Question

Explain the views and theories of the multiple economists below on income inequality.

1. Krugman

2. Stiglitz

3. Adam Smith?

4. Saiz

5. Picketty

Please answer in a clear and easy to undertand manner.

Answer 1

1) According to Economist Paul Krugman income in equality is a problem without a simple or clear answer. Income inequality is a degree to which total income is distributed unevenly throughout the population. To lower this income inequality krugman advised to follow several steps which are; firstly,government intervention is needed because understanding the market itself will not solve the problem any more. Secondly,Policies like universal health care for poor children and nutrition assistance all over the world will lower the problem of inequality, thirdly, there should be some policies that will prevent the distribution of unequal wages in the job market first hand.

2)According to Economist Joseph Stiglitz income inequality has some impacts on society and this income inequality is the fruit of our choices on political and economic actions. As this problem is based on our own actions we can reverse it by changing our own made rules, according to him we should attempt to rewrite the law of market economy, mainly changes in fundamental ideas. The first targeted market is labour market by increasing training aspects among youth , lowering the gap, changing world education system to produce a market capable of making necessary employment, the main focus should be on reduction of youth unemployment. along with these, social innovations from the very ground level is needed , new public policies to increase the social bond actually we need to reform our society to increase the capacity of the action of the community

3) According to Adam smith, income inequality is a double edged sword. On the one hand , smith believes a high degree of income inequality leads to have a flourishing commercial society and certain amount of income inequality is good for raising productivity and political stability on the other hand , extreme income inequality leads to people to sympathize more fully and readily with the rich than the poor, it undermines both morality and happiness

4) According to Saiz, increasing income inequality is not increasing lower and middle class income but on the other hand housing price is increasing rapidly. Due to income inequality middle class people can not enjoy the proper amount of standard of living they should

5) According to Picketty globalization tends to lead in rising income inequality but at a very different speeds.US data has set a very bad example on income inequality for the world. Now beyond west, income inequality has spread all over the world but depending upon different political actions and ideas outcomes are different.Among developing countries , according to him , India's picture of rising income inequality is very alarming cause India's income share on top 1% is higher than ever .