The Rising Inequality Along with the Polarization

by Shamsul
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Explain Theory X and Theory Y from the perspective of both supervisor and worker behavior

Theory X presents a traditional view of management which resembles the autocratic leadership style. The theory assumes that employees are lazy and are not willing to take responsibility, lack ambition, and prefer to be supervised. The managerial implication for this theory is to attain organizational objectives through implementing a coercive and controlling management system. On the other side, theory Y believes that people are happy to work and are motivated towards pursuing objectives. Moreover, people are ready for responsibilities and have a creative problem-solving approach. Managerial implications for this theory are to attain organizational objectives through different rewards. The challenge for this theory is to develop an environment where employees can develop their creativity.


What is a professional bureaucracy? Compare and contrast to a machine bureaucracy and a divisional structure

Professional bureaucracy refers to the fact that firms can be bureaucratic without being centralized. The operating work of such organizations is stable which results in predictable in effect standardized behavior. It is a complex process that is controlled by the operators of it.

Machine bureaucracy

A highly bureaucratic organization is like a machine. Governmental agencies along with other types of set-in-their-ways larger corporations symbolize this type of style. The strengths of this form are longevity, consistency, and structure; however, the downside includes limited openness towards a newer perspective, as well as inefficiencies that result from bureaucratic processes, which is very common.

Divisional structure

This is very common amongst larger corporations that are handling various product lines and multiple units of business. In some instances, corporations might divide their products or businesses within divisions for promoting specific management of every division. This format refers to implementing a centralized control where the divisional presidents tend to oversee all work facets within their respective divisions.


How do feedback systems work in management theories? Describe relevant theories and give concrete examples

The concept of an organization as a system has introduced the importance feedback holds. Businesses and organizations are greatly dependent upon their environment not only for inputs but, for the acceptance of the output as well. As a result, businesses have a need to develop means so as to adjust as per environmental demands. To put this simply, feedback systems collect information which is a reflection of the activity or a series of an activity undertaken on part of the company.

The systems theory when applied in managerial aspects can be related to Total Quality Management (TQM). In this theory, the systemic conception of the firm tends to strengthen by emphasizing the importance of relationships as being a part of the goal that needs to be attained. The feedback system theory can also be applied to the goal-setting theory of management where feedback plays a very important role as this element provides information through which the organization progresses towards goal attainment. Organizations and individuals can set goals as per the received feedback. For example, if a company has launched a product which is initially considered to have high demand however, through the feedback system, the company came to know that the demand for the new product is moderate, it can immediately change several aspects like budget allocated for the production process or work upon marketing activities.


Applying Coase and Benkler, at minimum, what are three ways of structuring business transactions? Be thorough in your explanations.

The three ways of business transaction structuring involve:

  • fiscal
  • legal
  • financial evaluation

The transaction cost approach was developed by Yochai Benkler which refers to the cost of delivering a product or service from the market instead of providing it from within the company. However, Ronald Coase theorem states that the markets are always competitive where there is no transaction cost along with an efficient set of outputs and inputs which will result in the making of an optimal decision.


How do behavioral economics and classical economics differ? What are the implications of those differences in terms of real-life impact?

Behavioral as well as classical economics is are two distinct rather opposite realms within economic modeling. The process of understanding the difference between the two allows interpreting its implication in real-life impact. On one side, behavioral economics tends to deal with the inconsistency that exists between what is desired and what was the outcome. For example, if a person is willing to lose weight but is never able to get it done. Additionally, this modeling states that man has irrational behavior. This is related to classical economics which clears that individuals are rational beings. However, behavioral economics assumes that the opposite of this is true.

Within classical economics, consumption and production can be determined through cost and benefit at the margin. Both the producer as well as the consumer believe to make rational decisions. The buying power of the consumers is fostered by gaining the most benefit from every dollar spent whereas, producers tend to work towards attaining the highest possible profit.


What are the basic differences in values between economic conservatives and economic liberals?

Economic liberals tend to extend their support towards the rule of law (contract), property rights, free trade, equity injustice, and capitalism. They basically believe that every individual is provided with equal opportunity for economic success and must not be deprived of the rewards associated with his labor unjustly. It refers to the freedom of an individual in the economy to carry on with activities with very limited interference from the government.

Economic conservatives, on the other hand, view social stability and order to be integral components of economic success. Conservatives of one generation most often defend the conservatives of the previous generation because of the perceived threat that the change might bring in.

Explain externalities and the Tragedy of the Commons

Economic efficiency involves that people make decisions over the basis of accurate prices – receiving full benefits for things produced and paying the full cost of the resources consumed. Positive and Negative externalities is a situation in which accurate prices are not present. Operating in a world where there are no patents that might lead to numerous positive externalities. For example, a company works over a remedy for migraine headache for almost a decade and when it is successful, someone else copies it and sell without paying any royalty. This will affect economic efficiency as fewer people will attempt to make research.

An example of a negative externality is that of the Tragedy of Commons. An example is that cows are bought and sent for grazing to the commons until the time arrives for slaughtering. The price of the cow is determined by her weight at the time of sale and the weight depends upon the amount of grass eaten whereas, the amount of grass the cow has eaten depends upon the total number of other cows that were also grazing with the commons.

When a farmer adds a cow in the commons, that added cow, by eating grass, imposes cost overall farmers as their cows will now not gain as much weight as they would have before adding in the new cow. However, this is an external cost and the farmer adding in the cow does not have to pay and as such, this cost is not considered in deciding whether a cow should be bought and grazed with the commons.


Broad CSR argues that universal core ethical values should shape business decisions; neoliberalism holds that only profit maximization should. Which view do you think is better able to deal with externalities like pollution, and why?

I think that CSR has more potential to deal with ethical core values that relate to externalities like pollution. CSR is the organization’s legal and moral responsibility towards the environment and community through contributing to education and social programs, working on pollution and water reduction processes as well as earning adequate returns over resources employed. CSR is effective towards pollution because it holds the concept of conducting business activities under strict compliance with the law, while still making profits, voluntarily considers the impact of their operations over the environment within their business decisions. This approach effectively contributes towards improving the quality of life along with implementing the concept of sustainable development.


What factor do you think best accounts for the rise in inequality since 1980: technological innovation, ideology, or another factor? Explain in detail and give your reasoning why.

The rising inequality along with the polarization of the societies poses a serious risk to the economy. This is because technology leads to financial inclusion in those countries where there is no financial infrastructure and global markets create trading opportunities. Intelligent automation strikes middle-income groups. Only in the banking sector, many jobs are at the risk of being decimated because of the utilization of artificial intelligence for performing tasks that were previously considered to be very complex for automation. Additionally, with advancements within biohacking and gene editing, there is a threat to human augmentation and longevity which also results in a newer segment of individuals where the elite class emerges from both mentally as well as physical up-gradation.


Richard Thaler talks about “humans” and “econs” as having different methods of making decisions. Are humans and econs two different types of people, or are we sometimes humans, sometimes econs? Give supporting evidence for your answer.

The notion of econ versus humans is very easy for understanding decision-making behavior. A human is not always logical as they can react automatically, have intuitions as well as emotions for making decisions, and can also make errors from a rational viewpoint. Econs, on the other side, have logical and rational behavior. They usually have the will and make mental efforts to make decisions. In short, it can be said that humans are different from econs. Humans are emotional, imperfect, and full of bias whereas, econs are perfect, objective, and calculated. Evidence of this statement is that if a person is willing to lose weight and has the information about the number of calories required to attain this goal and those available in different foods. In such a situation, he will only o for a food product that has minimal calories. However, after pursuing the weight loss ambition, the person views an advertisement of ice cream which have an attractive price and states that an individual should have 2000 calories every day so as to effectively function and this appealing deal leads the person to fall into the temptation which eventually resulted in falling out from the bandwagon of weight loss representing lack of self-control which is a clear characteristic of a human.



Neoliberalism is based on two principles: market fundamentalism, which is that vision according to which markets by themselves are efficient and sufficient for sustained growth and full employment, and the “ cascade effect economy, which is the vision that growth itself inevitably benefits everyone, including the poor, and the best way to help the poor is to maximize growth.

Neither economic theory nor the evidence supports any of these propositions. The market economy has been plagued by periodic crises and massive unemployment; without government intervention, companies have polluted our air and waters; unregulated or poorly regulated banking has caused problems country after country; Recent scandals in the United States involving Enron, Arthur Andersen, and almost every major bank have shown trouble even in one of the best-performing market economies.

I agree with neoliberals that at the heart of all successful economies there are markets, but markets and government need to work in partnership. A balance is necessary, “a third way”, between the extremes of excessive government intervention and the kind of `minimalist government that neoliberals advocate.

United States Government

In the fastest-growing countries, governments have played a central role. Even today in the United States the government continues to play an important role, such as in promoting technology (the Internet was an invention of the United States government and the first telegraph line was also financed by the United States government more than 150 years ago. years) in providing education, even in providing financing (up to a quarter of all loans come from either government-sponsored companies or government guarantees), in ensuring income and health for the elderly. My own research on markets with asymmetric information (different people know different things) showed that the reason Adam Smith’s invisible hand was invisible – according to which markets lead to efficiency – was that it simply did not exist.

In the same way, there have been long periods in history when the poor have actually become poorer as economies grow. Neoliberal policies have focused on macro-stability, privatization, and liberalization. Certain aspects of these policies make sense when done the right way, but neoliberals often lose a sense of perspective, ignore key issues of time and sequence, and confuse means with ends.

Macro stability has been misinterpreted with an exclusive focus on inflation rather than growth-oriented stability. The government should focus its attention on those activities in which the private sector cannot engage, thus it makes sense to privatize steel companies and other industries that the private sector can serve well.


But when there are efficient government enterprises, such as the Korean steel mills or the Chilean copper mines, privatization may actually do little, and rather may deprive the government of severely needed revenue, especially if privatization is done poorly which is a frequent case. Privatizing monopolies without proper regulation has proven problematic around the world.

Similarly, some aspects of liberalization make sense, such as removing some regulations, but deregulating banking and liberalizing capital markets, especially if done excessively fast, has led to crises country after country and has been one of the biggest sources of global instability. Some of the problems in America today are the result of deregulation.


Economic inequality in America

Economic inequality in American started in the early years of the 70s decade which incurred after several years of economic stability. The country exhibited higher rates of inequality than most of the developed countries arguably because of the less regulated markets of the nation.

The income division in the US has not always been as vast as it is today. In response to the staggering economic inequality in the early years of the 1990s, progressive policymakers along with various social movements successfully fought so as to reduce taxation levels along with leveling up the bottom by means of increased unionization as well as other reforms.

The gap between rich and poor grew last year in the United States to its highest level in more than 50 years of records on inequality, according to figures from the Census Bureau.

Income inequality in the United States grew between 2017 and 2018, driven by large increases in several states in the heart of the United States. Still, the inequality rate remained higher in some wealthy coastal states. This inequality can be associated with the structural theory which stems that the problem of an individual is not only his problem. This refers that if a person is unable to access a healthcare facility for his child, then it is considered a family issue and has an impact on society. If the child fails to get good care, it means that the future generations are being neglected which can have a detrimental impact on society. Additionally, a parent needs to be at home every time to look after the child resulting in withdrawing from the workforce which can also mean that the economy lost a skilled worker.

An increased level of inequality within a country is closely associated with the distribution of income and wealth within a nation which can lead to poor outcomes for education, health, and happiness. The link between inequality and environmental impact is identified over a global level. According to the World Bank (2010), people living in countries having poorer economies are more exposed to disasters such as floods, drought as well as heatwaves. On the other side, high-income economies do have proper planning and better infrastructures to deal with environmental disasters.

Addressing inequality requires rethinking the problem. First, when it comes to fiscal policies and progressive taxation. Tax escalation is a fundamental aspect of effective tax policy. Our research shows that in the upper segment of the income distribution it is possible to raise marginal tax rates without sacrificing economic growth.

The use of digital tools in tax collection can also be part of a comprehensive strategy to stimulate internal revenue. Reducing corruption can improve collection and also strengthen confidence in the government. Most importantly, these strategies allow the generation of the necessary resources to make investments that multiply the opportunities for the communities and people who have been lagging behind.

Budgeting with a gender perspective is another valuable fiscal tool in the fight against inequality. Many countries recognize the need to improve gender equality and empower women, but governments can use gender budgeting to structure spending and taxation in ways that further drive gender equality; in turn, the increase in female participation in the labor force strengthens growth and stability.

Second, social spending policies are increasingly important in combating inequality. When well designed, they can be instrumental in mitigating income inequality and its negative effects on inequality of opportunity and social cohesion.

Education, for example, prepares young people so that as adults they will be productive citizens who contribute to society. Health care not only saves lives, but it can also improve the quality of life. Pension programs can help preserve the dignity of people in old age.


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