rich poor gap
The Rich-Poor Gap
Vocabulary
| worth | poverty | entrepreneur |
| invest | predict | profit margin |
| gap | widen | distribution |
| enable | abroad | carry out |
| wane | shift | full-time |
| wage | reduce | proportion |
| apply | obvious | negotiate |
| union | income | criticism |
| crisis | consume | capital gains |
| bubble | properly | credit bubble |
| borrow |
Video: The Rich-Poor Gap
Transcript
Bill Gates is worth almost $80 billion. Mexican entrepreneur Carlos Slim Helu, $75 billion. And investor Warren Buffet, $72 billion.
They’re just three of the eighteen-hundred billionaires worldwide.
The richest man in Germany is car parts owner, Georg Scheaffler: he’s worth $24 billion.
At the same time, the world is full of people living in poverty.
Today, just 1% of the world’s population has almost as much money as everyone else put together.
And it’s predicted that they will own more than everyone else after 2016.
Germany has the strongest economy in Europe. But here too, the gap between rich and poor is widening. In the 1980s, the richest 10% of Germans had five times as much as the poorest 10%.
Today the difference is even greater.
Why is the gap between rich and poor widening? We asked the experts.
First to Professor Giacomo Corneo, an economist at Berlin’s Free University, specialized in income distribution.
He says globalization is the cause: companies move factories — and jobs — abroad.
Giacomo Corneo, Public Finance and Social Policy Expert: “That enables them to have production processes carried out by employees who don’t live in Germany, but in countries where wage levels may be one-fifth of those in Germany.
The profit margin increases accordingly.”
Even within companies, employees are losing out: improved technology, robots and computers are putting them out of work.
Next we meet with Dierk Hirschel, a union official.
He says the union’s influence is waning.
A third of Germans have jobs that offer no security and which pay less than jobs that come with a full-time contract.
Dierk Hirschel, Verdi Worker Service Union: “In order to reduce costs, companies are shifting away from collective wage agreements. The proportion of wages governed by them has dropped from 70 to 50 percent.
And that means that the good wages the unions negotiate apply to ever fewer employees.”
So the entrepreneurs make more money; the employees less.
Political scientist Markus Henn says another problem is the tax system in Germany is unfair.
People with a high income pay more tax than people with low wages, but Henn says the differences are far from great enough.
His second criticism is that those who have money left over can invest, and capital gains taxes are much lower than income tax.
He says that’s not only unfair — it’s also dangerous.
Markus Henn, Taxation Reform Activist: “The international Monetary Fund concluded that one of the reasons for the international financial crisis, was that people’s income in the United States was too low.
They had to borrow money . . . and this caused the credit bubble.
And we all know a market economy needs people who buy and consume enough in order to function properly.
That means unequal income is sand in the gears of the economy.”
So what’s the solution?
Many people think it’s obvious: wealth just needs to be distributed more fairly.
Questions
1. I have heard of the four billionaires mentioned in the video. The four billionaires are very famous. Yes or no? Who are the billionaires mentioned?
2. What does the narrator say regarding 1% and 10%? Is the gap between the rich and everyone else increasing, decreasing or staying the same?
3. What was the first expert’s explanation for the increase in the gap between rich and poor?
4. Unions are getting weaker. True or false? Is this good or bad? Which is better, a full-time contract or a part-time job?
5. According to the expert, do rich people pay less taxes than others?
6. What does he say about investments and capital gains?
7. Is inequality good or bad for the economy?
8. According to the report, inequality or the gap between rich and poor should be reduced. Is this correct or incorrect?
A. Is there much inequality in your city or country?
B. What has been the history of equality and inequality where you live?
C. Do you think inequality is good, bad, neither or both?
D. What do you predict will happen in the future?
E. Should there be more equality? How could the gap between rich and poor be narrowed?
