[EDITORIALS]Growth closes the income gapThe gap between the rich and the poor is ever widening. According to research by the National Statistical Office, the income difference between the top 10 percent and the lowest 10 percent of those working in the city increased from 8.7 times to 9 times. In other words, the rich make nine times more than the poor class nowadays.
During the financial crisis, the difference between the rich and the poor was 9.4 times, which decreased over the years but has now increased again. As the income gap broadens, the spending differences in medical and education expenses between the rich and the poor have also reached the greatest gap in seven years. As the economic recession deepens, people can’t afford to go to the hospital even though they are sick because their income has shrunk, and they are in a painful situation where they cannot invest in education for the future.
This administration has been the most active in our modern history to focus on distribution of wealth and on welfare. However, after this administration was inaugurated, the polarization of the rich and the poor became more apparent, which is a puzzling contradiction.
This also means that social safety net or “distribution-first” policy cannot solve the problem of widening differences in classes. No one can deny that a social safety net is needed for those who have fallen behind. Helping the poorest class by providing basic support is necessary to solve social conflict. However, increasing the welfare budget and pressuring the rich with more taxes to help the poor are not solutions.
A country cannot save itself from poverty. Providing subsidies is not the answer to eliminating poverty. When people become employed, they earn income and gain self-respect. Only more jobs can prevent a country from becoming a welfare state. Government subsidies that don’t provide jobs represent makeshift policy and will only increase the underclass. Utilizing a strong distribution policy because times are hard will only lead to a drop in growth, which entails a loss of jobs. That in turn will lead to more government subsidies and the vicious cycle goes on and on.
In order to create jobs, the economy must grow. In order to do so, businesses must be in an environment that allows more investment. The polarization of society must not be solved through distribution of wealth but by policies encouraging growth.