Please note! This essay has been submitted by a student.
In the recent survey, Atlanta city has received the dubious distinction of being a city having maximum economic and racial inequality, which is a cause of concern. Inequality to some extent brings efficiency, however extreme cases impact the economic growth and the social fabric adversely. At one hand, it starts polarising the rich and the poor, on the other gentrification gives rise to exclusive islands restricting the poor to realize their potential. Extreme inequality also fosters systemic barriers creates culture of destitution leading to mass social unrest. The current situation demands unprecedented intervention from the office of Mayor, otherwise it would have political overtones resulting in anti-incumbency in ensuing elections. It would also have adverse inter-generational impact influencing sustainable economic development. This situation calls for action.
Plato wrote almost 2,500 years ago, “any city however small, is in fact divided into two, one the city of the poor, the other of the rich,” and in Wheeler in 2005 too echoed that scholars have been struck by the remarkable amount of income inequality within dense cities.
The increasing economic and racial inequality in Atlanta presents a cause of concern as the deepening divide between the earnings of the richest 5%, and the bottom 20% of residents in the city may put the prospects of your winning the next election in danger. In the recently released report by the Brookins institute, the average annual income of the richest is about $297827, while the poorest Atlantans end up earning merely about $14850 per annum. Though the median income of the city is around $57000, the 5% richest in the city earn 18.8 times more than the poorest 20%. The striking difference mocks the existence of the spirit of the American dream of having equality of opportunity to every citizen to realize limitless potential to achieve highest goals. Consequently, young children born in these two disparate communities write a completely new script about their life-chances, future prospects and possibilities.
As a Mayor of Atlanta, it is the most defining challenge today. This is the startle reality in the Capital of the New South, cradle of the civil rights movements, and land of commitment to ideology to equality and fairness. Circumstances pose consequential threat to the city administration, policy makers and even the regional planners, which would not only impact the economic and social growth of Atlanta adversely but also give reign to the leader of republican party in the ensuing election.
This is extremely critical for you because since 1879 (Nedom L. Angier, the 23rd Mayor was the last Republican Mayor of between 1877 and 1879), there has always been a democrat mayor in Atlanta. Despite the fact that Barack Obama, Oprah Winfrey, and other African American celebrities also campaign in the last election for the mayor in 2018, the winning margin was historically as low as 823 votes, which was less than the 1 percent threshold needed to avoid a mandatory recount.
This increasing inequality is most critical and sensitive issue today in Atlanta- you must give your top priority to improve it.
The inequality is embedded into the social, political, and economic context which is defined in terms of existence of unequal access to resources, availability of opportunities, or rewards for different social positions or status within a group or society. This inequality of income and wealth are the major dimensions, however other significant dimensions include power, prestige, schooling, ancestry, race, and ethnicity .
This deepened inequality is the resultant of not just due to skill differences leading to disparity in ability to earn but also primarily due to possession of wealth in the hands of a few. Income and wealth inequalities bespeaks of concentration or mass concentration of income and wealth in the hands of the few.
Income bestows useful understanding about what a person brings home in his day to day job, business or manual labour, while wealth is slightly different as it focuses on the assets, and the earnings out of them. Assets like home, stocks etc. are huge sources of wealth for the rich, who transfer them from generation to generation.
Wealth inequality has substantial impact over time as not only it gets accumulated but also grows faster in comparison to income.
Surprisingly, the racial segregation in line with the maps prepared in 1934 still accords impermeable boundaries between the white and the black in Atlanta as the city is clearly divided into green and red zones still demonstrating the shadow of John Crow and even the slavery. The zones where the blacks predominantly live have not yet recovered from economic loss after the recession and several of them lost their houses permanently. This suppresses the black doubly as the accrued wealth of the white is transferred multi-generationally. A large number of laws though have been abolished exhibit strong indelible traces and function as drivers of inequality. In Atlanta, drivers of inequality is visible in terms of those customs and practices that trigger the black’s restricted access to banks, mortgage laws, access to quality education, and availability of equal opportunity to move up in the economic ladder.
A few analysts view that trends of inequality are ameliorating as the absolute household- income of the rich as well as the poor tend to increase over the years, but what makes the situation at Atlanta disturbing is the destitution of the poor and the relative inequality between rich and poor. The relative gap has been increasing substantially that has risen to the ratio of 18 to 1, which is the largest among all big cities in the USA. In terms of relative inequality, Atlanta stands dubiously at rank one followed by Washington, D.C., Providence, New Orleans and Miami.
Atlanta is the 2nd largest majority black area in the country. Still, African Americans in the city have been moving to the suburbs over the last decade, and the city’s black population narrowed from 61.4% in 2000 to 54% in 2010. Meanwhile, Atlanta has witnessed the fastest growth in the white proportion in comparison to any other city in the US. The white population soared from 31% to 38% in the first decade of the millennium . The primary reason of the blacks being pushed towards the suburbs is the higher cost of living in the city, where the poor are hardly managing to survive.
The existence of the middle class is shrinking, and it is hollowed down due to lack of growth and burgeoning inequality. For them too access to health care, exceedingly high cost of living , and transportation pose economic threat restricting them with not having sufficient income to bring home. There is a systemic barrier for someone in the middle range as jobs have been created but these vary for 10 to 14 dollars per hour which squeezes job opportunities for middle income groups, those who have skills and qualifications for higher earning jobs than lower paid ones.
The Gini coefficient measures the inequality among values of a frequency distribution (e.g. levels of income). The value Zero expresses perfect equality, where all values are the same (for example, where everyone has the same income). A Gini coefficient of 1 (or 100%) expresses maximal inequality among values (e.g., for a large number of people, where only one person has all the income or consumption, and all others have none, the Gini coefficient will be very nearly one). The Gini index or Gini coefficient of Atlanta city is 0.574 as against the Gini index of the USA which is 0.49 . This indicates that more inequality persists in Atlanta city than in the USA, which itself is more unequal than other OECD countries. This is indeed a cause of concern.
Those who advocate that if you make wealthy people wealthier, it would lead to trickle-down effect and they would be the job creators, but this theory seems to have failed in Atlanta. It is the tipping point to understand and act on the disparity arising out of racial-income-wealth gap. This is the high time to focus our attention on the drivers like redlining, housing- segregation and restricted access to banking to the families of colour, as theses drivers have widened the gap between the families of the white and those of color across the city.
The primary concern for this trend is the concentration of the rich as well as the poor in separate geographical areas due to disparage economic possessions and opportunities, and also in light of the shrinkage of middle class. The rich few start thinking of creating separate infrastructure that they use exclusively, spend resources on themselves and develop the segregated islands amidst ghettos. This gentrification leads to further exclusion of the poor, who are left with lower access to resources. The rich develop their own schools, community facilities, parks, clubs, and other institutions, with the desire of not owning the burden of the poor- which deepen inequality, alienate the poor and propel long term consequences. Some analysts may view this model attractive as it develops self-sustained systems by the rich, but when delved deeply into the matter, this restricts growth opportunities of the poor. The problems of inequality gets compounded as the children of the rich would have access to better educational opportunity resulting into transforming them into quality human capital, while the poor remain the sufferer in perpetuity. This discrimination in Atlanta also occurs on the racial lines as most of the destitute hail from the community of colour.
The concentration of wealth and income in the hands of the few with larger concentration of the poor at the bottom steadily leading to shrinking of the middle class, which results in reduction of demand of goods, impacting the overall health of the economy adversely.
If the city administration does not take into account opting for preventive, affirmative, and corrective interventions in the areas of education, health-care, employment and economic development, there would be grave discontent among large section of population, which may result in to anti – incumbency in the ensuing elections.
Arthur Melvin Okun published his book, ‘Equality and Efficiency: The Big Trade-off’ around four decades ago, where he propagated that the redistribution would just not solve the problem of inequality as it creates symbolic situation of leaky bucket, where leaks in transit are attributed in terms of higher administrative cost of taxation, incentive effects on the job performed by the rich and the poor- those who pay the taxes and who receive redistributive income, and tax avoidance.
However, analysis of empirical data in several cases exhibit that that efficiency and equality may go hand in hand and improved together. For instance, high degree of inequality adversely affects access to education and health facilities by the poor. Raising taxes may increase government’s revenue, which may trigger economic growth, leading to enhanced entrepreneurship, labour mobility and higher productivity by the large chunk of middle and lower class people. It is also a fact that the adverse effects of increased taxes on the rich is often overemphasized, which is empirically not the case. it is occasionally counterbalanced by the enhancement of productivity of weaker section of society.
The high degree of inequality also affects the ability of the poor to respond to the unforeseen financial crisis like recessions as it is the lower income-community that gets affected disproportionately the most by such recessions. When the recession starts affecting the rich, they find ways to respond politically and keep themselves least affected. A longer recession may negatively impact the economic growth and investment, which leads to jobs-cut of the masses affecting the low income groups substantially.
The interconnection between inequality and efficiency is not to be seen as a unidirectional and rigid, but it is quite similar to Laffer Curve relationship. It starts from the situation of full equality, the positive impact of increasing inequality outweigh the adverse effects, and the net impact is enhancement in efficiency. However, after a while, the adverse impact of increased inequality gets dominated, and the efficiency falls. Hence, at this moment, when Atlanta is witnessing higher inequality as never before, the inefficiency has cripled the entire system.
The argument of the leaky bucket of government redistribution in favor of enhancing inequality is also not substantive and it may be addressed strategically through emphasizing on social mobility (especially through education, human capital formation) and stimulating labour-market participation.
The inequality prevalent in Atlanta is a cause of concern as it adversely affects the growth of the city by polarising the rich and the poor and shrinkage of the middle class. The gentrification of the rich is restricting the economic opportunities for the disadvantaged groups, which are disproportionately affected by the consequences of recession, limited opportunities of developing human capital, penurious access to health services and crippled labour mobility. The overlap of the racial and economic possessions create a tragic situation for Atlanta which certainly has long- term adverse consequences for overall sustained development, intra- generational and inter- generational equity. If issues are not addressed immediately by short term and long term systemic interventions, it would have serious political and social repercussions for you, the party as well as for the social fabric of the society.