What is income inequality? (1-2 sentences)
Please provide a summary and analysis of the article (2 paragraphs)
The two major trends that almost all the economies across the globe have experienced since 1980 include the increasing income inequality and rising aggregate private wealth-income ratio. China and Russia are some of the countries that have economies that have been impacted significantly with these two trends since they transitioned to an economic system that is more capitalist than a communist one. In China and Russia, the move to a capitalist economy has assumed various economic and political forms — especially with multiple privatization approaches for public utilities. Such different methods have had a significant effect on inequalities and property control. Novokmet et al. (2018) focus on assessing the recent reports about China and Russia’s public and private wealth creation and accumulation together with the effects of various privatization techniques on income inequality.
- What is income inequality? (1-2 sentences)
Income disparity is an extreme income-level imbalance usually in the hands of a small subset of a society with high wealth accumulation. Where there is economic inequality, there is a significant gap in the wealth of one part of the population as well as another section. Income inequality has been illustrated increasingly by both China and Russia due to their shift to more market-oriented economies.
- In what ways does communism encourage income equality? (1 paragraph)
Communism refers to a political and social movement that is focused on setting a form of community that is grounded on regular ownership of the production means rather than being based on money and social status. Communism plays a significant role in encouraging income equality within society because its primary goal is to develop a community that is classless or stateless. And this can be attained by depriving the ruling class of their power of controlling the means of production (Novokmet et al. 2018). That is seen in Russia, where income inequality has risen in recent years because the top ten percent or the ruling class has increased steadily from 25% in 1990 to 50% currently.
- In your opinion, does capitalism create 1%, where wealth is heavily concentrated in the hands of a small elite upper class? Why or why not? (1-2 paragraphs)
Yes, in a place where there is a high concentration of wealth in the hands of the ruling class, the creation of 1% is highly possible because most of the production means will be in the hands of individuals. For instance, in China, despite the transition of the economic system, most of the elite upper class had less concentration of wealth that resulted in a slow rise in income concentration.
References
Novokmet, F., Piketty, T., Yang, L., & Zucman, G. (2018). From Communism to Capitalism: Private versus Public Property and Inequality in China and Russia†. AEA Papers and Proceedings. Retrieved 17 April 2020, from https://doi.org/10.1257/pandp.20181074.