Economic Inequality and Governmental Responsibility

Ever since the emergence of civilization several hundreds of years ago, social inequality has been a prevalent aspect of many societies across the world. This social structure developed as a result of several factors, amongst them political and economic status in the society. During the early stages of civilization, social and political status was closely related whereby the few powerful political leaders tended to be wealthier than the lesser politically influential majority. Although this dynamic is still prevalent in developing countries, a lot of changes have been witnessed over the past century in the developed world.

Economic inequality in the United States dates back hundreds of years, starting during the colonial era. It is well-known that the first wave of Europeans to arrive on American shores were peasants fleeing economic inequality and lack of opportunities back home.

During those early days, economic inequality was not prevalent in society as most people were poor, looking to make a living in the unexplored wilderness. With time, however, prosperity cropped up amongst some settlers and the arrival of the colonials marked the emergence of economic inequality in America. Other dynamics, such as the arrival of slaves, racial diversity, and industrialization further complicated the matrix of economic inequality in the United States as distinct economic classes became prominent. The emergence of these distinct economic classes has been widely studied at both academic and policy levels, with factors such as race, family structure, patriarchy, segregation and geographical location playing a large part. Over the past few decades, the issue of economic inequality in American society has become a huge topic on both social and political levels. Economic inequality formed an important element of Martin Luther King Junior’s 1960s social justice movement. Among the main topics of discussion on this issue of economic inequality in the United States is the role of the government as both the cause of and solution to these rampant high levels of economic inequality in the country.

Ever since the era of the social justice movement in the 1960s, the federal and state governments have taken a particularly keen interest in understanding and finding solutions to this issue of economic inequality in the country. This paper looks at the issue of economic inequality in the United States with a special focus on the responsibilities of government and its policies in addressing this important social issue.

The state of economic inequality in the United States of America:

With a Gross Domestic Product (GDP) of approximately 18.57 trillion dollars in 2016, the United States is the world’s biggest economy and has held the position for approximately the last hundred years. Over this period, the country’s economic success spilled over to the citizens, resulting in notable economic prosperity of the American population as reflected in several important indicators such as rates of unemployment, consumer leverage ratio, stock market prices, and retail sales. Despite the country’s economic success, the United States still has notably higher rates of poverty and economic inequality compared to some of the developed countries in Western Europe.
The rates of economic inequality, like in the rest of the world, fluctuate from time to time depending on several factors, such as the state of economic performance, both domestic and globally. The global financial recession witnessed between 2007 and 2010, for instance, had a major impact on the rates of economic inequality in America and across the world. Although the state of inequality has improved since then, the rates of economic inequality are still a major issue for the government and other concerned stakeholders (Saez et al., 527). The race is the most important factor attributed to economic inequality in American society over a long period.

The United States has, for several centuries, been one of the most racially diverse nations in the world, hosting people from different parts of the globe. Apart from the native American Indians, who have long been outnumbered, America is home to other races including whites, blacks, Hispanics, and Asians. As a result of various social and historical factors, the economic well-being of Americans from these different racial backgrounds has been determined to vary widely.

On average, the whites and the Asians are far wealthier than the Hispanics and the blacks. According to Taylor (2011), the median net worth of a white household in 2009 was $113,149 compared to $6,325 for a Hispanic household. Black households, on the other hand, had an average net worth of $5,677 (Saez et al., 557).

The causes of racial economic inequality in the United States have been around for hundreds of years and are a product of various social and historical backgrounds in society. These social and historical factors determine key group and individual economic aspects such as economic opportunities, income, and social economic mobility. Intergenerational poverty, segregation, racism, patriarchy, geography, family structure, and individual choices are some of the factors that have been attributed to racial economic inequality in the United States.

Intergenerational poverty is one of the reasons identified to be the cause of racial economic inequality in the United States today. Intergenerational poverty refers to the transmission of poverty from one generation to another, where poor parents have poor children who are likely to become poor adults themselves. Bloome (2014) studied the relationship between racial inequality trends and the intergenerational persistence of income and family structure.

The research found that intergenerational poverty dynamics among the different races in America significantly worked against the historically less prosperous Hispanics and blacks, as compared to the historically prosperous white and Asian communities. According to the research, it is particularly difficult for African American children to escape low incomes compared to the other three races. Additionally, black and Hispanic children born to upper and middle-class families are more likely to find it difficult to maintain the status afforded to them by their parents (Bloome, 2014).

Furthermore, family structure is another significant factor responsible for racial economic inequality in the United States. Family structure essentially refers to the way families are arranged according to roles, size, power, and hierarchies. The family structural organization is known to differ among different races, contributing to the economic inequality amongst them. One-parent families, for example, are very common among African Americans as compared to Asian and white Americans. This family structure widens economic inequality between the different races because parental absence weakens the processes that reproduce socioeconomic advantages.
For example, children raised in poor, single-parent families may not gain access to quality education due to financial issues, possibly compromising their future progress towards financial equality with kids raised in two-parent families (Bloome, 2014). Geography is another factor that has promoted racial and economic inequality in the United States over the past century. Geography, in this context, refers to the physical location and related factors that affect the economic condition of people living in these areas. Historically, particular minority races have inhabited certain regions or states for various reasons. A large number of black Americans live in the Southern states, while over two-thirds of American Hispanics live in five states: Arizona, California, Michigan, Florida, and Nevada. The concentration of a large number of a particular race in a single geographical area can make them susceptible to economic risks, potentially exacerbating economic inequality. The 2007 global economic recession, which seriously affected America’s housing sector, caused the net worth of many Hispanic households to plummet to historical lows because the five states where most of them lived were among the hardest-hit areas.

Their median net worth fell from $51,464 in 2005 to $6,375 in 2009, a loss of 88%. Given that over two-thirds of America’s Hispanic population resided in these five states, compared to less than one-fifth of the rest of American races, this situation contributed to racial and economic inequality against Hispanics (Taylor, 2011). Racial segregation also played a role in perpetuating racial economic inequality in American society, particularly in urban centers. The rising incidences of poverty in American cities in the 1970s were exacerbated by residential segregation, particularly affecting African Americans. In a hypothetical example, Massey (1990) found that the imposition of racial segregation in urban areas improved the economic situation for some white people, while all the Blacks fared much worse. This hypothetical case study also showed increasing levels of segregation corresponded to a steady rise in poverty concentration among Blacks, while the poverty levels for Whites declined (Massey, 1990).

Government responsibility in America’s economic inequality is a contentious issue. Economic inequality is an expected aspect of modern society, especially in a capitalist economic system. Therefore, the government is not directly responsible for America’s economic inequality. The United States was founded on values of individualism, personal control, and self-help. These values place personal responsibility on individuals’ financial decisions, as opposed to government control as seen in other countries. Therefore, the responsibility for economic inequality in American society today cannot be directly attributed to the government.
That said, the government plays an important role in the creation and development of economic inequality through its policies and actions. Whether deliberate or unintentional, government policies and actions have helped lead to the emergence and widening of economic inequality in the country at different levels. The most obvious government policy that has created economic inequality over the years in America is the issue of taxation and tax breaks. The country’s taxation policies that heavily tax the majority poor and the middle-class Americans, while offering the few super-rich Americans tax breaks, has played a huge role in the creation and widening of the country’s economic inequality. A 2015 study conducted by Taxation and Economic Policy discovered that America’s poorest 20 percent remitted an average of 10.9 percent of their income as taxes, while the middle 20 percent of Americans paid 9.4 percent. The top one percent were only found to pay around 5.4 percent of their incomes in taxes (Gilens, 2012). In alleviating economic inequality in the country, the American government can also play an important role through policies and actions.

Over the years, the government has tried to implement various policies and projects aimed at closing the gap between the rich and the poor. One such policy includes affirmative actions that are aimed at enabling the minority, and economically disadvantaged groups, to work towards achieving financial progress. Affirmative actions include policies in areas such as employment opportunities and access to education in the country’s top learning institutions. Apart from affirmative actions, the government has also tried to formulate policies and projects meant to spur economic activity and growth in areas where people are economically marginalized. Such projects may include infrastructure projects as well as enabling these disadvantaged people to access training and financial resources to start businesses. One area that the government can still work on is leveraging the taxation policies to streamline them so that the super-rich Americans contribute a fair share of their income to the country’s tax burden.

Nevertheless, there are limits to the extent of government intervention in the alleviation of economic inequality. One important observation for the policies is to make sure they do not infringe on the rights of Americans to pursue their financial freedom. This is important to ensure that the basic values on which the foundation of the United States as a country was built on are maintained. Additionally, taxation policies intervention also needs to be carefully worked out so that it does not affect the country’s capacity to attract and maintain investors (Gilens, 2012).

In conclusion, it’s obvious from this paper that economic equality is still a major issue in American society today. Being an age-old issue, economic equality has played a major role in shaping American society to date and is likely to remain so for the foreseeable future. This means that the government and authorities need to invest their time and resources in understanding the background of economic inequality in America. This will help formulate and fine-tune approaches towards solving the issue for the posterity and prosperity of American society.

Works cited

• Bloome, Deirdre. “Racial Inequality Trends and the Intergenerational Persistence of Income and Family Structure.” American Sociological Review, vol. 79, no. 6, 2014, pp. 1196-1225.
• Gilens, Martin. Affluence and Influence: Economic Inequality and Political Power in America. Princeton University Press, 2012.
• Massey, Douglas S. “American Apartheid: Segregation and the Making of the Underclass.” American Journal of Sociology, vol. 96, no. 2, 1990, pp. 329-357.
• Saez, Emmanuel, and Gabriel Zucman. “Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data.” The Quarterly Journal of Economics, vol. 131, no. 2, 2016, pp. 519-578.
• Taylor, Paul, et al. “Wealth Gaps Rise to Record Highs between Whites, Blacks and Hispanics.” Washington, DC: Pew Research Center, 2011.

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