NEGATIVE CONSEQUENCES OF ADDRESSING ECONOMIC INEQUALITY

 NEGATIVE CONSEQUENCES OF ADDRESSING ECONOMIC INEQUALITY

 

Shortly after economic inequality has been remedied, we must be prepared for an adverse situation due to this correction. Progressive taxation is a dampener for hard work and innovation. If their financial incentives are curtailed, people will be less motivated to take risks, start something innovative and new, or invest in unique ideas. As a result, economic growth in our country will be affected.

 

Some of the people who will be affected are:

1.    Entrepreneurs and Innovators: who may feel discouraged and demotivated if their financial rewards are slashed.

2.    Investors: Domestic investors might not find investing attractive if the taxes are high or the government imposes regulatory constraints.

3.    High-earning professionals driven and motivated by their high earnings and profits may feel disincentivised if they are highly taxed.

4.    The economy might slow down with less innovation and investment.

 

  Furthermore, in our quest to address economic inequality, many individuals may receive benefits they do not necessarily deserve, while others who may be highly deserving might only benefit partially.

 

Let’s take a look at some undeserving beneficiaries:

1.    Minimal Effort Workers: Universal Basic Income might benefit everyone, but the Social Safety net may be abused. Like healthy people posing as wounded war veterans, non-disabled people posing as sick, highly well-off individuals posing as economically weak to take advantage of quotas meant for weaker sections, and children with legitimate parents posing as orphans. Such people will exploit the Social Safety Nets meant for deserving people without trying to contribute to society or develop their employability skills.

2.    Exploitation of Welfare Systems: In India, people who have learnt to game the system take advantage of welfare benefits, housing subsidies, or other support mechanisms without genuine need or effort to stand on their own feet and become self-sufficient. They exploit the welfare system meant for genuinely deserving people.

 

When economic inequality is corrected, some truly deserving people are partially benefitted like:

1.    High achievers, creative problem solvers, thinkers, and innovators: Individuals who excel in their fields, such as scientists, thinkers, creative professionals, and entrepreneurs, might feel progressive taxes limit their financial rewards. Their incentive to innovate and excel is reduced.

 

2. Hardworking Low-Income Workers: Many low-income workers will benefit when economic inequality is remedied. However, their rewards and benefits may be the same as those of someone who does minimal or no work, which can be highly discouraging.

 

To address these issues, there should be fairness in maintaining incentives for hard work and innovation. Some ways could be

1.    Tiered Benefits: The benefits could be proportional to their effort and contribution. For example, those wishing to continue further education and training could receive significant, timely support and encouragement.

2.    Conditional Support: Some conditions could be imposed for receiving benefits like community service, public service, and giving back to society, such as training newcomers on the job, teaching and spreading literacy, or participating in job training programs or continued education so that they may better contribute to society.

3.    Encouraging Innovation and Creative Thinking: Maintaining incentives for innovation, out-of-the-box thinking, innovation and creative problem solving by allowing higher rewards for significant achievements and contributions.

4.    Robust Monitoring: A strict system in place to weed out people abusing and exploiting the system and welfare programs. This will ensure a clean, peaceful environment and support that reaches those who genuinely need it.

 

 

If some of these suggestions are carefully observed, the goal of reducing economic inequality can be achieved. This will minimise the number of undeserving beneficiaries and ensure that the genuinely deserving individuals receive adequate compensation and rewards.