How to bridge the gap between rich and poor
There is no denying that the gap between the rich and the poor keeps getting wider. It seems like ‘hardwork’ is no longer the path to wealth. Because let’s be honest, no one works harder than the poor. So is working ‘smart’ the remedy to this inequality? Or is there more to this gap than conventional layman knowledge? Let’s explore.
How did this gap happen
Ever since the 1990s, inequality has been on the rise in both developed and developing countries. As of 2020, about 71 percent of the world’s population were living in countries with increased inequality. While it is important to note that inequality between countries has reduced, inequality within countries has kept increasing.
It is also important to state that inequality is way more than income and purchasing power. Inequality exists in various forms like access to services like education, sanitation, healthcare and water.
What then has been the major cause of this gap in wealth between the rich and the poor?
The variation of individual access to education has declined in recent years.
Those who received less access to high-quality education are the ones working with lower wages. There are a number of reasons why there has been inequality in educational institutions. A few reasons are accommodation fees, transport fees, tuition fees, lack of bursary, and diversity problem.
There can be no denying that a good educational background puts you in better stead to break out of the inequality barrier.
I am living proof of the advantages of getting a quality education. Don’t get me wrong, you can still break the inequality barrier even without having a proper education backing you. After all, this is the information age and there are millions of opportunities out there. But the advantages of proper education goes beyond the things you learn in class.
Gender and Race
Inequality exists everywhere, even in families. Did you know that income inequality within households contributes up to 30 percent of income inequality?
In many institutions, there are still gender inequalities in the workplace. Some data even show that employers refrain from hiring women employees because of maternity leave. I particularly find this unfair because I believe procreating shouldn’t be a crime.
It is however important to state that the gender pay gap has been reducing over the past few decades.
The same can be said about race. Groups considered as minorities like migrants, indigenous folks, refugees and the likes are especially affected.
Some studies also show that certain races get lower wages. It isn’t news that some races consider themselves superior to others. In the households of the supposedly lower race, it is not unusual to see them suffer from financial stability.
These minority groups continue to suffer from discrimination, marginalisation, and inadequate legal rights.
A report carried out by UNDESA observed that even with the progress made from the 1990s to the 2010s, it will still take at least four decades to significantly reduce the gap between ethnic groups.
One factor to note is that income and wealth remain concentrated at the top. According to an Oxford report, the number of billionaires has nearly doubled in the 10 years after the world financial crisis. As of 2018, the 26 richest people in the world were richer than half of the global population. To put that in context, they held as much wealth as 3.8 billion poorest people. The number was down from 43 in 2017.
Below are few other factors contributing to inequality;
- Wealth concentration
- Growth of technology
- Taxes and labour market
Some economists have suggested that this widening gap is inevitable because of the free capitalism market. Free capitalism market is where the return of capital is greater than the rate of growth of the economy.
Possible Solutions To Bridge The Gap Between The Poor and Rich
Break down the social barriers
One of the reasons the gap has been increasingly widened is because people don’t realize the gap. As humans, we tend to only see the effects of certain factors after they happen. The same can be said with this gap. Even after noticing the gaps we only tend to see and be with people who are economically like us.
It is not uncommon that the rich only live in neighbourhoods with fellow wealthy folks. Their children go to the best schools money can afford. The rich usually live separately from the poor.
So what is the solution? Breaking and getting away from the comfort zone we have created and addressing this by creating conversations that will end up supporting each other.
Improving the Education system
What better platform is there as a ticket out of poverty than education? Lately, high-quality schools are characterized as being expensive and are not equally distributed. This gap separates the rich kids from the poor. Some research shows that the poorer students are a step behind the rich kids.
A reason for the education system disparity is because most schools are supported by property taxes. This means those who pay more get into better facilities.
Public schools are mostly filled with those from a low economic background while the opposite is for private schools. This is where the government and community should invest; public schools.
If public schools can measure up to private schools then that will be a plus for folks from low-income backgrounds.
Progressive taxation means that higher-income individuals will pay more compared to lower-income individuals. This is different from the regressive tax system, which is a system where high-income individuals pay the same or less to lower-income individuals. So can you guess which taxation system is most common? Yes, regressive taxation.
This system should be converted to progressive taxation as it addresses each individual with regards to their economic status. Warren Buffett, the business tycoon and CEO of Berkshire Hathaway said in an interview that he pays less tax than his secretary. Remember his net worth is $103 billion as of 2020!
As mentioned above many school facilities are funded from property tax. If it isn’t for the tax system we have now, schools and colleges would be well funded. And we wouldn’t be discussing the economic gap and difference in income level in that regard.
Special funding programs
This should be exercised mostly by the wealthy because of the growing number of billionaires added every year to Forbes list. When Forbes released its annual billionaire list, there were 2755 individuals with a total net worth of $13.1 trillion. These wealthy figures have access to have or buy any assets. So, why aren’t they trying to help bridge this gap?
It is important to note that rich folks like ‘The Gates’ carry out a lot of charity and philanthropical projects.
Raise minimum wage
This isn’t limited only to developing countries. Its effects are also seen in developed countries. For instance, US citizens have complained that the current minimum wage is lower than what it was in the 60s. 60 years in the future and the past beat the present. I don’t know about you but this is the first for me.
The minimum wage they receive doesn’t even go with the working hours they have. For example, in the USA minimum wage is $7.25 per hour, in China ¥25 per hour or €8.36 per hour, in the UK £8.21 per hour.
In some countries, mostly Europe, minimum age differs with age.
When this rate is compared with the employee’s economic status, it’s little wonder they are always complaining. The government in each country should implement a better and improved wage system for its citizens.
Important points to remember
- In the last three decades, the income inequality between countries has improved. This isn’t globally though. When comparing the average income of people living in North America and Sub-Saharan Africa, North America is found to be 16 times higher.
- Even though the income inequality between countries has improved, the same can’t be said about income inequality within countries. In some countries like China and India, it has increased. In Latin America, there has been a considerable decline in income inequality.
In summary, success should not be a one-man journey, it should be inclusive; which is the opposite of what it is now. Inequality between the rich and the poor is not a conversation that we have often. We must have conversations like this for something to be done about it.
The opinions listed above are some of the ways I believe we can achieve that. There is a particular phrase I love; “Inequality is not inevitable, but a political choice.”
Every country and its government should adopt better systems that cater equally to the haves and have nots.