Inequality is not liked by anyone and when it comes to economic inequality you will find that people will aggressively oppose it, economic inequality in simple words refers to that situation where the gap between the rich and poor is big which results in accumulation of wealth to small percentage of individuals resulting in large percentage of population of the country living in poverty. Economic inequality is a debatable topic as people who are rich argue that they have reached this position due to their hard work and people who are poor argue that rich people are the reason for their miserable condition before you take any side you should look at the advantages and disadvantages of economic inequality –
Advantages of Economic Inequality
Motivate People to Work Hard
The first and foremost advantage of economic inequality is that it motivates people to work hard because if there is no inequality and all people know that they will receive same income which in turn will make people lazy as working hard will mean nothing. Hence for example, if there are 2 race of 10 miles while in one race winner does not get any monetary award while in second race winner gets $1000 reward than the effort put by contestants to win the second race will be more as compared to first race.
Justice to Talent
Rich people become rich because they have some talent; hence rich people may be good in sports or in acting or has entrepreneur’s capabilities and so on and it is due to their talent that they get a reward in monetary terms. In simple words, one can argue that economic inequality is one of the ways in which one can justify that talent takes you away from the crowd and makes you stand out of the crowd.
Government become more Proactive
In case of economies where economic inequality is high then the government of the country steps in and start to make poor-friendly policies which include steps like giving subsidies to poor, implementing progressive taxation system, investment in infrastructure and industrial projects so as to increase job opportunities and so on. In simple words in an ideal world economic inequality should act as a motivating factor for the government to implement poor and middle-class friendly policies in the country.
Disadvantages of Economic Inequality
Creates Social Unrest
The biggest disadvantage of economic inequality is that it creates social unrest because when rich get richer and poor get poorer than poor people after a certain point of time may revolt against the government as well as rich people and we all know that social unrest is not good for any economy whether it’s developed or developing economy.
Wasteful Expenditure by Wealthy People
While rich people become rich because they have some talent but at the same time many rich people indulge in wasteful expenditure, while it may be argued that it is their money but sometimes their expenditure is so extravagant that it defies logic and people who argue against inequality points out this bad habit as funds wasted due to extravagant nature of wealthy people can be put to better use for the welfare of poor people of the country.
Non Inclusive Economic Growth
In case of economic growth of the nation due to inequality, the fruits of economic growth are not enjoyed by all people because it is the rich and powerful people who make the most out of economic growth resulting in widening of the gap between the rich and poor. In simple words, the economic growth of the country is lopsided or non-inclusive implying that not all people get the benefit of economic growth resulting in more social unrest and chaos in the country.
As one can see from the above that economic or income inequality has advantages as well as disadvantages and it is the responsibility of the government that neither rich nor poor gets unfair treatment and both sections of society are rewarded in the manner they deserve and thus both sections contribute towards the development of the nation.