Schaunaman 1

Elijah Schaunaman
Professor Lohmeyer
Composition ENG 101
24 October 2016
The Downside of Income Inequality
Having the income gap is a good thing! If it gets bigger do not worry because our
economy is better that way. The two authors of "The Upside of Income Inequality," Gary Becker,
and Kevin Murphy have stated what they believe that there are benefits of income inequality.
However, they forgot some of the key points like the debts of college, the Great Recession, the
demographics and the economy compared to foreign countries, and the taxes situation. These are
some of the downsides that our struggles with. Becker and Murphy argue that income inequality
is a good thing, but this document will show the downside of income inequality.
Becker and Murphy have not considered the differences between our economies.
Starting off, Murphy and Becker use China and India as examples that our economy should
follow with the income gaps: In this case of China and India, the rise in inequality came along
with an acceleration of economic growth that raised the standard of living for both rich and havenots. In the United States, the rise in inequality accompanied an increase in payoff to education
and other skills (Becker/Murphy 582). There are a number of problems with the idea that we
should follow the paths of China and India. One, in particular, is the difference between
economies.. China and India have in place a socialist market economy, which is relatively close
to a free enterprise system. A free enterprise system is where a business can operate with little to
no government regulation. However, the U.S has a mixed-market economy, A mixed economic
system is an economic system that features characteristic of both capitalism and socialism

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(Radcliff 1) Businesses have their private properties; however, they have to meet government
standards to operate. There are cons to this, though, like, unequal distribution of wealth, class
struggles, and public welfare. More reasons why our economy should be switched to something
similar to that of Chinas or Indias.
The politics that are in place to these foreign countries play a role as well. Communism
is what China uses as their foundation of government:
The political landscape is also very different in a democracy vs. under communism. In a
democratic society, people are free to create their political parties and contest in elections, which
are free of coercion and fair to all contestants. In a Communist society, however, the government
is controlled by one political party and political dissent is not tolerated. (Communism vs.
Democracy)
The political belief of communism is to get rid of social class and have equality amongst
the classes. There are cons to this idea as well, as the lack of choice. The people live all equal
even though some work harder than others. The U.S has a representative democracy in place.
Instead of being dictated and controlled by a single power our government allows the people to
choose. Our three branches of government have checks and balances, which allows not one
branch to infringe on another's power. It also has the division of authority, allowing for a
compound republic to form. There are levels of government at both the national and state levels.
The people have the choice to vote for those to represent them at each level of government, but it
is regulated. If that isnt enough, our government has different separate political groups in which
are involved with it like, republican, democrat, libertarian, etc. If there was communism in the
democracy that we have, the business owners would be able to control the wages, and how long
someone works for a day. There would be no regulations on the working conditions, because

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believe it or not some people just care for money. This would be a repeat of the Gilded Age, the
1920s to the 30s. In which the working conditions were so horrible but manageable to make a
large profit, no matter the health of the employees. Another reason why the U.S should not flop
to a communist-like economy.
Becker and Murphy do point out that college raises both wages and the attendance rate
at colleges. They support how the inequality provides higher wages which is common sense.
Those with higher degrees do earn more on average based on their title. Those who go into
college who are from a higher class background, they have the financial background to support
them and inherit it. However, those who are born from a lower- to the middle-class family do not
have the same funding going for them. Upon entering college, the students have to pay tuition to
attend those universities, which are not cheap. The student from the well off family won't have to
worry about how much the college cost and could probably write a check out for the college
(Krugman). The student who is from the middle class will most likely have to deal with the debt
through their life trying to pay it off and will be in the middle class. It is not true in all cases.
There are some who achieve the greatest and move on up to the upper level. Having a larger
income gap the possibility of moving to the upper class would be impossible. The government
that is in place now it is already hard to move up in the social class, why make it harder?
According to Becker and Murphy, since Americans know that if you attend college and
succeed you'll get better pay. The middle class and low-income citizens hearing this want to go to
college and follow their American Dream. This sounding great is bad; it creates a bigger debt for
the U.S causing the economy causing problems for the economy.
Andy Reynolds wrote an article called, Can the Middle-Class Be Saved? and discusses
the topic between the high- and low-class households. He points out that the American economy

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has gone through a recession, this is when there is a noticeable decrease in the economy, which
last for more than a couple of months. The recession, however, was named the Great Recession.
There more than a noticeable decline in the economy, it was drastic. It affected the GDP and the
income of families. Since the Great Recession ended in 2008, the rich and well educated are
putting the recession behind them. The rest of America is stuck in neutral or reverse (Reynolds
4). The Great Recessio is another topic that Murphy and Becker fail to mention. Since the flatline
in the economy, the national unemployment rate was 12 percent for people with only a highschool diploma, 4.5 percent for college grads, and 2 percent for those with a professional degree
(Reynolds 6).
To counter the U.S from reaching debt or potential harming debts. The government put
in place the Federal Reserve System. This system regulates the economy, by issuing money
through the twelve financial districts that make up the country. If they have to print more money,
to reimburse a district, the purchasing power of the money decreases. Purchase power is the
money' worth. The ten dollar bill would still have the same face value. However, the purchasing
power that the currency holds will decrease, because of That is why some countries currencies
are better than others. An example of this is the Euro compared to the U.S dollar. One Euro is
equal to 1.09 U.S dollars.
Taxes is barely mentioned in the section of the article, "The Upside of Income
Inequality." This idea is controversial, whether or not the government should raise taxes on the
wealthy, and lessen the taxes imposed on the middle class, which is a rather liberal point of view.
On the opposing side, conservative, it is believed that the government should lessen the taxes
overall so that big company and the wealthy can redistribute the currency back into the economy.

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Becker and Murphy both think that "raise taxes on high-income households and reduce taxes on
low-income families. While this may sound sensible, it is not" (Becker/Murphy 588).
My viewpoint on this topic is that there should be a medium between these two sides
creating a balance. After all, our country was founded on a "bundle of compromises" (the
Constitution). By establishing an agreement between the two sides, the taxes will be equal in a
sense. If taxes were higher on the wealthy, it would make sense because they can afford it. If they
wanted it back, they can file a tax return and get the money back, but some neglect the power to
do so on both sides.
Covering some of the topics of the income inequality, that Becker and Murphy left out in
their essay "The Upside of Inequality" were stated. They forgot some of the key points like the
debts of college, the Great Recession, the demographics and economics compared to foreign
countries, and the taxes situation. Those are some of the downsides of income inequality. Why
fix something that not broke, and put it into an even worse shape?

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Works Cited
Becker, Gary and Murphy, Kevin, The Upside of Inequality They Say I Say: with Readings.
Eds Gerald Graff, Cathy Birkenstein, Russel Durst, 3rd ed., W.W . Norton & Company,
Inc, 2015, pp 581-588.
Radcliffe, Brent. "Mixed Economic System." Investopedia. Investopedia, 2016. Web. 30 Oct.
2016. http://www.investopedia.com/terms/m/mixed-economic-system.asp
"Communism vs Democracy." - Difference and Comparison. N.p., n.d. Web. 30 Oct. 2016.
http://www.diffen.com/difference/Communism_vs_Democracy
Reynolds, Andy. "Can the Middle Class Be Saved?" The Atlantic. Atlantic Media Company, n.d.
Web. 31 Oct. 2016. http://www.theatlantic.com/magazine/archive/2011/09/can-themiddle-class-be-saved/308600/