Schaunaman 1

Elijah Schaunaman
Professor Lohmeyer
Composition ENG 101
24 October 2016
The Downside of Income Inequality
The two authors of "The Upside of Income Inequality," Gary Becker, and Kevin
Murphy have stated what they believe that there are benefits towards 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.
First 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 have-nots. In the United
States, the rise in inequality accompanied an increase in payoff to education and other skills
(Becker/Murphy 582).
The factors that go against how we should follow the paths of China and India deal with the
economic setup. 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 (Radcliff 1) Businesses have their private properties; however, they have to meet

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government standards to operate. There are cons to this, though, like, unequal distribution of
wealth, class struggles, and public welfare.
The politics that are in place to these foreign countries play in effect 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.
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 are 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

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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. 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.
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 to do bad.
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 has
gone through a recession. A recession is where 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 merely drastic. It
affected the GDP and the income of families. Since the Great Recession ended in 2008, Three
years after the crash of 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 high-school diploma, 4.5 percent for
college grads, and 2 percent for those with a professional degree (Reynolds 6).

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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. 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

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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.

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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/