off. Since it is now 2014, i would imagine this trend continued, and that the upper 10 percent have an even greater net worth.
The term Income Inequality typically refers to the difference in income between the social classes of the rich and the poor.
ReplyDeleteThe economic implications of a majority of Americans unable to pay for basic needs would be Americans saving for a long time and not spending money in the market, a boom/bust cycle can occur. The economy is based off of the buying and selling of goods and services, and if people can't afford those goods or services, then it can cause complications, such as a recession-depression. Income inequality is a risk to national, state, and local governments. Increasing income inequality poses a risk towards a state’s finances especially given the correlation between inequality and revenue volatility.
I chose Chart 6, Education Improves U.S. Potential Growth.
There is clear and strong correlation exists between the educational attainment of a state's workforce and median wages in the state, with more educated individuals more likely to participate in the job market. The graph shows a path from 2010-2014 then it begins splitting lines, one with what we are on, if we all follow the current path of education, we can experience less growth compared to the other split called increased education. Increasing our education level and increasing the amount of money towards education.
Income inequality refers to the vast difference in incomes between the wealthy 1% and the impoverished majority. Income inequality leads to a “boom/bust” cycle, for example, the one that ended in the Great Recession. Economic implications of a majority of Americans unable to pay for basic needs are ones that “tend to dampen social mobility and produce a less-educated workforce that can't compete in a changing global economy. This leads to diminishing future incomes and potential long-term growth. Income inequality affect national, state and local government income is predictably negative, as the wealthiest Americans only make up 1% of the population, therefore a reduction in income will lead to a lessening amount of money collected from income tax. Graph 4 shows that a college degree is almost an informal requirement to break into the upper range of incomes in the United States. The graph compares adults with and without a college degree, to their parents at the same age. It shows the striking difference in who ends up breaking out of (or who stays in) poverty, “children of well-off families much more likely to stay well-off and the children of poor families disproportionately likely to remain poor.”
ReplyDeleteIncome inequality is the unequal distribution of income across a population. This can lead to an increase in loans being withdrawn from banks and independent loaners such as Payday Loans. The problem occurs when those who borrowed funds cannot pay back the interest on it. Independent loan distributors can charge high interest rates that worsen the borrower's credit and debt. Income inequality can also cause an increase in saving which means less money circulating in the market. These are two ways consumers may approach a scenario in which they cannot afford basic needs. With excessive income inequality the market grows more and more volatile and thus inconsistency in federal and state revenue. The wealthier citizens usually donate large sums of money to write it off on their tax reports which results in lower government income from taxes. Chart 4 highlights the difficult climb to a higher income level for those who lack a college degree. The wide gap between those in the lower 20% and the upper 20%, in addition to the amount at each level, stresses the excessive income inequality in the US and the difficulty to escape it.
ReplyDeleteIncome inequality is the unequal distribution of household or individual income across the various participants in an economy. For example, the United States experiences income inequality because the top 1% of the population hold 50% of the nation’s income. Economic implications of a majority of Americans unable to pay for economic needs include market troubles such as recessions and depressions, many of the people who are more worried about short term troubles rather than the long term. This leads to people spending the money that they earn rather than saving it. Increasing income inequality is a risk to the federal, state, and local governments because it creates less money to collect and it is linked with the revenue volatility in the slow growth after the Great Recession. I chose to analyze chart four. This chart accurately represents the problems facing our society today because it illustrates that the wealthiest people in our society have a college degree. Alternatively, those who do not have a college degree are more likely to be in the bottom tier of the social hierarchy.
ReplyDeleteIncome inequality is the unequal individual income across the various participants in an economy. Economic implications of a majority of Americans being unable to pay for basic needs are that Americans spend less money which is harmful to economic growth. Also people are more focused on saving their money and not spending it any way possible. When this occurs a boom/bust cycle occurs like the one that appeared during the Great Recession and a less-educated workforce arises that cannot compete in the changing global economy. Income inequality is a risk to national, state, and local governments. Increasing income inequality poses a risk towards a state’s finances especially given the correlation between inequality and revenue volatility in the slow growth after the Great Recession.
ReplyDeleteChart number 5 shows the amount of people of ages 25-34 and 55-64 who have a tertiary degree comparing the U.S. to different countries. It shows that America is slightly above average in this statistic. Which too many of American standards is not good enough. It explained why a more educated workforce would benefit from higher wages and an increased supply of people with advanced degrees may initially slow wage gains for jobs requiring an advanced degree, a stronger economy would help support higher incomes for all and help government budgets.
Income inequality is the idea that the income of people within a set population are skewed toward a minority of the people holding most of the money. The impacts couldn't be more clear since most if the people have lower incomes not only are they spending less but the government is also get less in tax revenues, this is why the government is almost forced to tax those with higher incomes more, to make up for theses lower incomes. If incomes weren't so skewed toward one side we could maybe have the same taxes on everyone and still be able to have government funded programs. The other impact is education since I have a lower income I am less likely to be able to send my child to school and the lower tax revenues because of my lower incomes makes it hard for the government to pay for my child's education. Lower education also decrease our already low incomes it's seen in the graph showing different incomes with different levels of education. Income inequality is becoming a problems because as income goes down the demand for government programs up while the supply goes down this will end up hurting everyone in the nation.
ReplyDeleteIncome inequality is considered to be an unequal distribution of individual to household income across the number of individuals in an economy. This is basically when the economy is split between individuals who make more money than others and who are able to spend more as well. Some of the economic implications that a majority of Americans are not able to pay for their basic needs is because that Americans do not spend as much money as they are supposed to which builds up and negatively affects the economy. One other implication is that Americans do not put enough of their income into their savings and retirement accounts. This is because their income is already so low that they have to use most of it up in order to just barely live off of than using it for their future. Income inequality affects national, state, and local government income taxes by posing a high risk against the state and national economic financials. Basically, the wealthy individuals who have most of the economy’s income takes away from the poor individuals which in turn leads to the poor individuals not being able to give money to their state and government through their income taxes since they are so low.
ReplyDeleteThe graph I decided to analyze would be “The Distribution of Household Income Has Become More Concentrated over Time” and this graph shows how the U.S. Gini coefficient, after taxes, increased over 20% from 1979 to 2010. The Gini coefficient is a measure of income inequality that relies on the relationship between shares of income and shares of population. The value that represents the Gini coefficient lies between 0 and 1.0, with 0 meaning complete or total equality and 1.0 meaning complete or total inequality. From the graph, we can see that the market income ends with a value of around .585, before-tax income ends with a value of around .475, and after-tax income ends with a value of around .435. These all demonstrate how the real net average U.S. household income grew towards values that indicate income equality.
Income inequality is the major difference in economic status based on a person's income. Income inequality can be seen in the contrast of those who are rich and those who are poor. This causes a gap between the rich and poor. This can lead to an increase in loans being withdrawn from banks and independent loaners such as Payday Loans. The impact on national, state, and local income tax is also negatively effected. Since wage earners are basically earning less in comparison to the widening gap, the model demonstrates a lower collection of taxes.
ReplyDeleteChart 7 shows Household wealth by income group. Overall it shows the 0-89.9th percentile had a decrease in net worth, while the 90-99th percentile had an increase in net worth. This graph illustrates that the top ten percentile were not overall not hurt by the recession but really helped since their household net worth went up. This shows that the rich are getting richer, while the poor and the middle class are now worse off. This graph shows how the different income earners fare after a recession.
In economics, income inequality is the unequal distribution among the social stratifications who earn wages. Some economic implications are that most Americans aren't spending enough money and aren't saving a lot of their money into accounts such as retirement. Many of these Americans don't do these things because they are more focused on the "now" rather than the "then." Income inequality affects the national, state and local governments. This is happening because the rich are essentially stripping the poor of their money as the rich are the highest wage earners; which in turn causes the poor not to be able to return any profits to the economy because they can't afford to.
ReplyDeleteChart four I found to be easiest to analyze because it's very applicable to our economies state. Out of the individuals in the working force, the wealthiest have a college degree. Which is saying a lot. If it is implied that they have a college degree and get the most money that can say that those who don't may not get paid as highly.
Income inequality is the gap in income between those working in college education level jobs and those working in high school education level jobs, as those with a college degree tend to earn double what a high school graduate would. Many Americans who cannot afford to pay for basic needs end up having to take out a loan in order to pay for their basic needs, this leaves them in more debt and unable to save any money for the future. A less-educated workforce also means that many people won’t be able to compete in the growing global economy. Studies have also shown that States with a well-educated workforce has a lower unemployment rate. Chart four shows that earning a college degree significantly increases a child’s chance of earning a much higher income later on in life.
ReplyDeleteIn the context of this article, income inequality is the large and growing wealth gap in America between a concentrated group of people and everyone else. The article writes that in the US, the average income of the richest 10% is 14 times that of the poorest 10%. In addition, from 2009 to 2010 the average income increase for the top 1% was 15.1% while the average income increase for the bottom 90% was only 1%. The implications of a state with severe income inequality is economic stagnation and the end of a global hegemony. The United States will no longer be competitive on a global scale and citizens will become even more uneducated and impoverished.
ReplyDeleteIncome inequality will lead to a reduction in national, state, and local government tax revenue. This article writes that income inequality leads the wealthy to save and reduce spending while also inducing the poor to borrow and spend. This is unsustainable and is an inefficient way to spur economic growth. Less economic growth would mean less tax revenue and foreign investment. This would then sap revenue from the federal government and it's citizens.
The chart that stood out to me was the bar graph outlining the effects that a college degree can have on a person's life long income. This graph showed that for children in the top 60% income levels, most of them ha a college degree. For the bottom 40%, the vast majority of then did not have a college degree. Although correlation does not equal causation I think this chart is very telling. The chart and the article make a compelling case that the cause for the wealth gap in America is a large education gap. I think that the only way to combat poverty and the growing income inequality dilemma is to enhance education opportunities. Promoting welfare and the production of low wage, low skill jobs are a waste of resources because they do not work. Instead of giving these people a fish, we should be more focused on teaching them how to fish and turning that skill into a productive career.
At its core, income inequality is the unequal spread of wealth within a country, where the rich are rich to an extreme and the poor slowly dip at and below the poverty line. As explained in the article, “Higher levels of income inequality increase political pressures, discouraging trade, investment, and hiring.” With too little income inequality, an economy stagnates; but, paradoxically, with too much, there will also be a stagnation, as explained in the overview, “At extreme levels, income inequality can harm sustained economic growth over long periods.” Ultimately, the U.S. is approaching this level. This has lowered our GDP and our growth forecast by .3% -- a small number, but with massive implications for the prosperity of the economy.
ReplyDeleteThese economics implications only further the point that a college education is needed in order to bring back healthier levels of stability and “semi-equality,” for there must be inequality for stimulation. Too much of it, clearly, is a bad thing. The rich can form a monopoly. At a national scale, social security and health insurance have attempted to bring back this “health” with little end results. At a smaller level, state finances can be harmed.
The graph I decided to analyze was chart three. The chart highlighted the levels of degrees – from some college to a professional/graduate. Ultimately, and from common sense, the higher the level of degree, the larger the net worth. This only emphasize my previous point that an education is necessary to stabilize the growing inequality of the poor and rich.
Income inequality is the difference in the allocation of monetary power between individuals in society. If everyone were to have the same ammount of monetary power, there would be no income inequality. If only one person owned all the money, then you could say it is 100% income inequality. Our economic system brings forth a natural income inequality, and income inequality is necessary for short term economic growth.
ReplyDeleteAlthough it has been shown that a degree of income inequality is required for short term economic growth, the article made it blatently obvious that prolonged and extensive income inequality often leads to a stagnation in growth. It was stated that amongs most countries, those with a GINI coeffiecient of .45 (a coefficient that represents income inequality, 0 being no inequality and 1 being complete inequalty) often fared best economically. Also, it is important to analyze the reasons of the income inequality. Technology in the past decade has increased exponentially, and according to the article jobs that require college degrees often pay twice as much money as jobs that require a high school education. Recomended ways to solve this are a higher minimum wage or a higher tax specific to very wealthy people, but neither measure effectively decrease the income inequality.
Perhaps our best bet to reduce income inequality is a better education system. Chart 6 illustrares the obvious relationship between education and the potential us growth. It makes sense that a bigger skilled labor force would translate into a smaller income inequality.
Sp what is the meaning of all this? In lamens terms the ric people have most of the money and dont want to give it back, and although right now it does not affect our economy much it could have a very harmful effect in the near future in the form of economic stagnation. Of the three ways to solve this, two cause the big money owners to loose more money, and one requires individuals to spend more time in school attaining an education. We cant view this as if we hva learned nothing from the past, and we have to fight this income inequality to benefit and protect not only those in poverty, but also the whole country.
In economics, A measurement of the distribution of income that highlights the gap between individuals or households making most of the income in a given country and those making very little. Economic implications of a majority of Americans being unable to pay for basic needs are that Americans spend less money which is harmful to economic growth. Income inequality affects national, state, and local government income in a negative way because they would be taking in less taxes.
ReplyDeleteChart number three was meaningful in a way to me because it basically proves what some Americans today follow by. The graph, "Ratios of median net worth relative to median net worth of a high school graduate", basically claims that those with a bachelor's degree had a median net worth value nearly twice that of people with a high-school diploma. If you stay in school there's a good chance that you will get a better job if you stay in school rather than quit and not complete college.
Income inequality is the wealth gap in a market economy. The problems american face is that they dont have enough to pay the cost of leaving. Loans are the only way they can maintain. If the income gap grows to large a good portion of the population will not be able to pay for basic needs. To conserve money the middle class would not spend money, intern causing the economy to under go less stimulation. Chart 3 is showing the difference in income brackets for the different levels of education.
ReplyDeleteIncome Inequality is the difference in income difference between the wealthy and the poor. The big concern if most Americans can't afford basic needs is that the government would have to give handouts which puts burden on the middle class in the form of taxes. Taxes then would push the middle class closer to the poverty line which becomes a vicious cycle of government handouts. Chart 4 is a good representation of how a college degree could get you ahead in life. For example a child born into the bottom 20% has a 45% chance of staying there, but with a college degree that drops to 16%. It is tough in general to even move up with a college degree because only 5% of the bottom 20% of children will be able to make it into the top percentile. I would like to double check that chance against other countries numbers to see if the USA really is the land of opportunity.
ReplyDeleteHighlighting the modern era of our country – one that capitalizes on the doctrine of money and survival of the fittest – the definition of income inequality brings to light the unequal distribution of wealth of the nation, where the rich have “too much” money and the poor can’t get enough to sustain a livable lifestyle. To put simply, higher levels of income inequality have caused more pressure for politicians to answer to the call, which has also discouraged investing and hiring. Overall, too little inequality will cause lack of stagnation because of little stimulation. What is needed is inequality – but BALANCED inequality (one without the polar extremes that strengthens a dichotomy or stagnates the entire nation). As a consequence, GDP has lowered and so has our growth forecast that we had predicted 5 years ago to be .3% above what is currently is. At a national level, there is the attempt to stabilize the poor (though this welfare has only led to more stagnation), with Medicare and social security. At the state level, finances are diminished.
ReplyDeleteOf the graphs, I found most interesting the college degrees of chart 3. It’s almost common sense that a professional degree will put one above in net worth than a Bachelor’s or “some college” and those unfortunate without a high school degree. Net worth to employers is crucial in a day and age where the minimum wage really isn’t livable. What is needed is an education, one that can bring balance back to this unequal economy.
Income inequality is when wealth is distributed unevenly across a number of people. The economic implications this leads to is increased political pressure and discouraged trade/hiring. Most of those disadvantaged cannot save in the long-term. Looking towards a national point of view, the disparity will lead to less GDP growth in the long-run. All across the board, we will see less tax revenue due to the low-income citizens spending and the rich saving.
ReplyDeleteThe chart I analyzed was chart four. It shows how the poorer you are, the less likely you will graduate from a college/university. Logically, this could be due to the discouragingly high tuition rates that turns prospective students away.
Income inequality is the unequal distribution of income across a population. This may lead to an increase in loans being supplied by from the banks and independent loaners. The problem happens when those people who borrowed funds cannot pay the interest on it. Independent loaners can charge high interest rates that is higher than of the borrower's credit and debt. Income inequality may cause an increase in saving which means less money in the market. These are two different ways consumers may approach a occasion in which they cannot afford basic needs. With excessive income inequality the market grows more and more volatile and thus inconsistency in federal and state revenue. The wealthier citizens usually donate large sums of money to write it off on their tax reports which results in lower government income from taxes. Chart 4 highlights the difficult climb to a higher income level for those who lack a college degree.
ReplyDeleteIncome inequality is the unequal distribution of income within an economy. When some individuals make more money than others within in society, this phenomenon occurs. The economic implications of this occurrence are a majority of Americans being unable to pay for basic needs. These Americans are busy trying to save every penny just to get by. This ultimately takes away from our economy as we have less amount of money circulating in our economy. Some may even turn to borrowing, and take loans that are given to individuals from banks. Yet most who borrow from the banks may be unable to pay back the interest rates, let alone the actual loan.
ReplyDeleteIncome inequality affects us on a national, state, and local level. Over time, our economy will stagnate as the inequality will affect hiring, and investment within our society. The wealthy will be encouraged to save more as those lower on the income spectrum will continue to borrow. As a result, we would have less revenue from our federal government.
It seems that the only way to combat this is to invest in our education. The graph I chose to analyze was graph number four. Those with college degrees were typically wealthier than those without. While it was stated that children born into families that were poor, were more likely to stay in their respective positions, these chances can drop after receiving a college education.
Income inequality is the unequal distribution of household or individual income across the various participants in an economy, which is basically when few people have more money than the general population does. The economic feature of the scenario is important to the growth of our country and is multi-faceted. This includes online lasses and degrees. This is bad for those who go into the workforce with no higher education past a high school diploma. The impact on national, state, and local income tax is also negatively affected. The population don’t understand the gap between the main classes has caused for everyone, most commonly seen in the change in taxes. Usually the taxes are lowered, as less people can afford to pay higher taxes. Chart 3 calculates the median net worth of differing levels of education in relation to a high school graduate. As expected, increasing levels of education lead to an increasing net worth. But the marginal differences among the degrees is the most interesting factor seen in the chart. The differences between the attendance of college, to actually acquiring an associate’s degree is not as much compared to the differences between each additional degree,which are pretty close in hindsight. Each of the college degrees had increased in its worth over time.
ReplyDeleteEconomically speaking, income inequality is the imbalanced distribution of income amongst wage earners in America. This significant gap between financial statuses entails those that are the richest of the rich, and those who are the poorest of the poor. As stated in the article, “Higher levels of income inequality increase political pressures, discouraging trade, investment, and hiring…can lead to affluent households to increase saving and decrease consumption.” The wealthy class is so wealthy that they are able to spend at their leisure and still have remainders to put into their savings. Meanwhile, the lower class of the nation is struggling just to make ends meet as explained in the article, “those with less means increase consumer borrowing to sustain consumption…until those options run out.” Although this income inequality is currently at an unfavorable level, this is a beneficial factor to the U.S. economy. As predicted, over the next five years, productivity gains could add around $525 billion, or 2.4%, to the level of GDP, in relation to the baseline.
ReplyDeleteThe economic implications of a majority of Americans unable to pay for basic needs are that it would be a situation in which people are not spending and not having enough to save for the future. Since this economy is run on incomes and outcomes, it is important that consumers are contributing their expected share of funds. When Americans are unable to pay for these every day needs and not cycling money into the market, a boom/bust cycle may occur. An additional implication is that “such income imbalances tend to dampen social mobility and produce a less-educated workforce that can't compete in a changing global economy.” With all of these complications, a recession or depression has a possibility of occurring.
Income inequality affects national, state, and local government income tax in an unconstructive light. As explained in this article, while the wealthy are spending less and the poor are simply borrowing to spend, there is no economic growth being seen. The petite economic growth would then lead to petite tax revenue, which in turn would not be advantageous to any federal governments.
After assessing all the graphs, I found graph 4, “For The Poor, Little Chance of Breaking Into the Upper End of the Income Range Without A College Degree”, to be the most interesting. Reviewing all the statistics in detail, I realized that this chart was the most relatable and accurate to the problems pertinent to our society today. It shows that children with a higher income upbringing and college degree are much more likely to cross that border into the upper income range in the United States. This graph compares adult children to their parents both with and without a college degree at the same age. This clearly shows the difference between those who are able to break free from poverty and those who stay poor.
Income inequality is the unequal distribution of income among a nations people. The economic implications of people not being able to afford their basic needs are people who are in the middle earnings bracket are going to save more and consume less, while those in the bottom bracket who can't afford anything at all will borrow for basic needs until they are no longer able to, this includes credit cards, borrowing from affluent friends or family and unemployment/food stamps. This affects our taxes greatly because if there is an increase in unemployment the government is going to need to get the money from somewhere to send out those checks. Federal and state income taxes would also be increased because with the little spending that is being done, there is not a lot of money being earned on sales and property taxes. I felt like graph 6, Education Improves US Potential Growth, was very accurate and it is something that we all need to think about and push for. If we were to simply increase education the economy has the opportunity to double in growth from, 1.5% to 3%. We need to push even harder for kids to earn a degree and present more opportunities for them to do so, such as increased financial aid, especially for those less fortunate. The ivy league schools shouldn't be the only ones granting full rides for families making under 60K a year, we need to get our youth to college so that our country has a bright future.
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