**How Should the US Reduce Economic Inequality?**The rich are getting richer. And the super rich are getting super richer. We know some of the names: Warren Buffett, Bill Gates, Mark Zuckerberg, the Walton family (of Wal-Mart). This billionaire club is growing fast. In 2007, there were 946 billionaires in the world. By 2016, that number doubled to 1,810. Of these, 540 were Americans. A 2015 Oxfam report warned that the combined wealth of the world’s richest 1 percent would soon surpass the combined wealth of the other 99 percent of people on the planet.Wealth inequality is an increasingly serious problem in the United States, a nation known as the land of opportunity and the home of a strong middle class. The wealthiest 1 percent in the US owns more than 40 percent of the nation’s wealth. The poorest 40 percent own less than 1 percent of the wealth.Economists agree that free-market economies will always have some degree of economic inequality. This could be income inequality, which relates to differences in annual earnings. Or it could be wealth inequality, which refers to the total worth of individuals (land, businesses, stocks, and bonds), not just what they earn in one year.Many economists feel that inequality is not necessarily a bad thing. It can provide the incentive for people to work hard or to risk starting their own business. This chance for upward mobility spurs innovation and growth. However, when those opportunities are not there, economies can stagnate and people can suffer.Too much economic inequality is a bad thing. But how much is too much? The current levels of economic inequality have not been seen since the late 1920s, when the nation was on the verge of the Great Depression. Most of the widening gap is benefitting the top 1 percent. The top 0.1 percent is doing even better. As just one example, CEOs have seen the real value of their salaries increase more than 1,000 percent since the 1950s. Meanwhile, the average worker has seen the real value of his or her income decrease over the last three decades.The gap between rich and poor is widening, and people are noticing. In 2011, a group of protestors drew extensive media coverage when they set up camp in Zuccotti Park in New York City’s financial district. This initiated the Occupy Wall Street movement, 1. How much of the total US wealth is owned by (a) the richest 1 percent? (b) the poorest 40 percent?2. What is the difference between income inequality and wealth inequality?

Income and wealth inequality refers to the inequality between various individuals. The article…

Answered: 1. How much of the total US wealth is…

1. How much of the total US wealth is owned by (a) the richest 1 percent? (b) the poorest 40 percent? 2. What is the difference between income inequality and wealth inequality?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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