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April 11, 2013

Essay on American Wealth and Assets


Introduction
Since its inception, openness towards individual’s rights and preserving their freedom has been the hallmark of American democracy. The American Dream is the idea that any person living in the United States, through his work, his courage and determination can become prosperous. Even though this idea was embodied by several prominent people who had emigrated or invested in America, the American social reality has been disappointed many other less fortunate. This created a gap between the well to do people and the unfortunate ones.   
Thesis Statement
Although America champions the idea of providing equal opportunities to the people in a society where they are treated equally the fact is that only 1% of its citizens possess 50% of the national wealth which has been proved to be an important reason behind lack of social cohesion and health care problems.
As the research by Edward N. Wolff shows that by 2007, the 1% of population belonging to the upper class of society was found to own 34.6% of all privately held wealth, and the next 19% of population belonging to the executive, proficient, and small business section had 50.5% of wealth which shows that just 20% of the population owns 85% of the assets of the country which means that the bottom 80% of the population who are mostly wage and salary earners only has 15% of the wealth. Furthermore in terms of monetary wealth that is total net worth minus the value of one's home, the crowning 1% of households is allocated an even larger share that is 42.7% (Wolff, 2010).
This highly unbalanced distribution of wealth is an extreme that is responsible for jeopardizing the social structure and health sector of the country.
Richard G. Wilkinson and Kate Pickett carried out a research in which they offered confirmation that both social cohesion and health care problems gain strength in nations or states where there is unequal distribution of wealth and wealth is concentrated in the powerful sector of the country. For that they presented example of Japan and Finland where it has been found that crime rates, mental health problems and teen-age pregnancies are lesser than in countries where wealth is unequally distributed such as the US and UK.( Wilkinson and Pickett 2009)
Furthermore the problems with health care have forced the country to incur unfair debts and consequently harsh decisions on the health care policy.
The health care costs have been rising faster than the rest of the economy for decades; a trend highly seen as unsuitable. According to Henry J. Aaron a senior fellow in economics at the Brookings institution “one hundred percent of the problem with the nation’s fiscal future lies in health care” and if this health care problem is solved there will be no fiscal problems and hence no additional national debt. Medicare spending growth rates reflect not only the growing receiving population but also health-care costs that are growing faster than the inflation rate. According to former Comptroller General Walker “total health care spending is absorbing an increasing share of our nation’s GDP” it has risen from about 8 percent of GDP in 1976 to 16 percent in 2009 and is expected to rise to about 20 percent in 2016. This will make health care a major expenditure of GDP, which is an extra burden on the already stretched out budget of the country.
So debate continues on whether reforming government programs like health care is the key to controlling the national debt or the rising health care costs of the privately insured Americans need to be restricted, which has made these wealthy citizens a cause of much burden on the country’s economic plans.
Similarly the concern towards high crime rates because of economic inequality has been researched by a professor of political science at Harvard, Robert Putnam, who presented associations between social capital and unequal distribution of wealth. In his research studies (Putnam, Leonardi, and Nanetti 1993, Putnam 2000) he links the crime rates to inequality in US. As he says:
Community and equality are mutually reinforcing… Social capital and economic inequality moved in tandem through most of the twentieth century. In terms of the distribution of wealth and income, America in the 1950s and 1960s was more egalitarian than it had been in more than a century… [T]hose same decades were also the high point of social connectedness and civic engagement. Record highs in equality and social capital coincided. Conversely, the last third of the twentieth century was a time of growing inequality and eroding social capital… The timing of the two trends is striking: somewhere around 1965-70 America reversed course and started becoming both less just economically and less well connected socially and politically. (Putnam, 2000)
Thus it can be said that unequal wealth distribution brought reduced social cohesion and health care problems in the society and the elite 20% of the population with 85% of the nation’s wealth has negatively affected the country.


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