Chapter 20 Reflection

Chapter twenty: Income Equality and Poverty

Chapter 20 Summary 

 

           This chapter centers on equality, in particularly the redistribution of income.  The chapter discusses the numbers and data associated with the problem, various political views and philosophies, and potential solutions. 

There is great disproportion of income between the “poorest” and “richest” people in the United States, with the top fifth earning over ten times as much as the bottom fifth.  The rate of poverty was presented and statistics showed that female households with no spouse present had the highest rates, followed by Blacks and Hispanics.  However, this data is not always complete because it only takes into account money income.  It doesn’t consider things like in-kind transfers such as food stamps, housing vouchers, and medical services.  The economic life cycle (the regular pattern of income variation over a person’s life), transitory income versus permanent income, and economic mobility (the movement between poverty and wealth) also present difficulties for gauging actual poverty rate.

Numerous solutions to poverty have been presented.  Minimum wage laws have been passed.  Welfare presents various forms of financial assistance.  In-kind transfers (which are mentioned above) are nonmonetary aids.  The negative income tax is a system that collects revenue from high-income households and redistributes to low-income households in the form of subsidies.

There are different political viewpoints when it comes to solutions to poverty, in particular the redistribution of income.  Utilitarians favor the distribution of income and believe that government should enforce policies that maximize total utility of everyone in society.  Liberals believe that government should act as an impartial observer.  Libertarians believe that the government should promote individual rights and are against the redistribution of income.