Tuesday, March 20, 2012

Economical Inequality can burn the financial system



On a Fifty third story sky scrapper in Manhattan, there is a penthouse that offers beautiful unhindered views of central park, the Hudson River, and the city skyline. Its price is about $ 10 million.
A space agency is offering you to become world’s fortunate few to fly in space just like an astronaut in space mission . . . for just a few million dollars.
Unfortunately you can not view Fort Washington Armory in upper Manhattan from that $10 Million penthouse. It was opened as temporary shelter and it houses about 1000 men who sleep in one big sized room. Despair, fear of Ads and other life threatening diseases seems to be their fate.

Inequality and redistribution of wealth and has remained of main concern for the scientists of Economics for many decades. Economists are taking this issue as a threat to whole economic system if not properly discussed. In depth studies and thorough research is being in this field to analyze it impact on economy to overcome its consequences.

A recent study released by a think tank in United States suggest that the gap between Rich and Poor has been steadily widening in last three decades, as rich are getting more richer and the poor got a lot poorer.
Although this gap has remained in play from very start, however it is painful that in last 7 years balance in distribution of wealth has gone totally in the favor of rich. This gap is particularly bad because it is representing a consistent decline in the income of the poor. Studies reveal another unfortunate fact. That the distribution of poverty by race is very unequal: in United States 12 percent of white families, 31 percent of Hispanic Origin families and 33 percent of black families are below the poverty level. While in world comparison, Western countries which account less than 30 percent of world’s population have 90 percent of world’s wealth in their pockets. This inequality is not only threatening the economic system but also present great risk for peace of the world.  Riots and agitation is expected if current situation prevails.

Although many attempts are being made to repair the damages made by this inequality still a lot of work needs to be done. These attempts are called Income Redistribution Schemes. For example rich countries like United States are investing in social sector reforms and uplifting of deprived parts of poor countries. These countries are not only trying to help governments of such countries to boost country’s economy, but these also invest directly into welfare programs and charity services. However despite all these investments and efforts, the gap between rich and poor is consistently widening. Developed countries like United States, United Kingdom, Germany, China and France (G8) needs to rethink where is the problem and put efforts in right direction. Otherwise outrage would burn all things in world. Arab spring, Capture the Wall Street and other movements are just indication of turmoil under the surface. Anger can burn all theories.