In the recent years, there has been a significant increase in the gap between the rich and the poor. Various theories explain the widening gap, some of which are built on economic precepts while others are built on social concepts. Various propositions can be used to explain this phenomenon. For instance, there is a proposition that the gap between the rich and the poor in the modern day America is a result of laziness. A second proposition suggests that the gap is a result of intentional policies developed to favor the rich at the expense of the poor. Autor on the other hand, explains the concept of this rift from the perspective of increasing skill premiums and a combination of other factors, which all affect the level of wealth of the community in one way or another (843). A review of the two propositions alongside that given by Autor shows greater alignment between the Autor’s proposition and the second proposition on public policies than there is between the first proposition and Autor’s perspective.
Comparison of Propositions
According to Autor, the increase in skill premiums is the most probable cause of the gap between the rich and the poor (843). Increasing skill premiums result in an increase in earnings premium and subsequently an increase in net earning inequality. Autor describes the rising skill premiums as a function of the demand and supply of skills across many disciplines (844). A substantial increase in skill premium over a temporal profile results in the widening gap of inequality. As more people gain access to quality education, the value accorded to the skills possessed also increases. Those who cannot utilize or do not possess any professional skills earn lower premiums compared to those who have the skills. Skill premium is considered as a cause of this inequality since it gives insight into the expansion of inequality within any given market economy. Skill premium describes the value of social inequality relative to the social costs it raises. With technological advancements, the country needs literate, technically efficient, and scientifically trained workforce. This workforce can only be obtained through educational filtering, which somewhat distinguishes the skilled from the unskilled and subsequently widens the inequality gap.
Autor’s argument could be linked to the first proportion through the vicious cycle of poverty (845). In the first proposition, there are infinite opportunities for success in the U.S., and any person who cannot earn a living is lazy. The income distribution, therefore, corresponds to the effort distribution. Since the modern day society is characterized by high dependency levels relative to the past societies, it is inevitable for those who depend on others to remain poor, while those who work hard become increasingly rich. While the linkage between the first proposition and that made by Autor (843) brings up support for the role of poverty in widening the inequality gap, it does not directly attribute poverty to laziness. The vicious cycle of poverty provides a perfect example of how dependency and laziness could result in the rift between the rich and the poor. For instance, a lazy or dependent parent is more likely to be unable to educate his/ her children. Once the children lack education, they are pushed lower in the social cycle while the educated are boosted socially (Autor 846). The uneducated children become dependent on others and fail to educate their own children hence the cycle continues. This kind of progression confirms that both proposition one and Autor’s position could have the same implication.
The second proposition also aligns significantly with the arguments posted by Autor (843). It communicates the role of policy in expanding the gap between the rich and the poor. Policies that favor the rich and disfavor the poor increase this gap inadvertently. Beginning with Ronald Reagan’s financial deregulation policy, the rich have been continuously favored to grow richer while the poor are hampered from increasing their wealth.
In Autor’s argument, public policy has the role of maximizing the inequality benefits and also minimizing the costs associated with social inequality (844). This implies that public policy will only increase the gap in inequality if not formulated to foster mutual growth of both the rich and the poor. For instance, with strategies that foster mutual utilization of skills and national resources, public policy can be a good weapon for narrowing the gap between the rich and the poor. On the other hand, capitalist public policies that ascribe all wealth creation capacity to the rich result in a wider gap between the rich and the poor. As such, Autor (846 – 848) and the second proposition both provide sufficient proof that while public policy may not always result in the widening of the inequality gap, it has the potential to increase that gap.
Each of these propositions has its own pros and cons. Neither of the propositions provides an accurate description of the cause of the rift between the rich and poor although the second proposition offers a more plausible explanation for the rift compared to the first proposition. As such, the gap can be attributed to interplay of several factors, part of which includes the dependency growth and the unfavorable policies
As the level of inequality between the rich and the poor in the society increases over the years, various propositions exist for explaining this gap. Some of the propositions that have been made include the role of laziness in fostering poverty and public policy as a driver of inequality. A comparison between the two propositions with that given by Autor has shown that neither of these propositions is directly and wholly accurate on its own. However, the second proposition on public policy as a cause of the increasing rift between the rich and the poor offers a more acceptable explanation for the increasing gap of inequality.
Autor, David H. “Skills, education and the rise of earnings inequality among the other 99 percent,” Science 344, 6186(2014): 843- 850