Inequality for All
Capitalism is the dominating economic system in the world nowadays. Moreover, we consider it the best possible economic system. Although capitalism is indeed much better than the systems that came before it, it also contains its pitfalls. Currently, the U.S. is the richest country in the world, however, despite the apparent prosperity, the major part of the American nation is facing not their best times.
Every day we get disparate messages from the media regarding inequality. We are presented with pictures and graphs of gargantuan inequality between the rich and the poor in the U.S. In fact, only by this metric, America occupies a place among the countries of the third world. At the same time, the economists and politicians say that there is nothing bad in inequality, they say that inequality is essential to capitalism and normal functioning of the economy. Upon hearing such opposite messages, one starts wondering where is the truth, and who is really a deceiver. The tough answer to this question articulated in the film is that both of these stances are right. The intricacy is that it is not inequality which is inherently bad, rather it is the size of inequality that matters. Moderate inequality is beneficial for the economy because it stimulates people to earn more by getting education and improving their professional skills. By earning more, they are able to spend more, which encourages the growth of the economy. At the same time, large inequality creates a giant pit between the richest people and all others. In this case, the economy also suffers, because the rich do not spend as much as the middle class in proportion to the earnedincome. As a result, the economy slows down and the middle class gets weaker.
As argued in the film, the middle class, not the richest one, is the core of any economy. When the middle class is strong the economy is also strong due to the virtuous cycle. In this cycle, investments in the middle class cause more people to obtain higher education, the more people get higher education, the more they earn, the more people earn, the more they spend, and the more people spend, the faster the economy grows. However, when the richest people set the rules of the game, the middle class suffers. As a result, the virtuous cycle turns into the vicious cycle. The process starts acting in the opposite direction – the middle class gets weaker, fewer people get higher education, the middle class earns less, and spending decreases. As a result, the funds get accumulated in the hands of the rich, and these resources stop working for the economy, which substantially slows it down. However, as the wages of the middle class stagnate, the level of spending is encouraged to grow. To maintain the rising expenses, first, women started working to help their husbands to pay the bills. When this was not enough, people started working more. As a result, on average, Americans worked 300 hours more than the Europeans and the Japanese. However, there is a limit to working more, and when this limit was attained came the debt. People started taking more credits, pledge their homes, and, as a result, the debt pit became deeper and deeper. When the bottom was reached, and the economy could no longer sustain itself came the crisis of 2008, and the market crashed.
The film is narrated by Robert Reich who was the Minister of Labor under President Clinton and now is a professor at Berkeley, this is why the position he argues for in the film is the grand economic perspective. Although a large part of the film is devoted to articulating the misfortunes that many Americans are facing, it would be wrong to conclude that it argues for the least well-off part of the nation and misses the perspective of the richest. In fact, it is shown in the film that rich people who understand the mechanisms of the economy also share the same opinion – the richest pay the least taxes, while the middle class is burdened. Therefore, the perspective that this film narrates is universal.
As already noted above, we get our perspectives on inequality from the media, and I am not an exception. Although I was aware of the enormous size of inequality, I did not know the detailed data regarding the connection of inequality to the economic growth and to crises that happened. Also, I found from the film how important is the middle class to the functioning of any economy. The most surprising point in the film for me was the data about where does the money from selling iPhones go. Although we are used to believing that the majority of goods are manufactured in China, we are unaware that the parts from which they are manufactured do not come from China. This is a very strong line of support for the primacy of the role of the middle class in the growth of the economy. Essentially, Germany and Japan both have a very strong middle class that enables technological and scientific progress making it possible for them to manufacture highly elaborate appliances, which they sell at high prices because of their unrivaled quality and complexity.
Opponents of the film often labeled Reich a communist or a socialist because he argued for the strengthening of the labor unions and tax increases for the higher earning social groups. According to Ball & Dagger (2018), socialism is “social and economic doctrine that calls for public rather than private ownership or control of property and natural resources”. Although the policies that Reich argued for seem to resemble those argued by the socialists, they are fundamentally different. Reich is the proponent of capitalism, however, he strives to optimize the functioning of the economy, and this may mean increasing taxes, which was always unpopular.
Although Reich suggests that inequality is essential to capitalism and the economic growth, he also states that the level of inequality should be adequate. I totally agree with him, but it is hard to mandate the optimal level of inequality. Moreover, it is even harder to maintain because it cannot be changed as easy as the yearly budget or the tax rate. However, it has been shown in the film that the U.S. faced its most prosperous times when the wages grew together with the level of spending. As soon as the gap between the earnings and spending started to grow, the overall prosperity and economic growth started to fall. This is why through appropriate political decisions and manipulations of the tax rates, such level of inequality should be maintained that the level of spending is balanced with the level of earnings.
PlaySpent Game Reflection
The first thing I had to do when the game started was choosing a job. I have selected the job of waiter because although it featured the lowest wages, I hoped to earn more from the tips. However, as a result, my income my income was still lower than offered by other jobs, because the hourly wage comprised $8. After collecting the earnings, I had to face tough choices. The first tough choice was to choose the health insurance plan. Healthcare is expensive nowadays, and health and life are all I have. Being in good health is mandatory for working productively, this is why I chose the gold plan. Although it was the most expensive one out of the offered options, it offers the largest coverage. I have found from my own experience that health is the last thing on which one should save, because it impacts all other spheres of life. Essentially, the quality of one’s health ultimately determines one’s quality of life. There is no point in earning millions when one cannot enjoy life because of multiple diseases, weakness, or large excessive weight. This is why I selected the golden plan to be sure that any health issues that might occur would be covered. However, making this choice also cost me a lot, and had a very large impact on the available funds. Now I think it would be better to choose a less expensive health plan.
The choice of what to do with the stuff I accumulated was not hard because all we use are simply tools, they should not consume our time and efforts. In case there is too much stuff, one has to get rid of it. However, the choice on whether to go to the wedding was much tougher. This was the point when I felt very uncomfortable. Wedding is one of the most important events in our lives, and being present at best friend’s wedding is an absolute must. However, as I lacked funds, I had to deny the invitation. In the real life, such decision would be very problematic for me. I think I would borrow money, but I would definitely go to the wedding. In fact, many people face similar decisions every day. Although the game slightly exaggerates the situation, many people got psychological traumas because of not being able to afford something. I am sure that at that moment they must have felt less worthy than everyone else, and such thoughts have a very profound impact on our personalities and ambitions, especially when they take place in childhood.
Overall, my emotional state was going down with every next day of the game. At day seven, I decided to pay for the dental care and went broke. Although crude, this game offers a close approximation of what many people feel nowadays. I learned through my own experience that a lot of people cannot provide for the things considered mandatory in our society. Yet, somehow they must survive. It is rather useless to hope that the majority of such individuals would be very motivated to earn more by hearing about the richest and their stories of success. They would rather envy them, feel less worthy and somehow defect, because they cannot even cover their basic needs. This is why each of us must take a part in changing the economy and reducing the inequality so that there would be a strong middle class that would be happy rather than sorry.
Ball, T., & Dagger, R. (2018). Socialism. Retrieved from https://www.britannica.com/topic/socialism
Kornbluth, J. (2013). Inequality for All [Film]. USA: RADiUS-TWC.