While the wealthy keep increasing their assets, low-income individuals struggle to improve their financial situation, resulting in a widening income disparity in recent years. Consequently, the income gap leads to various socio-economic and political problems. This essay will discuss these problems and propose solutions to address them.
To begin with, a widening income disparity can lead to a greater socio-economic inequality. Privileged individuals have financial capacity to purchase basic necessities – property, education, health insurance – that are currently non-accessible for underprivileged groups. For example, Elon Musk is considered to be the wealthiest person on the planet, possessing half of a trillion dollars. This amount of money could be distributed among all the humankind and he would still have 492 billion dollars. At the same time, according to the United Nations’ reports, almost one billion people live in extreme poverty, encountering food insecurity, water and electricity scarcity, and homelessness.
In addition, increasing inequality leads to political instability. To be precise, feeling deprived, financially disadvantaged groups can start mobilising against the governments and the rich. For example, in the early 20th century, the working class overthrew the Russian ruling family and exiled the nobility because the inequality was so enormous that they could not bear it anymore. Similar social unrest has occurred in other countries. Therefore, the current widening income gap can cause protests and revolutions worldwide.
There are multiple approaches to tackle these problems. However, the most effective one is enforcing well-developed policy measures. For example, Scandinavian governments adopted a progressive tax rate, which means that wealthy people pay more taxes and these taxes are allocated among financially disadvantaged groups. This policy measure diminished inequality and has led to the best political stability rates on the planet.
To conclude, not only does an increasing income gap lead to societal inequality, but it also poses a great threat to governments and the wealthy. Without a doubt, these problems should be tackled by governmental intervention.