Though my viewpoint is predominantly Indian (my home) in nature, this article is global. We shall see about the lower middle class and the poor of the society and why the current system shall not work. This is not a moral quarrel but a logical approach to why inequality will not work at any cost.
According to global statistics (World bank), assuming inflation and comparing 1981 (earning $1.2 a day) and 2012 ($2 a day), there has not been a dramatic decrease in the number of people below the poverty line. In my opinion there are two oppressing reasons – income inequality and law enforcement. These issues need to be addressed immediately if we don’t want micro revolutions or pitchfork mobs displaying unrest against plutocrats just like the French Revolution.
The oldest and biggest problem with poverty is income inequality. Why is it such a serious problem? Let us think of a simple example – A man earning 100 times the median wage of a society is not spending 100 times more. He is spending just a little more than the average median wage earner. Ideally, he should propel an economic growth by a 100 times the worker earning average wages, but it is not the case.
Henry ford, famously introduced a $5 dollar minimum wage in his company when it was half that number outside of the company. What did he achieve by doing so? There were simply more people buying the cars they produced themselves. He created a demand by putting more money in the hands of the middle or lower class. Rising wages increases demand which in turn increases hiring, hence the economic ecosystem rolls on. On the contrary, if there is more wealth being accumulated by the upper 1% or lets say 10% of the people, the ecosystem will stagnate. The lower or middle class will not have money to buy products and businesses hence will not progress along with, when the tipping point reaches, mob attacks, revolution and uproot of the system. Hence the fundamentally unstable trickle down economics needs to change to a more “middled-out” economics where the middle and lower class takes the center stage of the ecosystem.
Karl Marx predicted the self destruction of capitalism and introduction of a new system namely – Socialism. I currently live and study in the Netherlands which is the best example for this phenomena. The country that was one of the first to adopt capitalism has already moved out into a socialist economy. I wish to see more countries adopting this new system.
Solution – Socialist economy with a high minimum wage will narrow down the income inequality.
We have just seen the effects of increasing the minimum wages. But many countries already have a not-so-good but reasonable minimum wage system in place and there have been millions of dollars funding the anti-poverty programs. Then why has there not been a very promising change? The next big problem is enforcement of schemes and policies and the law enforcement that protects them. Everyday violence in every form (modern slavery, torture) is more evident than ever. This coupled with terrible law enforcement is the next biggest problem our system face. The fact that there are more slaves now than ever shows that the poor are not in the bubble that is protected by law. Slavery and harassment is illegal, but the law protecting the poor from these nuisance is still far from accessible. I have seen child labor, physical harassment (at every level), bilking and extortion, to name a few, with my own eyes. The people going through such problems find justice too expensive and unreachable because of the same reason. As much as we need the poor to grow out of the sordid bubble by providing them with better wages to save our economy, we need to protect them from the evil vultures of our society.
Solution – Detach law and its enforcement (police) from the political system, make it more powerful and a free basic human right for everyone to access.
Keeping it straight and simple – We can’t have a sustainable economy with rich and poor gap increase. PROLETARIAT (the labor class) need to win (prosper financially) for the BOURGEOISIE (the rich and plutocrats) to win.