Income Inequality:1. Definition: is the unequal distribution of household or Individual income across the various participants in an economy.
2. Why does Income Inequality exist? - Bank bailouts: if someone manages Its money improperly, she or he will go bust. When someone goes bust, banks get Advantage of it and in this way banks are easily earning money.- Quantitative easing: Central banks Are unelected bodies. Money is printed as a part of a quantitative easing and it’s Created out of nothing. Once money is printed, it goes directly into the Financial sector, making the financial assets more expensive. That is great for Those who own assets or for those who work with them, but it is not helping to Most of the people.
3. Possible solutions to solve Income Inequality: - An exemplary and accessible education: A country with an advanced educational base and program plays with an Advantage. It could be said that education and training is the tool that the Poorest segments of the population should use in order to opt for a better Future and income equality. - Progressive taxes, estate taxes: A fair progressive tax rate – On the one hand where the wealthiest pay the highest rates and on the other Hand where the poorest pay the lowest rates. Closing up the loopholes, taxing Capital gains and dividend income as regular income. This measure is one of the Most powerful tools society can use to fight income inequality.
Wealth concentration: 1. Definition:is the average difference (disparity) Between the remuneration for men and women who are working (in the labour Market).
2. Reasons for Concentration of Wealth: - In the USA as well as in European industrialized countries the middle classes are Shrinking. But taking into account the just mentioned difference of wealth Share of the respective middle classes, can lead one to the presumption that More capitalism leads to a bigger wealth gap.- In capitalism, those who are advantaged by birth are getting more andmore space to use their wealth to create even More wealth, for example by investing inassets Whose prices are increasing disproportionately to the wages. At the same timethose who are disadvantaged by birth are Suffering from that, because their ability tocreate Wealth keeps shrinking as prices of assets are rising due to the additional Moneybrought on the market by, inter Alia, wealthy private citizens and Central banks.
3. Avoidable reasons for wealth concentration: - One example is the Tax Code, which, despite its huge extent, contains loopholes thatcan be used to pay less tax, by those companies And people who have enough resourcesto Find them. The consequence is that the lack of received taxes falls back to Lower income tax payers.- A Central Point critics like Dominic Frisby mention is that the tax on wages is Way toohigh in comparison to a company Tax, the tax on heritage or the tax on the ownership of assets and land. Frisby Argues that those are the tools to keep the riches rich and to prevent less Wealthy people from maximizing their own wealth by investing in assets.
Corruption and Economic Growth: 1. Definition: the abuse of entrusted power for private gain. Another def. Would be where at least two market participants exchange a Property or several goods to earn own welfare profit. Second one obeys the law Or second one accepts.
2. Types of corruption: - Grand corruption:acts committed at high level of Governments that distort policies or functioning of the state, enabling leaders To benefit from the public good.
- Petty Corruption: everyday Abuse of entrusted power by low and mid-level public officials in their Interactions with citizens. - Political Corruption: manipulation of policies, institutions, and rules of procedure In the allocation of resources and financing by political decision-makers, who Abuse of their position of power. 3. Environmental conditions that foster corruption: if the policies and procedures of a Country are unclear, inadequately enforced, or are non-existent.
4. Socio-Psychological conditions that foster Corruption: unfettered desire for Money or power, with no regards to moral boundaries. 5. Downsides of corruption:- Political cost: loss of legitimacy and public trust In politicians(elected representative Uses this power for private purposes)- Economic cost: not available or high priced essential public resources as Water, Electricity, healthcare, security, education, etc.
6. Can corruption be beneficial to The economic performance?Some studies have Suggested that corruption may be beneficial for the economy. Positive Correlation between corruption and economic growth in Asian countries:
- Bureaucrats do not have enough information or are Not competent for taking decisions; corruption can result in a competitive sale. - Innovative And expensive projects have been created through corruption of capital. 7. Possible solutions: - Access to information / right to Information (Transparency) - Cooperation between Governments (common database). – Code of Conduct (education on legal base). - Reveal Information (protected by law and Incentives).