Question

Do you think the current distribution of income in the US is too unequal? Why or why not? What criteria do you think should be used to judge the fairness of the distribution of income? Is the final outcome more important than the process that generates the income?

Answer 1

Dear Student,

Please find below answer to your questions

Abstract

Income inequality has increased in the United States over the past 30 years, as income has flowed unequally to those at the very top of the income spectrum.

Some causes like falling wages and rising income inequality: technology, trade, and institutions - are contributing to inequality.

A) Causes behind the current distribution of income in the US is too unequal

Following are the main causes of inequality in US.

1) Executive compensation increasing relative to the average worker

In term of fairness pay policy this is one of the drawback, payment of Chief Executive Officer are far more greater than the payment of average worker.

2) Financial Development

Due to vast and rapid in financial development there is major gap in rich and poor in term of standard of living.

3) Greater industry concentration

Some technological advancement focused on digital age and created the gap such as high paying jobs in IT and low paying jobs in manufacturing sector.

4) Lower unionization rates

Low unionization rates occurred in finance, insurance, professional and technical services and food services and drinking place, Which cause to have the inequality between the people.

5) Lower effective tax rates on higher incomes

The taxpayers with higher incomes had lower effective tax rates than low income group.

6) Technology changes that reward higher educational attainment.

some technologies have become permanent parts of the higher education enterprise and it created the inequality such as poor people afford to public school with bad quality education and rich afford to attend high technical education.

B) Criteria to judge the fairness of the distribution of income

This criteria can be interpreted with the help of following important points :

1. Income distribution is the smoothness or equality with which income is dealt out among members of a society.
2. If everyone earns exactly the same amount of money, then the income distribution is perfectly equal.
3. A society's income distribution falls somewhere in the middle between equal and unequal.

C) Explanation - How final outcome more important than the process that generates the income

If your goal is outcome based you just wanted to achieve a time or a place.

If you are focusing on the process you are likely to want to achieve a goal or goals that are based on a general feeling or status like to feel better, feel stronger, have less injuries, train more often or consistently

Main reason can be stated as below

1. Results are irrelevant as a measure of decision quality. For Example, in Bakery the final outcome that is Cake which can generate value only after selling it rather than raw material mixing process.
2. Results don’t necessarily reflect a high-quality process, Therefore outcome is having prime importance (See above example)
3. Using results as a measure of decision quality leads to organizational crises, even bankruptcies.
4. Being accountable only for results is not the right standard for performance.
5. It’s not enough to measure organizational leaders on results; how they achieved them is equally important.

--------------

Hope my answer have cleared all your queries, I really appreciates your positive feedback !!

Thank You !!

--------------