The Vicious Circle: Income Inequality's Impact on Society and Economy

This essay examines the pervasive issue of income inequality, exploring its detrimental effects on society and the economy. It highlights the vicious cycle where the rich accumulate wealth while the poor struggle, leading to adverse impacts on employment, GDP growth, and international trade. Th...Read More

The rich getting richer and the poor getting poorer.
Running Head: INCOME INEQUALITY 0

INCOME INEQUALITY 1
The rich getting richer and the poor getting poorer
This cycle is generally known as the vicious circle which refers to system in which there is no
development of the either one and the impact of the same is extreme harmful for the economy
which in future actually destroys the economy because there will be no enhancement of any
group of the society except for the rich. As the middle class will stay at the same stage and
the poor will become poorer because of the inequality in the distribution of the income
among the different groups of the society. It will adversely affect the employment situation of
the country because the poor people would barely get a chance to develop and the economy
won’t be able to focus on the development of the country (Hoynes, H.W. and Patel, A.J.,
2018). The accumulation of the wealth goes in the hands of the rich people which facilitates
the unequal distribution of the wealth across the economy and also the global development of
the country is also at stake because the unequal distribution of wealth as the GDP does not
shows any kind of growth reason and the balance of the payments is affected as the imports
exceed the number of exports and the international trade is affected the employment rate of
the tends to decrease and the people living below the poverty eventually increase(Aghion, P.,
Akcigit, U., and Hémous, D., ETAL, 2018). There are people who don’t have a house to live
and struggle for a single meal everyday due to the unfair and unjustified behaviour towards
the poor section of the society. With equal distribution of income towards the poor section of
the society the overall development of the country is hampered as the productivity decreases
because the major section of the society is unemployed which proves to be drawback for the
economy(Durante, F., Fiske, S.T., and Kervyn, N. ETAL, 2018). The poor section of the
economy is retarded of the benefits that they should be getting the cycle can be stopped but it
needs certain kinds of enhancements which are only possible with the intervention of the
government by making the required changes in the policies of the economy which facilitates

INCOME INEQUALITY 2
the equal distribution of income among the rich and the poor section of the society, so that the
development of the economy to the further level.
The unequal distribution of the income can be expressed in the statistical terms as the data
depicts the real and actual picture of the vast difference among the different communities of
the society (Oishi, S., Kushlev, K. and Schimmack, U., 2018). The rich getting richer and the
poor getting poorer actually depicts the huge difference between the income of the poor and
the rich community of the society, the whole concept points towards the unequal distribution
of the income in the economy, which is like the worst disease for the economy, that actually
can lead to death of the growth of the economy by causing various deep injuries to the health
of the economy of a country.
When looked at the real picture; the rich getting richer is true, but the poor are not getting
poorer. The study conducted by Adam Bandt, states that the poor people these days looks for
full time jobs to meet the household necessities and improve the standard of living (Abc.net,
2019). Even in this case, the inequalities will not be decreased; but the inequalities will be for
good as the poor people are concerned to lead a basic life by working full time. This situation
describes the common good for the whole economy. Therefore, it can be stated that there is
no other benefits associated with the inequalities between the poor and the rich.
Various measures can be taken to avoid the same and get control over it by the modification
in the policies of the economy concerning the distribution of the income in the economy
(Sánchez‐Rodríguez, Á., Willis, G.B. and Rodríguez‐Bailón, R., 2019). Also reforming tax
reforms can assist a lot to end the vicious circle as the rich community will be compelled to
abide the rules and policies for their sustainability in the economy and the poor section
should be exempted from paying tax up to a certain limit so that the balance is maintained in
the economy (Chancel, L., Piketty, T., Saez, E. and Zucman, G.,ETAL, 2018). These are few

INCOME INEQUALITY 3
of the measures that can be used to overcome the situation of the rich getting richer and the
poor getting poorer. It is of immense importance that equality regarding the income should be
present in the economy for the proper growth and development in all aspects in the economy
of any country.

INCOME INEQUALITY 4
References
Abc.net, 2019. Adam Bandt says that one in four people in poverty work full time. Is he
correct?. [Online]
Available at: https://www.abc.net.au/news/2019-05-30/fact-check-poverty-working-poor-
Aghion, P., Akcigit, U., Bergeaud, A., Blundell, R. and Hémous, D., 2018. Innovation and
top income inequality. The Review of Economic Studies, 86(1), pp.1-45.
Alvaredo, F., Chancel, L., Piketty, T., Saez, E. and Zucman, G., 2018, May. The elephant
curve of global inequality and growth. In AEA Papers and Proceedings (Vol. 108, pp. 103-
08).
Durante, F., Fiske, S.T., Kervyn, N., Cuddy, A.J., Akande, A.D., Adetoun, B.E., Adewuyi,
M.F., Tserere, M.M., Al Ramiah, A., Mastor, K.A. and Barlow, F.K., 2018. Nations’ income
inequality predicts ambivalence in stereotype content: How societies mind the gap. In Social
Cognition (pp. 246-268). Routledge.
Hoynes, H.W. and Patel, A.J., 2018. Effective policy for reducing poverty and inequality?
The Earned Income Tax Credit and the distribution of income. Journal of human
Resources, 53(4), pp.859-890.
Oishi, S., Kushlev, K. and Schimmack, U., 2018. Progressive taxation, income inequality,
and happiness. American Psychologist, 73(2), p.157.
Sánchez‐Rodríguez, Á., Willis, G.B. and Rodríguez‐Bailón, R., 2019. Economic and social
distance: Perceived income inequality negatively predicts an interdependent self‐
construal. International Journal of Psychology, 54(1), pp.117-125.

INCOME INEQUALITY 5