Effectiveness of the Methods used by the government to make the Distribution of Income Equal
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Effectiveness of the Methods used by the government to make the Distribution of income Equal
Introduction
Effectiveness is the degree to which something produces the desired success. Distribution of income, on the other hand, is the way a nation averages the amount each citizen makes. The government is the major player in ensuring that there is an equal distribution of income in the country. This happens the methods employed by the government to ensure equal distribution of income are effective. Most of these methods are the economic policies that the government makes through the help of economists in the country. Equal distribution of income is a complex concept which needs a considerable investment of money and expertise, but it is worth it as it eliminates disparities in a nation.
Inequality in the distribution of income
Distribution of income is measured by taking the country’s Gross Domestic Product and dividing it by the total number of the people leaving therein. Income inequality is caused by several factors which include the economic policies of a country, level of development, and economic markets (Lynch & Kaplan, 2017). It is crucial to compare the income of individuals in a country to understand the effectiveness of the methods the government has adopted to ensure equal distribution of income. However, this might not be an accurate measure as it reflects the assets owned by individuals. It is worth noting that the cause’s wealth inequality is equivalent to the causes of income inequality. In a country where there is inequality in income, people do not have equal access to goods and services; thus, others will be poor, whereas others will be rich.
Inequality in income can happen in any society or a government. One of the major reasons for this is the policies that the government employs to create equality in society. In most cases, the government set forth policies to eliminate poverty, but fail to pay attention to inequality. Additionally, the development of the nation reveals inequality therein. For, instance if a country has little industrialization, inequality is likely high and only the wealthy have the purchasing power. Most nations that have a high level of income inequality are in Africa, where the majority of people earn less than $5 a day (Chotikapanich, Valenzuela & Rao, 2017). Such nations have this problem because less infrastructural development and export of primary products and import finished goods.
Role of Government in Influencing the distribution of income.
The government achieves its role in distributing income through redistribution. This essentially means that it takes income from some citizens and transfer to other citizens whose income is low. This is majorly done through taxation and monetary policies. The government establishes such policies in an attempt to provide for all the members of society. Taxation is a primary method used by the government to redistribute income (Paukert, 2013). Citizens who earn more salaries are taxed and distributed to those in need through welfare programs established in the country. Texas is not only levied on income but also goods and services or the properties owned by individuals in the country. Organizations also pay taxes through employees’ payroll their sales.
In the taxation system, those who earn less pay fewer taxes, but enjoy several benefits from the government. The wealthiest, on the other hand, pay more taxes and receives fewer benefits from the government. Also, those who own homes and use energy-efficient appliances pay special taxes to the government. Where redistribution is is a method of the income distribution, to some extent, it does not always work in society (Edgren, Faxen & Odhner, 2019). Many people are not helped through this program, especially those who do not have taxable income. Lack of access to capital within the country is one of the reasons that cause the method to be ineffective. In some countries, demand is higher than the supply; hence many people will not be assisted.
Education is another tool that the government uses to enhance the equal distribution of income in the country. However, this method is beneficial in the long run and is focus on the social background, which affects student’s performances. Some countries have established policies that help reduce the impact of social background on students. In most cases, children from rich backgrounds perform as compared to those from a poor background. This reveals that if education policies that reduce these disparities are not put in place, the gap between the rich and the poor will continue widening (Keller, 2010). Education policies focused on ensuring equity in schools include fairness where a student’s background such as gender, ethnicity, and the family situation does not affects hi/her success.
Recently, there has been recognition of the significant contribution of the child’s earliest years at schools in his/her lifelong development. At this age, the children from well-off families enjoy substantial benefits that start them well on schooling that the children from less-advantaged families. Children from rich families receive high-quality daycare and preschool. This establishes a good foundation for them to adapt to the school environment and the learning process. On the other hand, children from poor backgrounds do not receive such benefits; thus, their education foundation is not well-laid, which will be reflected in poor performance (Coady & Dizioli, 2018). The government has paid particular attention to providing high-quality daycare and preschool to children from a poor background as its efforts to reduce inequality.
For many years, tertiary institutions have been receiving a small number of young people from poor backgrounds. This means that majority of the students in such institutions are from a wealthy background. It is worth noting that the graduates from these institutions enter into the labour force of the country. This trend will perpetuate inequality in the nation because all opportunities go to the wealthy in society. thus increasing the gap between the poor and the rich. More recently, governments have tried to reverse such trends by allocating funds that help the students from poor backgrounds access education in tertiary education (Yang, Huang & Liu, 2014). Educating children from a poor background is a major step forward in the government’s initiative to reduce income inequality. This makes low-income families have a share of income and hence raising their standards of living.
Health is one of the important factors considered in budgetary allocations in a country. A nation where the health system is strong and effective is likely to achieve its economic growth and development objectives. Sick individuals are not productive in any way. Instead, they are dependent on the individuals who are in employment (Shi et al., 2019). There the individuals who are dependent upon have little to save and invest. This a serious threat to the country’s economy and its one of the characteristics of the undeveloped nation. If individuals are healthy, they can engage in income-generating projects through which they can receive benefits from the government. The government can distribute the benefits to individuals in the employment opportunities that they directly control.
Economic growth is one of the measures used to determine the effectiveness of the methods of income distribution. Looking at the health perspective, healthy individuals contribute significantly to the growth of the economy. It is through there participation in the nation-building process that the government can strike a balance in the income of the citizens (Pickett & Wilkinson, 2015). Among these individuals, some earn higher than others, perhaps through the level of education, expertise, and position they hold in employment. The government uses this opportunity to take some deduct part of the salaries of such individuals. it then adds to the salaries of those who earn less in the same employment or another one. Therefore, health is one of the most effective methods that a government can ensure an equal distribution of income in the country.
Equipping Workers
The pay gap between the high-skilled and low-skilled employees is one of the major drivers of income inequality. According to economists, low-skilled employees will continue to face many challenges in the modern economy. As computerization takes its shape in the world, several jobs are under threat. Many of these will be jobs like office tasks. However, as artificial intelligence tasks shape, many highly-skilled workforces will be replaced by computers. This means that the government should revisit its policies and polish them because ahead lies a danger of extreme inequality as some skills become outdated. For low-skilled workers that are the group that has little or no computer skills, the future holds higher rates of unemployment for them (Mortensen & Pissarides, 2011). Furthermore, there is a likelihood of lower incomes for them, thus widening the gap between rich and poor.
Equipping people to thrive in the future economies and societies should start in their early lives proceeding through their education even up to the time they have completed education. The government needs to invest heavily in training individuals throughout their lives by putting forth policies that ensure the realization of these initiatives (Martin, 2013). In this way, people who want to work can be able to secure employment and one that matches their skill sets. Particular attention should be paid on times of recession where many employers are not willing to offer employment opportunities to those in need of them. Unemployment rates are higher during these periods, and therefore income inequality is higher. Therefore the government has a great role to play that helps stabilize the economy and therefore ensure equity in income distribution.
Getting more people to work
Jobs opportunities are by no means the answer to poverty and inequality. Work helps people to secure economic fortunes and putting them in a firm position in the country’s economy. The government provides both the salary and employment opportunities to its citizens. It also provides opportunities for people to develop new skills and passions and helps them to feel that they are useful members of society (Arestis, 2012). In the real sense, the rich always feel that they are the better members of the society as compared to the poor. This is brought by the financial power they own. They acquire whatever they require and even accumulate more wealth using their income. The poor, on the other hand, are left struggle to acquire a need that helps them survive, but their going is difficult. Therefore creating jobs for many people in society will help reduce inequality among citizens.
While work is an effective method of solving inequality in the country, there are many concerns about its potential to bring equality in society. This is due to the existence of “in-work poverty” where individuals work still leave below the poverty level. What is the cause of in-work poverty? The obvious factors are insufficient working hours and low wages which are not enough for workers to cater to all their needs. Job instability is another factor linked to in-work poverty. This is where people move from low-paid jobs to unemployment, thus making there earning irregular, and such people cannot save and invest the money they make. In recent years there has been a growing conflict between people with stable contracts and those with temporary contracts. The latter do not have job security and are faced with repeated bouts of unemployment.
Policies for better jobs
What are the policies that the government established to get more people into the labour force? It is essential to create economic conditions that can stimulate a strong need for workers. Moreover, the policies should ensure that people have incentives to search for employment opportunities. All people cannot secure employment at once. the government should also focus on those who are in the process of searching for employment (Papadimitriou, 2016). Some government has excellent programs that cater to such people. In such programs, for example, the government provides job-search support and training benefits to people demonstrating a commitment to finding employment. While these programs help those in the process of searching for a job opportunity, they encourage those who had not thought about looking for one; thus, such programs stimulate the countrywide need for employment.
Keynes opinion on income equality
Keynes, the renowned British economist, believed that long-run growth is majorly influenced by capital accumulation (Arestis, 2012). He observed that since industrialization started, the standards of living of many people have been raised. This because of the government policies that ensured equal distribution of income in the country. With industrialization, job opportunities are created those who work earn a salary which the government imposes taxes. The money collected from taxes is used by the government to create more job opportunities for people to get employed. Furthermore, the government roles out programs to assist those who are not in employment to acquire basic needs and the daily services required. All this helps reduce inequality in a nation.
Case Study
China’s Impressive Progress in Reducing Poverty
The widening inequality was not considered in a major challenge in China until recently when the government started laying down strategies focused on the creation of employment opportunities. A significant amount of money was allocated in poverty alleviation programs which include work relief. A particular interest in such programs is to develop the human capital of the poor population and promote infrastructural development. People were encouraged to seek labour by lifting restrictions on labour mobility, thus allowing the people living in rural areas to seek employment in urban areas. More recently, the government has rolled out policies focused on helping individuals, particularly those who earn low incomes (Knight, 2013). These programs include social benefit programs which aim at ensuring that the poor people are catered for in the country.
The government of China re-introduced the healthcare system, which had previously collapsed. This is one of the efforts the government is putting to eradicate income inequality among the citizens. The initiative was termed the New Rural Cooperative Medical Care System. It is worth noting that, it is an initiative that the government is rolling in rural areas where many people do not have employment and cannot afford to take themselves to hospitals where they can get high-quality care. The goal of the government is to ensure that such people receive high-quality medical care in their areas. Their good health will give them the strength to work and earn income. This initiative is an excellent way the government will ensure equality in the country as the rural people will be included in the payroll through the efforts they are putting into the economy.
China has witnessed a significant narrowing of the gap between the rich and the poor. This is due to the poverty reduction projects that are in force currently. Previously, the income gap between households in the country was widening. However, due to the government programs focused on poor counties, the average household income has significantly risen in these areas. It is estimated that the ratio between the top and bottom quintiles increased by 1.2 from 2002 to 2009 which indicates that the government’s initiatives in china to reduce income inequality are effective (Rosen, 2014). China has introduced changes in the way labour mobility is monitored. These changes have given confidence to people from rural areas to work in cities irrespective of their migrant status.
Policies for Addressing Inequalities in Developing Countries
At the outset of this case study, it was noted that the inequality income originates from the inequality in opportunities. The persistence of inequalities across the generations is responsible for widespread poverty, especially in developing countries (Volmink & Dare, 2015). There have been significant efforts for the governments of such countries to reverse the trend. Some of the policies they set forth to achieve their objectives include moderating income inequality; closing gaps in health, nutrition, and education; addressing social exclusion by combating discrimination and transforming inequality.
Moderating Income Inequalities
Income disparities inhibit individuals and households from getting ahead in life. Therefore the governments must moderate-income inequality so that citizens can access opportunities that promote their well-being. Moderating income inequality is essential in addressing issues such as gender inequality and other forms of inequalities (Thurow, 2010). The major factor revolving around gender inequality is the unequal bargaining power of women in society. There is a high correlation between income inequality and other non-income factors. So, moderating income inequality is crucial in closing gaps in health, nutrition, and education. The variation in the ration of child mortality rate witnessed in developing countries is attributed to income inequality.
Reducing gaps in education, health, and nutrition
The good life is constituted in the capacity to be well-nourished. Persistent and extreme deprivation of some human aspects responsible for well-being indicates gaps in education, health, and nutrition. Developing countries are putting several efforts to close those gaps. High-quality education, health, and nutrition lead to economic growth as they allow individuals to be increasingly productive (Chopra et al., 2012). The improved economic growth will increase the per capita income of the citizens of these countries, leading to a reduction in inequalities. Evidence shows that other factors such as service delivery, improved institutional capacity, public expenditure policies, and service modalities can contribute to the closing of gaps in education, health, and nutrition.
Discrimination and social exclusion play a significant role in perpetuating inequalities in society. These factors are embedded in the social, economic, and political process of any country. They prevent individuals from accessing opportunities that would improve their lives. The governments in the developing countries have established anti-discriminatory legislation and universal service provision that can help promote equal opportunities and close inequality gaps (Gilson, L., Russell & Buse, 2013). Policymakers in the developing economies have advised the government that there is an urgency of addressing income inequality and the implementation of the policies requires specific actions that demand the creation of political space for inequality reduction. The policies in force in the developing economies are focused on enhancing the participation of the vulnerable groups in society.
Conclusion
Income inequality is a significant challenge, globally. The governments are implementing several policies to address the issue. It is worth noting that income inequality is responsible for the widespread poverty in the countries of the world. Governments must address the issue with urgency. The methods that the governments have put in addressing the inequality have proved effective. This has been revealed by the increased per capita income of the citizens. Several counties have approached this issue by promoting high-quality education, healthcare, and job opportunity creation. These are factors that enhance the participation of the citizens in economic growth. Taxation is another method that countries are using to distribute income by taxing the high-income earners more and distribute the money earned to low-income earners through various programs. All in all, the method used by the government to ensure equal distribution of income is effective.
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