Social Equality and Economic Growth Essay
Source: Edsall (par. 3)
Social equality refers to a situation where all individuals in a particular society are of the same status. It is an ideal situation given that it is not practical to achieve perfect egalitarianism in any given community. The similarities in status can be regarded in terms of security, access to services offered, and equality before the law. Other aspects of this phenomenon include freedoms and property rights. Equality also means the absence of social classes. Also, it implies the absence of discrimination. All the individuals are provided with equal opportunities in life (Edsall par. 3). However, most people regard the concept is as a form of utopia. The reason is that, as already indicated, it is difficult to have such a society where all individuals have equal chances and rights.
Economic growth is closely related to social equality. It refers to a rise in market value for goods and services produced in a particular economy within a given period. In most cases, the growth is expressed as a percentage of the annual change in gross domestic product. To achieve this phenomenon, the economy must be productive. Individuals in the country must also be engaged in meaningful economic activities for growth to occur (Porter par. 9). It is for this reason that it is important for every individual to be given equal opportunities to participate in nation-building.
In this essay, I am going to analyze the relationship between social equality and economic growth. The analysis will be made in the context of an article published in the New York Times about this topic.
Social Equality and Economic Growth
As already indicated, there is a close link between the two concepts. Social equality provides individuals with equal opportunities to contribute to the growth of the economy (Krugman par. 12). Such people have equal chances to be productive. Equality also ensures that the potential of the society is fully exploited to enhance the development of the entire community. However, in spite of the apparent relationship, economic growth has been cited as a major factor behind social inequalities. The rise in economic prosperity leads to the emergence of social classes, which makes it difficult to achieve equality. The reason is that the benefits of these economic developments are not accessed by all individuals equally. As a result, people have come up with divergent views concerning the link existing between the two phenomena. Two schools of thought with different views have emerged. One of the groups supports a positive relationship between the two. They feel that social equality stimulates economic growth. On their part, the other group is of the view that economic growth impedes the achievement of social equality.
Capitalism is one of the major problems that have contributed to social inequalities in society today. The concept refers to an economic system where industries, means of production, and trade are privately owned and controlled (Fung par. 22). The players involved are charged with the responsibility of setting the prices for goods, assets, and services. The practice exposes buyers to the risk of being exploited by these market players in their bid to maximize their gains. The major concern of these investors is profit margins. They are rarely concerned with the welfare of the consumers. It is noted that the group of market players is made up of a few wealthy individuals. As a result, the system is characterized by stiff competition between producers. There is also the unfettered accumulation of capital among the investors (Fung par. 22). Wealth is controlled by a few individuals who make decisions affecting millions of people. For this reason, there is a wide gap between the rich and the poor in most of the capitalist economies (Porter par. 9).
Most of the world’s economies, such as those in the United States of America and China, have adopted capitalism. The governments in such countries advocate for free trade. As a result, they have little or no control over property rights. They also lack control over the markets. To safeguard the interests of the citizens, there is a need for government to take a more proactive role in the economy. Failure to put in place control measures leaves the citizens vulnerable to economic abuse. Exploitation by capitalists may be in the form of hiked prices of goods and services and low wages for labor (Tritch par. 17).
One of the ways through which capitalism leads to the exploitation of citizens is by encouraging the emergence of monopolies (Olivo and Sullivan 31). The formation of monopolies grants the production rights to only a few individuals. Lack of competition gives these individuals the liberty to change the prices of their goods and services at will. Also, monopolies interfere with the distribution of wealth in society. Only a few individuals can accumulate assets and other forms of capital (Fung par. 22). Other potential producers are denied the opportunity to operate. As such, the economic system continues to hinder the achievement of social equality. It has led to the widening of the gap between the wealthy and the poor in society (Porter par. 9).
Factors that have aggravated the situation include the aforementioned increased inequalities between the wealthy and the poor. There is a need to provide all individuals with equal opportunities. Some economists think that promoting equality would enhance economic growth compared to a system where only a few individuals are in control of production rights (Fung par. 22). There is increasing pressure on governments to promote equality to increase social welfare (Grynbaum par. 22). It is not fair to have a few extremely wealthy individuals, while the majority of the citizens languish in poverty.
At times, the information highlighting the form of relationship between social egalitarianism and development is sketchy. Different economists view social equality from varying dimensions. Regardless of the divergent views, it is important to take into consideration what seems right and fair. Social fairness aims at redistributing wealth and resources among individuals in society (Krugman par. 12). Discrimination is significantly reduced since there would be no social classes. All individuals are accorded equal chances to contribute to the economy and benefit from the same. As a result, the per capita income for the poor is likely to rise, reducing levels of poverty.
The experts and analysts who think that equality would promote economic growth also feel that social inequality leads to wastage of human potential. For example, over 40 percent of the children living in the United States of America are from poor backgrounds (Krugman par. 12). The children are not given a chance to contribute to growth in society. On the other hand, those from affluent backgrounds receive preferential treatment. The situation means that only about 60 percent of the American children are adequately empowered to exploit the available opportunities and resources. The remaining 40 percent lack the means to produce. They often end up working for those from affluent backgrounds. Only a few of them are in a position to realize their potential after many years of struggle. As a result, these individuals are not as productive as they should be (Porter par. 9). In the process, economic growth is hindered.
Some economists think that measures to promote social equality would lead to reduced economic growth (Edsall par. 4). Such strategies include imposing taxes on the affluent in society. However, such a move is likely to hurt the economy. The reason is that individuals would make little or no returns from the services they offer and the goods they produce. As a result, wealthy individuals would lose more to taxation than they would be gaining from the economic growth expected to be brought about by social equality (Krugman par. 12). Such persons are mostly successful investors. Taxation and such other measures to address inequalities would scare away these investors, reducing the economy’s total productivity in the long run. The effects of such a move are more devastating than inequality itself.
To begin with, many individuals would lose their jobs as businesses begin to shut down. The rate of unemployment would increase, taking a toll on the economy since many individuals are rendered unproductive. Per capita income would also be considerably reduced.
I find it important to have an accurate picture of the real effects of inequalities on economic growth. As stated earlier, different economists have varying opinions concerning this issue (Edsall par. 3). The scholars have come up with brilliant explanations to support their arguments. However, the effects have not been determined quantitatively. As such, the real benefits of promoting equality are not well documented.
Different words have been used to describe and define the concept of egalitarianism. Such terms include, among others, redistribution. In such discourses, the term is used to describe the process of obtaining wealth from some individuals and indirectly giving it to the poor. However, such a strategy has its evils. The situation would mean taking from the wealthy and those from high social status what is rightfully theirs (Grynbaum par. 22). In light of this, the move is likely to encounter resistance from those persons who are considered to be of high social standing in the economy. The criterion to be used in the redistribution of wealth is also a major concern. Equality must be achieved through a specific set of standards for it to be viewed as fair and transparent. The process is also very demanding. Appropriate measures need to be put in place to ensure that the resources that have been obtained from the affluent in the society are given to deserving individuals.
I have learned that the problem of social inequality forms a cycle that is hard to break. Individuals who lack the opportunity to produce and become wealthy are not in a position to empower their children. For this reason, the issue of social inequality has become a recurrent problem. It is passed from one generation to the other. The situation means that the differences between the haves and have-nots continue to increase (Krugman par. 12). Governments and other stakeholders should address this issue with the urgency it deserves. If this does not happen, there is a likelihood that the different world economies would suffer from reduced growth due to failure to fully exploit human and other resources available. Many skills and abilities are unnoticed. As a result, they are not fully utilized. The economy has to seek for such skills from other areas, a process that increases the cost of production. In light of this, social equality would go a long way in stimulating economic growth.
Great care should be taken when promoting equality between members of the society (Edsall par. 34). The move should be implemented in such a way that it is viewed by all to be in good faith. It should be geared towards benefiting the entire society. Some may argue that equality should be in terms of opportunities and not outcomes. The statement seems realistic in terms of providing all members of society with equal opportunities. Such a strategy would not be seen to be undermining any particular group of people. In any case, it would stimulate healthy competition among individuals. Such competition is important as it spurs economic growth. It is expected that all persons would work hard for them to gain from equal opportunities availed to them.
However good the statement sounds, it is not realistic. For equality to be achieved through availing equal opportunities to all, a lot of time is required (Krugman par. 12). The approach can only be used in bringing social egalitarianism to future generations. For instance, it can be used to improve the future of 40 percent of American children brought up in poor homes. It is unrealistic to think that these individuals would have equal access to opportunities, such as education, health, and jobs, as children from rich families. The children from low-income families are also likely to drop out of school. They may not complete their college education. Individuals from both poor and wealthy backgrounds may probably be allowed to attend the same schools. However, those from low-income families may lack the capacity to settle the high charges associated with learning in such institutions.
For this reason, opportunities alone would not bring about social equality. People should be empowered to contribute to the economy and improve their living standards. Giving such people opportunities is not enough. Capital and resources are needed to exploit opportunities and ideas. The poor in society lack these important factors to enhance the quality of their life. That is one of the reasons why equality has not been achieved in society (Goltz par. 16).
Social equality would be achieved when people reap similar outcomes from the opportunities availed to them. For this reason, the statement that we should seek to achieve equality of opportunities, as opposed to fairness in outcomes, is not valid. Inequalities in outcomes are the major reasons why social egalitarianism has not been achieved in contemporary society. People cannot have equal opportunities if they are not in a position to benefit equally. As a result, there are disparities in the outcomes obtained from opportunities availed to different members of society. That is the reason why the gap between the poor and the rich continues to increase.
Edsall, Thomas 2014, Just Right Inequality. Web.
Fung, Brian 2014, Forget the 1 Percent. In the Bitcoin World, Half the Wealth Belongs to the 0.1 Percent. Web.
Goltz, Jay 2014, 10 Words Entrepreneurs should use with Caution. Web.
Grynbaum, Michael 2014, Litigant against Social Welfare Agency will be its Leader. Web.
Krugman, Paul 2014, Liberty, Equality, Efficiency. Web.
Olivo, Antonio, and Patricia Sullivan, 2014, Northern Va. Property Values, and Tax Bills, are Up- but Public Services Aren’t. Web.
Porter, Eduardo 2014, A Relentless Widening of Disparity in Wealth. Web.
Tritch, Teresa 2014, Yet more G.O.P. Hypocrisy on the Minimum Wage. Web.
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Source: Edsall (par. 3) Introduction Social equality refers to a situation where all individuals in a particular society are of the same status. It is an ideal situation given that […]