Why is it bad if there's a big gap between the rich and the poor?

Question

If the lower 10% of the country live on $12,000 per year, but the following year Bill Gates were to be worth $100 billion instead of $50 Billion, why is that a bad thing? The poor have just as much as they had before he increased his net worth. The gap has doubled, but how does that hurt the poor???

Don't know about "control theory"...enlighten me.

Bill Gates and Warren Buffet have contributed over $60 Billion to Charity. Have you ever worked for a poor person? What do you mean that the "rich don't play well"? What percentage of your income do you regularly give to charity? Do you "play well" with those that are in africa???

Answer 1

Maybe its not bad, but its at least unethical. And I say that knowing full and well that it is the rich that most often keep the economy going because its their investment that creates employment for the poor. However, when men are as rich as Bill Gates, and there is no way they can ever spend it all, while at the same time others starve, that is an ethical question.

BTW, the Gates foundation will go mostly to organizations like planned parenthood to fund abortion, which usually targets the unborn children of the poor. Some see it as an organized means of infanticide that targets mostly the worlds poor.

Your question is referring to the american poor, which really is not considered poor to world standards. $12K per year in many places is good money, and I see americas poor driving new cars, talking on cell phones while wearing $200 nikes.

Answer 2

One thing to keep in mind is that wealth is never made; it's redistributed. For someone to be wealthier, someone else has to be less so.

If you want to cheat this system, you can have the government to print more money. But that means there will be inflation because if everybody had more money, things would cost more. And the value of the dollar will drop.

So the example of someone who previously was worth $50 billion to now magically worth $100 billion while everything else being equal is not valid (it may be achievable if a lot of smart overseas trading was done, but I doubt that's the case). Honestly, I don't think the poor can get any significantly poorer. What's more likely happening is that more middle class people are falling into the poor class.

To generalize a bit: if you're living under poverty, life sucks as it always has. If you are in the rich, life is great as it always been. If you're in the middle class, life is getting worse as the gap widens.

Answer 3

I’d like to start by addressing your example. Bill gates started with 50 billion and finished with 100 billion. Where did the money come from? In this example, unless bill gates gave away 50 billion dollars worth of something, his buying power has increased, while someone else's has decreased.

Disparity in buying power is a big problem in capitalism. The basic Economics 101 premise is that if there are a limited number of donuts, and you and I both want some, the issue will be decided by who is willing to pay more. Whoever is willing to pay more wants it more. This runs into problems when Mr. Gates has 10 million times the purchasing power of that poor person. It is no longer a matter of deciding who wants the item more. It is a matter of who wants the item more relative to their purchasing power.

The result of this is that the poor person can lose out on things they really want due to lack of relative purchasing power. To take this to the real world, imagine a 1967 corvette for sale on the side of the road. 2 people come to look at it, 1 18 year old car buff that is just finishing high school, and 1 56 year old CEO who just finished cashing out 15 million worth of stock options. The CEO is going to get the car. The young guy wants it more, would get more use out of it, and would give up about everything eh has for it, but the CEO just has so much more. The end result is the CEO ends up with a car that he drives 3 times in his life, and the kid is driving a beat up VW bus or something.

This is a situation that capitalism would claim to solve in Eco 101, but when the difference in purchasing power comes in, flipping a coin distributes the resource in a fairer way.

Answer 4

I guess because the "average standard of living" is a relative thing, it's based on comparison. Plus, the dollar value today is different than what it was 10 years ago.

But, perhaps the thing to be most feared is with money comes oppotunity, and the gap represents how difficult it gets for the poors to climb out of their ghetto. If you look at the history, every country with large gaps (Russia, China, as well as Latin American countries, France, Cuba, etc.) all get into very bloody revolution and often falls into a form of government that's innately degenerate. So, hopefully, we, the more sophisticated Americans won't get ourselves into such trouble.

I do agree with you in that in capitalism, people should be able to amass as much as their intelligence, talent, and humanity allows them to. But, that doesn't necessarily apply to their children. Some are lazy and unproductive, yet doesn't need to work because their parents had established royalty income, which could last a long time, and are shareholders of successful companies that are managed by good management team. Still, the opportunity is much greater for them.

The poor, who really need to be educated, finds that they need to work more than they can afford to spend in school. Them seeing how the others live breeds only jealousy. As the level of jealousy gets bad enough, there starts the crime due to the attitude, "Fine, if I can't get it legally, I'll just take it." So gangs form, drug sales sore, robbery increases, etc. (anything that seems easy to make money). As a society, these are the things we ought to condemn and avoid, I believe.

Answer 5

Simple, as the gap increases, so does the mean standard of living. As standard of living increases, so does the price of goods. Wages don't increase until the standard of living gets a LOT higher, so though the higher tier of society is able to constantly improve their standard of living and be content with the increasing prices of the goods they are consuming, the lower tier of society is making the same wages and having to spend more money on less goods and services.

The poor don't have 'as much' as they had before, they have the same earning potential as before. Prices have increased because of the increase in mean standard of living, so their purchasing power has actually decreased. This is, though, only an unfortunate side effect of a deregulated capitalistic economy. If regulation were in place to put price floors (or is it ceilings, can't remember) on goods, it may help the poor teir of society better cope with less purchasing power, but the potential loss to industry from reduced profits might stem to higher unemployement and lower quality products for the same price.

I guess what I'm beating around is that having these excruciatingly extreme marginal gaps between the elites and the have nots, is hurtful because it keeps the have nots having nothing. With reduced purchasing power, a family can't send their kids to college, can't work more than a few dozen miles from home (gas prices), can't invest in professional or polytechnical training, and further strains the delicate social welfare system which is crudely in place. There is no real solution that I can think of besides increasing wages and lowering higher education prices. There's also expanding social welfare, but that can cause many more socio-economic problems.

Answer 6

Simple, democracy goes out the window. If we live in such a system that promotes inequality, there is no measure of equality when it comes time for voting. Take a look at South Africa, the tiny minority of wealthy people from Dutch descent fortified their power and made sure nobody could touch them with such policies as Apartheid. Apartheid is a racial caste system that takes away rights of people put into certain (people without power) categories. Now this is just fine for the folks up top, but there is a larger majority of people who now have no choice but to buckle under and be submissive.

Or, take a look at our country. The "American Dream" of pulling yourself out of poverty doesn't happen often (Bill Clinton). In fact, to do this you must work far harder than anybody who inherits a big fat wad. Take a look at the Waltons. The family that owns walmart is fantastically wealthy, and all they had to do was wait for Sam Walton to die. Do you really think that Robert Walton works harder than Joe Shmoe works in the back store room of Walmart?

If that isn't convincing enough, there is the age-old example of the garbage man and the lawyer. Who works harder? Why does the Lawyer make more? We could go our whole lives without ever seeing a single lawyer, but could we do that with a garbage man? Clearly, the work of the garbage man is more useful in society, but she gets paid so much less.

Now Bill Gates is an exception to the rule, he is very cheritable and one of the only good billionaires in the world. Take a look at the Bill and Melinda Gates Foundation. They are doing wonderful thing. But Robert Walton, on the other hand, spends his money funding both sides of the political spectrum to ensure his company can continue to do what it wants.

In truth, inequality leads to things being unfair. How unfair you want things to be is up to you. Just remember, for the people living pay check to pay check (me) equality starts to look far more appealing.

Answer 7

To me it boils down to understanding that you're only as strong as your weakest link. If the "weak link" is essentially prey, eventually an economy will collapse.

I'm 41 years old and due to a divorce I'm back in the work force after being a housewife for 10 years. The job I have doesn't pay enough for me to live on my own. ( I used to have a living wage professional job before becoming a housewife) I can't afford the basic necessities of life...shelter, food, and clothes. So it's sad to say but I'm living with my parents again. When basic needs cannot be met by many (if not most) of the jobs in society, then the majority of society cannot build equity or enough wealth over their lifetime to contribute to the economic engine driving the country.

Big business is now turning to outsourcing and hoping that markets overseas will be strong enough to purchase the goods they produce. Increasingly the people in the USA won't be able to buy the very products they (used to) make.

IMO, let the market economy run unfettered by protectionism. Pay a living wage and don't hide ugly truths with market manipulation. Solve problems...don't cover them up. The present manipulated market allows wealth creation to occur very quickly for an "elite" few. Ultimately, IMO, to all of our demise. Pay people enough money to live and let them take care of themselves versus handouts and charities.

Answer 8

I think it's bad that there's a gap between the rich and te poor because after all these years no one's figured out how to eqaulize society, and no one's trying, everyone just likes to believe that if you're poor it's your own fault. No one helps, the poor get poorer , the rich get richer, the rich should help the poor, like the mighty and strong should help the weak . You know ....

Answer 9

undesirable wealth distribution impacts all of us. not purely the adverse. the prosperous also struggle through, because they lose markets for inspite of that's that they produce, on account that not adequate people can arise with the money for it. THe capitalist equipment calls for a consistent bypass of money..or maybe as a huge percentage of the inhabitants reaches a useless end, the commercial equipment is composed of a screeching halt.

Answer 10

It's not a bad thing, there has always been a difference in class (financial) for all of history. Human beings need limits and structure. We need it to know our place, to rebel against it, and to have comfort in our own lives. Financial is only one of the many differences amongst us.