Offshoring Jobs and the Income Gap Research Paper

Open, View, and/or
Download this Document

Total Length: 2517 words ( 8 double-spaced pages)

Total Sources: 6

Page 1 of 8

Wealth Inequality from a Macroeconomics PerspectiveIntroductionBoushey reports in Unbound that “the very richest households—the top 1 percent—save 51 percent of their income, while those in the bottom 20 percent save just 1 percent.”[footnoteRef:2] The income gap between the top 1 percent and the 99 percent in the US has only increased since the Great Financial Crisis of 2008, when the Federal Reserve responded to the bursting housing bubble with three rounds of unconventional monetary policy. As Pew Research has shown, “economic inequality, whether measured through the gaps in income or wealth between richer and poorer households, continues to widen.”[footnoteRef:3] The widening wealth inequality in America is directly related to Keynesian economics, unconventional monetary policy, and central banking intervention, which benefits the top 1 percent to the detriment of the rest of the population. This subject is important because if it goes unaddressed, the vast majority of the US population will end up as little more than serfs under the 1 percent. This paper will address the issue of wealth inequality by looking at the gap between the 1 percent and the 99 percent, explaining how Keynesian economics and quantitative easing (unconventional monetary policy) have exacerbated that gap over the past decade plus since the Great Financial Crisis of 2008. [2: Heather Boushey, Unbound: How Inequality Constricts Our Economy and What We Can Do About It. (Harvard University Press, 2019), 144.] [3: Juliana Menasce Horowitz, Ruth Igielnik and Rakesh Kochhar. “Trends in Income and Wealth Inequality.” Pew Research, 2020. https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/]ResearchClassical economic theory posits that free markets are balanced by the law of supply and demand. This was the basis of Adam Smith’s view that economic order and balance could be maintained so long as nations did not attempt to engage in a zero sum game. Keynesian theory developed in response to perceived market irregularities and is based on the idea that markets will not self-correct when problems because markets are inherently imperfect. During a recession, for example, wage reductions mean earners have less to spend and savers will keep money out of the economy if the interest rate is high enough. Keynes therefore suggested that fiscal policy (government spending) and monetary policy (control of the money supply by the central bank—the Federal Reserve in the US) should work strategically to counter business cycles and ensure balance in the economy. This idea necessitated, however, that the free market economy be transitioned into a command economy. Keynes himself “lost faith in the power of his monetary transmission mechanism, and had moved his preference towards fiscal policy,” but as shall be shown here, fiscal responsibility has not been a hallmark of the US government since 2008, and monetary policy has been used to support the markets.

Stuck Writing Your "Offshoring Jobs and the Income Gap" Research Paper?

View All Our Example Offshoring Jobs and the Income Gap Research Paper

Have A Custom Example Essay Written

[footnoteRef:4] [4: Marc Lavoie and Brett Fiebiger. \"Unconventional monetary policies, with a focus on quantitative easing.\" European Journal of Economics and Economic Policies: Intervention 15, no. 2 (2018), 141.]Wealth GapThe wealth gap in the US has widened as a result of the concentration of wealth in the hands of a few, the fact that inflation has occurred while wages have not risen enough for the working class, and that the wealthy 1 percent have amassed significant political power, which limits the potential for the rest of the population to prompt legislation that would address issues, such as monopsony and monopoly by the 1 percent.[footnoteRef:5] The chart below shows the extent to which the income gap has widened in recent years. [5: Heather Boushey, Unbound: How Inequality Constricts Our Economy and What We Can Do About It. (Harvard University Press, 2019), 195.][footnoteRef:6] [6: Growth of Family Income. Source: Andrea Witte, http://www.connectthedots.usa.com/.]As can…

[…… parts of this paper are missing, click here to view the entire document ]

…still struggling to rebound from the 2020 lockdowns. The longer QE goes on, and the longer rates are suppressed (in accordance with Keynesian theory), the worse it gets for the 99 percent. Fed Chair Powell says that inflation is transitory, but anyone can see that the value of the dollar has dropped more than 90 percent since the creation of the Federal Reserve. Inflation was not felt so long as everyone’s income was growing together in the post-war years.However, when credit tightened and jobs were offshored, the working class suddenly saw its ability to grow constrained. The allure of the American dream (everyone being a homeowner) led to many Americans taking advantage of easy credit during the housing bubble years—but that bubble burst when credit once more tightened. Today, housing prices have risen as investors have sought to put their money into tangible assets outside of equities. The middle class is increasingly being priced out of markets. So long as production remains overseas and the 1 percent is allowed to maintain its monopoly and monopsony in the marketplace, there will be no end to the widening wealth gap in America. That is the main take away from this research......

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Offshoring Jobs And The Income Gap" (2021, August 30) Retrieved June 4, 2026, from
https://www.aceyourpaper.com/essays/offshoring-jobs-income-gap-2181100

Latest MLA Format (8th edition)

Copy Reference
"Offshoring Jobs And The Income Gap" 30 August 2021. Web.4 June. 2026. <
https://www.aceyourpaper.com/essays/offshoring-jobs-income-gap-2181100>

Latest Chicago Format (16th edition)

Copy Reference
"Offshoring Jobs And The Income Gap", 30 August 2021, Accessed.4 June. 2026,
https://www.aceyourpaper.com/essays/offshoring-jobs-income-gap-2181100
   

Open, View, and/or
Download this Document
order custom essay example