Gap between the Rich and the Poor

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Gap between the Rich and the Poor
Introduction
What does it mean to be rich or poor? In what ways is poverty or richness measured? The subject of poverty or richness can either be interpreted individually to indicate a deficit or certain lacking in material of a particular individual or otherwise (Shah, 2011). It may also be interpreted to mean a nation’s development status (Nations that are developing seem to be poor compared to the industrialized ones that economies speak volumes in terms of opportunities). However, Paul Bentley mentions that in a strange way, inequality in developed nations is much higher that in developing nations (Bentley, 2011). Global poverty is in every way, an occurrence as a result of poor or inconsistent human development (Shah, 2011). Shah explains that Human development as a key factor in the fight against economic inequality surpasses the rise and fall of incomes nationally. According to him, it is the creation of favorable environments for the explorations of each and everyone’s potential that leads to creative and productive lives. Many researchers and socio-political analysts have staked their claim on the fact that the gap between the rich and the poor is as a result of social and political factors. In this particular paper, the causes and effects of economic inequality and its influence on the global economy will be critically analyzed.
Evidence of Economic Inequality in the World
As stated before, many studies have pointed out social and political instability as the chief reasons why the gap between the rich and the poor keeps on widening. However, other factors such as globalization are also key players in the facilitation of the above. Apparently, income inequality seems to be on the rise in many industrialized nations due to technological advances coupled with globalization, which has seen increased demands for skilled workers, most of whom are already above average earners (Moffett, 2011). Previously, the World Bank had indicated $1 as the standard international poverty line. But as of 2005, due to inflation, this was revised and the current international standard poverty line stands at $1.25 per person (Shah, 2011).
Studies conducted with the revised international poverty line indicate that the number of people living below $1.25 a day have since increased from 984 million in 2004, to 1.4 billion as of 2005. Similarly, the level of income in the United States increased steadily in 2005, with the top 1 percent of Americans, earning their biggest share of national income since the great depression. Incomes of top earners in America raised to about an average of $1.1 million each, an increase of roughly about 14 percent. These gains were not replicated on the bottom American earners. New data indicates that each person in America with an yearly income of $348, 000, earned 440 times more that the bottom 150 million Americans, which if translated with data from the 1980s, would indicate a double increase in income for the top 1 percent of Americas top earners (Johnston, 2007). Most of these figures showing income inequality have been blamed on the refusal by many governments to effectively address the issue of household incomes taxes and benefits as opposed to emphasizing on wealth redistribution (Moffett, 2011).
Causes of Economic Inequality
It is a fact, that many third world or developing nations are more often that not, associated with poverty and inequality, both socially and economically. This assumption seems more often than not, to disassociate developed nations from the issue of poverty and inequality. However, rich nations have been found to suffer from levels of inequality relatively similar to those of developing nations (Shah, 2011). Causes of the gap between the rich and the poor have been blamed on income inequality, ...