Positive and Negative Effects of Income and Wealth Inequality in America

The Wealth Inequality Debate
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The Wealth Inequality Debate
Income and wealth inequality has brought disparity between different groups in America. It has caused the rich to become richer as the poor continue to be poor. In essence, income and wealth inequality results in a small population controlling a relatively large amount of a country’s resources. In America, income and wealth inequality has been growing for the last 30 years which indicates there is little possibility for change in the near future. The effects of highly concentrated wealth have been a hot debate and often poorly understood among observers. Wealth inequality has both positive and negative effects in the American context.
Income and wealth inequality has created employment opportunities for the poor and disposable incomes for the rich. For instance, due to low income and wealth in China, more Chinese go to work where they engage in the manufacture of products. The goods manufactured by the Chinese are cheap which allows Americans who have more income and wealth than the Chinese to purchase them (Will, para. 1). As a result, the arrangement creates employment opportunities for the Chinese while at the same time increasing the disposable income of the Americans to purchase the products the Chinese manufacture. In essence, inequality creates an incentive for the poor members of the society to work. The rich then get an opportunity to spend their disposable income which creates a market for the products manufactured.
Inequality is a driver for innovation as individuals gamble for new opportunities (Will, para. 3). The salaried and wealthy individuals generate an incentive for the workers earning low incomes to get into labor positions. As the individuals earning low incomes and with less wealth work harder, they form new companies and invent new merchandises which enable them to join the class of the higher income group. Innovation makes it possible to convert luxurious products into common goods. As a result, more individuals can acquire products they would never otherwise have afforded. Where income and wealth inequality does not exist, the individuals lack the incentive to work harder to create wealth and earn a higher income. Hence, due to income and wealth inequality, individuals work harder hence creating more opportunities for economic growth.
Income and wealth inequality has been more pronounced among the communities of color. Slavery and Jim Crow Laws prevented blacks and other people of color from building wealth (Thompson, para. 9). For instance, the loan programs provided by the Federal Housing Administration (FHA) were discriminatory against the people of color. The black and other minorities were confined in less developed neighborhoods while the whites stayed in the more developed neighborhoods. Discrimination has persistent in America due to policies that encourage the whites to build wealth at the expense of the blacks and other people of color. Such racial income and wealth inequality has ad...