Economic Despair-ity: A Widening Gap
Mounds View High School
Arden Hills, Minn.
"No person, I think, ever saw a herd of buffalo, of which a few were fat and the great majority lean ... Nor in savage life is there anything like the poverty that festers in our civilisation" (Henry George). Famous American political economist Henry George is the author of bestseller Progress and Poverty (1879), a book about economic inequality; According to his observations, humans are the only species to have a wide economic gap between individuals. In today's society, the disparity of wealth and income among the wealthy and poor individuals is not only present but increasing at a rapid rate. Annie Lowrey, an economic author for the New York Times, writes, "the top 10 percent of earners took more than half of the country's overall income in 2012, the highest proportion recorded in a century." Due to this inequality, the top 10% of the U.S. population has obtained 50% of the country's income, resulting in a large economic gap between the wealthy and the poor. This widening economic gap between wealthy and poor individuals is caused primarily through an education system that favors the wealthy, increased availability of jobs for rich people through social connections, and an economy that is biased toward the rich.
A major cause of economic inequality in the United States is the education system Wealthy students are able to do better in school than their less affluent counterparts through the use of tutors and extracurricular enrichment activities. This in tum gives wealthy students a competitive advantage when seeking admission to elite schools which in tum translate into higher paying jobs and increasing gap between poor and wealthy individuals. The economists Richard J. Murnane and Greg J. Duncan report that, "from 1972 to 2006 high-income families increased the amount they spent on enrichment activities for their children by 150 percent, while the spending of low-income families grew by 57 percent over the same time period" (qtd in Reardon). This study shows that wealthy families spend more trying to prepare their children for school than poor families resulting in an educational gap. Furthermore, a study done by Sean F. Reardon, a professor at Stanford, discovered that in comparing children in the 1950s to 1970s to children born 20-25 years later there was an increase of 40% in the gap between reading achievement scores of poor students and wealthy students (Reardon 1). This illustrates that wealthy students score better on tests than poor students, which can lead to admission to elite universities and thus higher paying jobs (Morrison). Through the availability of resources and increased preparation in school wealthy students are able to do better than poor students in school resulting in higher paying jobs and economic inequality in the population.
Through social connections made as a result of enrichment activities and social events, affluent students are presented with more job opportunities and higher paying jobs. In an interview done by Myer and Shultz, Stanford economic professors, it was shown in a New England Mill town that, "62 percent of the interviewees had found out about and applied to their first job through a social contact, while only 23 percent had applied directly on their own and 15 percent had found their job through an agency, ads, or other means" (qtd in Jackson 3). Similarly, according to ABC News, 80 percent of jobs are obtained through social networking, reiterating the point that social ties and job searching are intrinsically connected. Poor students are unable to attend certain social events, and their families spend less money on enrichment activities, therefore they miss out on important connections. This loss of connections causes wealthy students to have an advantage over poor students when searching for high paying jobs resulting in an increasing economic gap.
Advantages are also accumulated by wealthy people through a biased economy, leading to a growing gap between the wealthy and the poor. The interest rate of the current economy is currently at historically low rates, causing saving money to be much less profitable than investing money in stocks and bonds (Craft & Wiseman). However, due to the inherent risk of investing, low-income families are dissuaded from investing and instead store their money in saving accounts, which earn little to nothing. In contrast, the rich can absorb failed investments through diversification of portfolios where the high payoff from one investment can cover the costs of a failed venture (National Center for Policy Analysis). Consequently, the rich are able to sustain losses due to their diversified investments created by a good education and a large amount of money while minimizing risk and increasing potential payoff. Accordingly the rich become richer through stocks and bonds while the poor earn little to nothing through savings accounts causing the economic inequality gap to grow.
Through an education system that favors the wealthy, increased availability of jobs for rich people as a result of social connections, and an economy that is biased toward the rich, the economic inequality gap is growing and will severely affect the future of the United States. The growing economic gap may result in the cherished American dream of economic mobility being dismantled, and also without a strong middle class, consumer spending falls, and the economy suffers. Unless more funding in the future is provided to lower-income families in order create an educational base for their children and more economical resources are provided for poor individuals to use, like advanced networking capabilities, the gap between the wealthy and the poor will inevitably increase. However unlike buffalos, humankind has the capability to be self-aware and stop its own downfall