policy being adopted. 7 This problem has now increased further due to the citizens united case vs. the Federal Election Committee. Citizens United, a conservative non-profit organization, successfully convinced the Supreme Court that regulation on campaign finance was unconstitutional as political spending was a form of free speech. This means that corporations and other organizations can spend unlimited amounts of money on independent political expenditures such as radio and TV ads supporting a candidate. President Obama said that this ‘gives the special interests and their lobbyists even more power in Washington’ and that this ruling ‘strikes at our democracy itself.’ This is most definitely a step in the wrong direction for a so-called democracy where votes are losing their spot as the primary influence of politics. 8 Inequality can also lead to a lack of equality of opportunity. Joseph Stiglitz’s book The Price of Inequality lays the argument out as follows: Many people at the bottom and in the middle are not living up to their potential due to the people at the top using their financial means to influence public policy towards cutting taxes and government spending and away from vital things like infrastructure, education and technology. This is devastating for the lower income brackets because they do not have the money that is required to have a good quality of education. 71% of students graduated with student loan debt, and the average debt was $29,400 9 and then a lot of employers are looking for a master’s degree, but only students with rich parents can afford to not work for another few years and rack up that level of debt. Unpaid internships are also a common pre-requisite for a high-earning career path, but again mainly students with rich parents can afford to take an unpaid job. This means that more than ever the income and wealth of one’s parents are influential in bringing about future success. This seriously hinders social mobility and may be why social mobility is as low as half what it is in some western European countries. 10 So inequality damages social mobility, democracy and the economy. The damage it causes is severe enough to contribute to recessions and inequality and financial crises have correlated for a century. Inequality means that the rewards (money) are not going to the most able or those that work the hardest but to those with the richest parents. This means that the economy’s most valuable asset, its people, is being underused. There are benefits to reduced inequality as the IMF concluded that ‘lower net inequality is robustly correlated with faster and more durable growth, for a given level of redistribution.’ Reducing inequality would increase social mobility whilst also reducing damage caused to the economy by inequality, in the form of a parasitic financial sector and a lack of opportunity. This raises the question as to how inequality could be reduced. The following are various policy suggestions that may be appropriate for the government to undertake to reduce inequality. The solution of the inequality issue is all about redistribution of the resources in an economy. Germany, Italy and Portugal all have higher market levels of inequality but the US is the third most unequal OECD country after taxes and transfers. 11 The main problem is in the transfers, that there is not enough social spending on the poor. There must be increased spending on the poor in order to provide them with the opportunities to succeed, should they be capable. Currently in the US there is a lack of opportunity and not a great deal of worker protection. This has led to President Obama calling for the law to be updated so that a woman can ‘have a baby without sacrificing her job’ and that people can ‘care for a sick child or parent without running into hardship.’ This gets to the core of the inequality issue. Equality of opportunity is about investing in the children of a country, and currently only the rich can afford these investments, so the middle class children fall behind for no other reason than their parents lacking money. This is where the government needs to step in and make these 7 http://scalar.usc.edu/works/growing-apart-a-political-history-of-american- inequality/external?link=http%3A%2F%2Fbostonreview.net%2Fforum%2Flead-essay-under-influence-martin- gilens&prev=http%3A%2F%2Fscalar.usc.edu%2Fworks%2Fgrowing-apart-a-political-history-of-american- inequality%2Findex 8 http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission 9 http://projectonstudentdebt.org/state_by_state-data.php 10 http://www.economist.com/news/united-states/21595437-america-no-less-socially-mobile-it-was-generation-ago- mobility-measured 11 http://en.wikipedia.org/wiki/List_of_countries_by_income_equality#Gini_coefficient.2C_before_taxes_and_transfers
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