The United States of America, a phrase that has historically been represented as a symbol of hope, freedom, and individuality. To be an American is to believe in diversity, individuality and the freedom to pursue a career in life centered upon your interests. For centuries since the founding of the United States, thousands have come to America seeking a new life, a place where parents could reassure and encourage their children in pursuing their passions. In fact, the belief that we can grow up to be whatever we want as long as we work hard has become a central theme in American culture. Such beliefs of freedom and opportunities can even be seen in politics, with Thomas Declaration of Independence starting off with the ever-famous phrase: “We hold these to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” Interestingly, even the term America, as coined by Amerigo Vespucci, had its original meaning derived from the concept of “A New World”. The connotation and history of America are immense, and as with all Americans, we embody and adore the idea of equality, that given an equal playing field, hard work triumphs all our in typical rags to riches story. This in itself is embodied by capitalism; an economic system where private ownership and competition ensures constant evolution and successful innovation. As amazing as capitalism is portrayed, however, there are often downsides associated with this system that gets often overlooked.
Ironically, perhaps one of the biggest controversies of capitalism is the inequality inherent to the system. By definition, capitalism is acknowledged by Merriam Webster as “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.” As such, it is not surprising that a crucial part of inequality in capitalism lay in the individual differences among companies and industries. According to journal articles from Evonomics: The Evolution of Economics, however, the concept of individual differences while small can provide a multiplicative effect on society, accumulating and exaggerating even the most minute of differences. One considerable difference among individuals is the social class one is innately born into. Logically, those born into wealth and money will have more opportunities, connections and heightened ability to succeed. This disconnect in equality of wealth can be seen most prominently in the form of college education. Historically, the ability to go to college has had a tremendous impact on future success. In fact, a New York Times article journalist Eduardo Porter succinctly summed up that “This pattern of stagnant mobility and rising inequality of education adds up to a dumbfounding paradox. American workers with a college degree are paid 74 percent more than those with only a high school degree, on average, nearly the biggest premium in the O.E.C.D”. In a modern society where more and more higher-end jobs require higher skill caps, the notion of education has become increasingly vital as most if not all professional careers have some sort of requirement for knowledge-intensive training. At the same time, higher emphasis on education has drastically increased college competitivity around the world. This competitivity has gone to a point where specialized organizations such as Y2 academy and C2 education dedicate their goal solely on improving student standardized test scores and personalized essays as a way to optimize the college admission process. Unsurprisingly, all of these organizations, while helpful, require a hefty sum ranging several thousands of dollars further separating those of low income with high income. This in itself isn’t even accounting for the inflation of college tuition that many are forced to pay semester by semester. The high monetary cost before, during and even after college has essentially ensured those with low income to stay in low income due to their lack of opportunities in pursuing higher end education, which in turn reduce their ability to get a high paying job. Fascinatingly, this disconnect in wealth and the positive feedback loop was illustrated blatantly through Washington post as they reportedly claimed that the richest 1 percent of the American population currently own approximately 90 percent of America’s total material wealth.
Despite such problems, however, Capitalism is arguably not without its merits. The natural competition of companies and businesses foster tremendous incentives for individuals to work harder, innovate and improve as to outcompete their rivals. Likewise, consumers are able to choose from a variety of products, thus playing a pivotal role in determining the price a good is likely to be set at. The result of these consumer-producer relationships inevitably serves to promote economic growth and efficiency. In the end, the debate of whether or not capitalism is an adequate system lay in what we as a population value. Are the technological advancements we get from capitalism worth the inherent inequality that comes from our differences? If we decide that Capitalism is not a good system, then what alternative solutions are there?
Sources:
https://www.economicshelp.org/blog/5002/economics/pros-and-cons-of-capitalism/
https://www.washingtonpost.com/news/wonk/wp/2017/12/06/the-richest-1-percent-now-owns-more-of-the-countrys-wealth-than-at-any-time-in-the-past-50-years/?utm_term=.dd3d152ee6e8
https://www.theatlantic.com/education/archive/2014/04/is-college-really-harder-to-get-into-than-it-used-to-be/360114/
https://www.thebalance.com/capitalism-characteristics-examples-pros-cons-3305588
https://www.loc.gov/wiseguide/aug03/america.html
American Capitalism Means Individualism and Freedom, Not Government Paternalism
https://www.merriam-webster.com/dictionary/capitalism
Hi Kebo,
I think you raise valid points in highlighting the role capitalism plays in the issue of inequality in America, however, I would argue that cultural and social factors have a greater influence on the differences in income than capitalism itself. That being said, capitalism has served as an effective economic system in the United States for many years. It is certainly not without problems, but rather than looking to reform something that has historically served as a tenet in American society, it may be worth considering other factors that influence the educational, and in turn, economic gap.
As discussed by David Brooks of ‘The New York Times,’ capitalism has been proved effective as recently as during the past three years. In 2015, median household incomes rose, as well as those of single women, Hispanics, and immigrants. According to the United States Census Bureau, in 2016, the “[m]edian household income rose another 3.2 percent, after inflation, to its highest level ever. The poverty rate [decreased],” and “[t]he share of national income going to labor [was] rising, while the share going to capital [was] falling.”
In an opinion piece by Steven Thrasher of ‘The Guardian,’ he argues that income inequality can be attributed to structural racism, sexism, child abuse, and other social and cultural issues. While it is true that those born into wealthier families tend to have more opportunities and access to resources that contribute to an increased likelihood of earing a college diploma, it is also true that wealthier families tend to be white and reside in middle or upper-class, predominantly white communities. Because demographics in communities tend to reflect commonalities in race and socioeconomic status, poorer communities that historically have been home to black or Latino families are more likely to attract individuals with similar circumstances. These communities, which often have weaker school systems, have less educational opportunities, thus fostering a culture where attending college is uncommon and therefore, maintaining the income gap.
Income inequality can also be attributed to sexism. According to ‘The Guardian,’ “women earn 78 cents on the dollar overall compared to white men.” This inevitably contributes to inequity, especially in the case of single mothers who, in addition to making less than men, “are also routinely discriminated against economically for being children” (Thrasher).
While a myriad of factors contribute to the income gap in the United States, considering the role of cultural and social issues in America’s issues with inequality before looking to capitalism may allow for more focused changes and quicker improvements.
Sources:
https://www.nytimes.com/2017/09/15/opinion/the-economy-isnt-broken.html
https://www.theguardian.com/commentisfree/2015/dec/05/income-inequality-policy-capitalism
Hi Kebo,
I enjoyed reading your article and what resonated with me was your remarks on the “American Dream”. I thought about my own mother, immigrating to the U.S. to go to college. She spent her days studying and holding a job to pay for her tuition. She was truly able to achieve the American Dream- working hard and eventually achieving success. Nowadays, I think it has become astronomically harder to achieve these goals.
I agree with you on the fact that income inequality is becoming more and more drastic. For the wealthiest in the U.S., opportunities are a dime a dozen and the middle and lower classes have to do twice as much to even remain at the same spot on the socioeconomic ladder. In one article I read, for low-income college students, graduation rates are much lower than the national average. In one study, top students from low income families are just as likely to graduate from college as an average rich student (41% as of 2015). Students facing economic distress at home have more on their plate than the average college student. These are the students working long shifts at work to pay for their tuition, commuting to school in the early hours of the morning, and often, taking care of their family and their bills at home. College classes are difficult to manage on their own without these added stressors.
To me, the worst part is the unfulfilled potential of these students. In the same article, I read about high school counselors failing to encourage these high-achieving students to apply to selective schools (that are more likely to offer financial aid). These are also schools where resources are scarce and few students are being encouraged to aim for success. However, in wealthy schools, opportunities come far and wide for students who often don’t have an appreciation for the valuable education they are receiving. Sure, as Thomas Jefferson mentioned, “all men are created equal” and in theory, we should all have the same rights. In theory, we all have the right to receive a college education, but where do we see equity in the opportunity to receive education? We have to start revamping our education system, strengthening lower income schools and offering more financial aid to students so that they can actually have the opportunity to receive a college education.
http://www.slate.com/blogs/moneybox/2015/06/02/college_graduation_rates_for_low_income_students_why_poor_kids_drop_out.html
https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/
I think you brought up some interesting points and we definitely share some of the same views regarding the division in level of education, leading to greater income inequality. One thing I would like to point out was when you said that there are more and more higher end jobs that require higher skill caps. I believe that part of the division in job prospects for people with college degrees versus people without college degrees employers using college degrees, as an easy way to sift candidates. This means they may not even need any college related skills to fulfill the job. I don’t believe this problem can be solved by simply sending more people to college and behaviour needs to be changed at a corporate level. Further, a Harvard study done in 2011 argued that promoting “college for all” may harm many students, best suited for different career paths. The report argued that the U.S. has the least developed alternatives to college out of industrialized nations. It suggested that the U.S. follow precedents set by Northern European countries that have a much greater focus on a combination of schooling, workplace learning and apprenticeships. Further, between 40 and 70 percent of high schoolers in these countries opt for that type of joint learning.
Regarding the points you make about Capitalism, I think you may be interested in the book aptly named Capital in the Twenty-First Century by Thomas Piketty. This book closely examines the changes of wealth in Europe and the U.S., since the 18th century and the economic system that had propagated them. Essentially Piketty argues that the rate of return on capital is higher than the rate of economic growth, which will always lead to greater income inequality over the long term. He argues that capitalism has allowed for large economic growth, but the benefits are highly concentrated to a small group. I am reading it right now and it’s really fascinating, I would definitely recommend checking it out.
https://www.csmonitor.com/USA/Education/2011/0202/Does-everyone-need-a-college-degree-Maybe-not-says-Harvard-study
https://www.goodreads.com/book/show/18736925-capital-in-the-twenty-first-century