How shall we battle income inequality? According to Emmanuel Saez, of UC Berkeley, The top .1% took in as much as 188 times as the bottom 99%. This is a ghastly statistic that almost seems unbelievable. A large part of this income disparity has to do with automation. Cheaper labor equals larger profits. So when a corporation can find a way to cut costs they will. Whether that be lowering wages or turning to automation. This greed by corporations hurts workers within the private sector. Having to compete with machines by taking lowered or stifled wages make living comfortably extremely difficult and/or impossible.
According to the EPI (Economic Policy Institute) the incomes of the top .1% has gone up by 157% since 1979 while the bottom 90% has only grown by 22.2%. Which if just looking at the percentage for the bottom 90% looks great, however comparing it to the top .1% you can see just how outrageous it really is. In 1979 the average income for the bottom 90% was $29,608 while the top .1% earned $622,018. In 2017 on average the bottom 90% made $36,182 while the top .1% made $2,756,865. This ridiculous growth within nearly half a century has created more problems for the average U.S citizen.
When corporations find ways to cut costs through stifling wages creates a huge benefit for consumers. Lowered prices on goods and services allow for consumers to have a surplus of income. This is great from the consumer’s point of view, however from the worker’s point of view, the view from beneath the boot starts looking quite bleak. For the worker, stifled wages has made it quite difficult to live a comfortable life like the well off consumer.
Now A UBI (or a Universal Basic Income) would help redistribute the money from the very top to the very bottom. How does a UBI work? How a UBI works is that it gives every citizen within a country a certain amount of money for people under a certain wage line. This (in theory) would help those who are on the bottom survive and thrive in the ever growing economy. This extra income could be used for food, gas, public services, etc. This extra income would help those on the bottom more economically free to invest and better themselves while the job market changes. A UBI could be used to help put one through college or through a trade school. A UBI could be extremely useful for those on the bottom of the income ladder.
There are many ways to battle income inequality. Whether it be through a larger welfare state like the scandinavian countries or a UBI like Finland. Finland at this moment has a study on a UBI using a lottery and randomly selecting individuals to be apart of this trial. This trial has concluded and the results for the first year have been published. These results show that those who received the money have become less stressed, more confident in finding work, and healthier in life according to Finland’s Labour Institute for Economic Research.Now only the first half of the study has been published so nothing can be confirmed. With the second half of the research not being published until 2020 we have to look at what was published and the results aren’t the best results. Though they aren’t the worst results.
These findings show partially what was thought what a UBI would do. It did increase happiness. This could be for a multitude of reasons. It could be because they had a little more financial freedom, as in, they could pay bills they were worrying about, repay debts, eat healthier, etc. This is great in a democratic sense that these people were able to feel less hopeless and hopeful and confident for the future, but in a capitalistic sense it would be seen as a negative as the participants of the study’s job prospects didn’t really improve. According to Finland’s Labour Institute for Economic Research compared to the control group those who did receive money they worked on average .4 days more in 2017 and earned $24 less. This would show that nothing has changed in a capitalistic sense, but we also have to remember that this is just a one year chunk of a two year study. We won’t know until 2020 for the full results.
Now those who align their thinking among the right wing will say that income inequality isn’t necessarily a bad thing. Right wing ideology aligns itself among a hierarchy, while left wing ideology aligns itself among an egalitarian mode of thinking. Right wingers generally believe that billionaires are on top and those who are impoverished are on bottom is the correct way because of how hard those billionaires worked. However, this can easily be dismissed as those who have more money have a much easier time making money than those who have less. Fixing income inequality is scary for those on the right wing because those on the right wing tend to be richer, older, white men who would be affected by this. A UBI, no matter how scary it may be, does make it easier for those who are more impoverished and allow for more financial freedom to compound wealth. Although an egalitarian mode of thinking may clash with those who align their thinking to that of a capitalist mode of thinking it still is a benefit to fight income inequality because it would be beneficial to the market. From a simple supply and demand thinking we can see that if more people have more money to spend within a country’s market than the richest hoarding wealth then the market would be less active.
Fighting income inequality is a very difficult task within the United States. With many challenges to get past within the United States government we will be able to combat income inequality. A UBI would be the best way to do so as it would level the playing field and create a diverse market of an increased amount of consumers.