Wealth, income and inequality

What does it mean to be wealthy?The answer to this question varies from culture to culture. In the modernised, industrial world that we live in. wealth generally means all the collected Store of valuable things that belong to a person (or family, company or country). Wealth can include money saved in bank accounts, or invested in pension schemes. It can include land, houses or other property and valuable belongings such as works of art or precious jewels Many people also own stocks and shares in companies. The various things that make up a person's wealth are often called assets.

 

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So wealth is a statie thing. The term income, on the other hand, suggests a flowof money. Income is the amount of money that a person (or family or company) receives over a period of time. For most people, this means the salary they get for the work they do. However, there are other sources of income. One source is government benefits. such as unemployment benefit or family support. Another source is rent from property and another is interest from savings.

Huge inequalities in wealth owned by individuals exist in many countries. Take the United Kingdom for example. A fifth of all the marketable wealth is owned by just one per cent of the UK's population That one per cent own over S 355 billion of assets. Figure 1 on page 56 shows how the rest of the United Kingdom's wealth is distributed. As you can see, the richest 50 per cent of the population own over 93 per cent of the wealth. In other words, half the population own nearly all the wealth and the other half own only a tiny percentage. The chart also shows that the richest one per cent of the population own over a fifth of all the country's wealth.

Large inequalities also exist in the distribution of income. The extent of these Inequalities can be shown with something called the Lorenz curce. You can see an example in figure 2 belo w. The straight blue line shows perfectly equal distribution of income For example, the bottom 20 per cent earn 20 per cent of the total income. The bottom 40 per cent earn 40 per cent and so on. This is the ideal situation. The red curve, however, shows the real situation for the United Kingdom. You can see immediately how far from perfect the distribution is. Half of the population, for example, earn just under a third of the total income. Move horizontally along the population line and you can see that 90 per cent of the population take only 70 per cent of the total income. This means that the top ten per cent of the population earn nearly 30per cent of the country's total income.

 

В Comprehension

Now read the text again and match each paragraph with the correct heading. There are two extra headings that you don't need.

PARAGRAPH 1

PARAGRAPH 2

PARAGRAPH 3

PARAGRAPH 4

A How governments can create more equality

B Inequalities in income

C Inequalities in wealth

D What income is

E What wealth is

F Why there are inequalities in wealth and income

Before you listen__

Discuss the following with your partner.

Economic inequality also exists on a global scale. Below are some facts about global economic inequality. See if you can guess which figures from the box complete the notes.

The lowest earning Americans have higher

incomes than (1)......................of the

world's population.

The world's richest (2)......................per cent

earn more than the combined income of the world's poorest (3)......................per cent.

The (4)......................richest people in

the world have incomes that are more than the combined incomes of the poorest (5)......................countries in the world.

 

С Listening )))

Now listen and check your answers.

 

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Before you read_

Discuss these questions with your partner.

What docs poverty mean? Is there a way to define it?

How many people in the world do you think live in poverty?

Do you believe people in industrialised countries live in poverty

 

D Vocabulary

Complete each sentence with a word or phrase from the box.

■absolute	■associate	■ average
■ cycle	■corruption	■ define
■generation	■ natural	■disasters
■shelter	■ trap

 

 

1 We......................high crime rates with poverty

and unemployment.

2 Having a.......................a roof over your head, is

a basic need of humankind.

3 How does the dictionary......................this word?

4 Floods, droughts, hurricanes and other

......................are happening more frequently.

5 Giving money secretly to judges or politicians so that they help you is an example of.....................

6 Hunters will sometimes set a......................

instead of using a gun.

7 Lets hope the next......................finally put an

end to hunger and poverty.

8 The world's water supply is a......................which

involves the sea. rainfall and rivers.

9 If somebody lives in......................poverty, that

means they are completely without money to buy basic necessities.

10 The......................salary at that company is

very high.

 

Reading 2

Poverty

Without a doubt poverty is a huge problem in the world today. Figures suggest that three billion people or half the world's population live in

poverty. However, although we associate poverty

with developing countries, poverty of some kind also exists in industrialised nations. For example, it is now thought that quite possibly one in every ten Americans lives in poverty. However, poverty means different things to different people. How do

economists define poverty?

One has measure of poverty is absolute poverty.

People live in absolute poverty when they live on or below the poverty line. This is a level of income that is so low that people cannot afford the basic necessities to live, such as food, clothing and shelter. According to the World Bank, these are people who are living on two dollars a day.

 

 

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However, there are one billion people in the world who live on less than one dollar a day. The World Bank defines this as extreme poverty.

Few people in industrialised countries live in absolute poverty, but many live in relative poverty. This measure of poverty takes into account the differences that exist in a population between the rich and the poor. For example, some economists say that people who earn less than half the average income live in relative poverty. In Britain, this means 14 million people.

Why does poverty still exist? There is no single answer to this question. In developing countries, causes of absolute poverty include natural disasters like droughts and floods, political corruption and war. However, in many cases people and whole populations - are caught in a trap the poverty trap

People on a low income spend everything they have on daily necessities. They save almost nothing. In order to raise themselves out of poverty, they need education. This costs money. Even when governments provide free schooling, the poor may not send their children because they need them to work. These families cannot afford the cost of sending a child to school. Without education, the children cannot find better paid work. In this way, generations of the same family remain poor,

The same cycle that traps individuals can trap a whole population. Economic growth depends on investment. Investment money comes from savings. Л nation that has almost no savings cannot grow economically. This keeps wages low, so again people cannot save and the cycle continues.

 

E Comprehension

Now read the text again and answer the questions.

1 Poverty is...

A only found in developing countries.

В mostly in industrialised countries.

С found in both developing and industrialised countries.

 

2 What number of people live in extreme poverty?

A three billion

B two billion

C one billion

 

3 How can relative poverty be explained?

A It takes into account that there are rich people.

B It's a kind of poverty found in industrialised countries countries.

C It's a kind of poverty only experienced in Britain.

 

4 What cause of poverty is notmentioned in the text?

A war

B lack of natural resources

C natural disasters

 

5 Why can't people escape from the poverty trap?

A Because they refuse to send then children to school.

B Because they need any income their children can earn.

C Because governments don't provide free education.

 

6 According to the text, why are countries often trapped in a poverty cycle?

A There is no money for investment

B The are no schools

C The land is not good for growing crops

Before you listen_

 

Discuss these questions with your partner.

What do you think are the possible results of living in poverty?

In what ways does poverty affect people's lives?

 

Listening)))

Now listen and complete the notes. Health

Poor people (1)......................younger.

Life expectancy is (2)......................years

shorter.

(3)......................is more common.

Family

Teenage girls are more likely to (4)

(5)......................are more common.

(6)......................rates are higher.

Education and training

Children drop out of (Z)......................

earlier.

No (8)......................at work.

 

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Speaking

Discuss this question with your partner.

Do you think it is possible to share wealth equally?

 

Task

Give a two-minute talk on the subject of poverty. First read text 2 again and make notes below on the following.

 

ways of measuring poverty

striking facts about poverty in the world today

where poverty exists

causes of poverty

how poverty affects people's lives

he poverty trap

 

H Writing

 

Pronunciation guide

Inequality

Modernised

Precious

Jewel

Lorenz curve Poverty

Associate

Corruption

Drought

Flood

Schooling

Write a report describing the charts on pages 56 and 57.

First, read text 1 again. Then look carefully at figure 1 and figure 2. Use the outline plan to help you. Remember to include the following language:

The chart shows...

It is clear from the figures that...

The majority of the population...

Л very small percentage of the population...

about / approximately / almost

a quarter / half / a third

In comparison...

In contrast...

is owned by...

earn...

 

Report

PARAGRAPH 1

Introduction. Say generally what the charts are about - use the titles to help you.

Begin like this: These charts show how wealth and income are distributed in the UK. Figure 1 shows...

PARAGRAPH 2

Describe figure 1 in more detail. Say how

much of the wealth the top one per cent own. Compare this with the bottom 50 per cent.

Begin like this: Figure 1 shows how unfairly wealth in the UK is shared out. You can clearly see from the chart that...

PARAGRAPH 3

Describe figure 2 in more detail. Describe the perfect distribution shown by the blue line. Give examples from the chart. Describe the real distribution shown by the red line. Give examples from the chart. Say how much of the total income the lowest 40 per cent earn. Say how much of the total income the top 30 per cent of the population earn.

Begin like this: Figure 2 compares perfect distribution of income with real distribution in the UK. The blue line shows what happens if income is evenly distributed...

PARAGRAPH 4

Conclusion. Explain briefly what the figures show about the UK economy.

Write 200-250 words

 

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Before you read_

 

Discuss these questions with your partner.

Micro means small and macro means large.

What do you think macroeconomics is?

How is it different from microeconomics?

A Vocabulary

Match the words and phrases with the definitions.

1 devastating collapse	A something that happens
2 fiscal policy	B a method or tool for
	doing something
3 domestic	C control of spending
	through taxation
4 steady growth	D money you have to
	spend after paying tax
5 monetary policy	E a serious slowing down
	of the economy
6 recession	F at a slow, unchanging
	rate
7 mechanism	G move around
8 disposable income	H control of the cost
	of borrowing and
	movement of money in
	economy
9 interest	I the members of the
	population able to work
10 circulate	J something you know will
	happen
11 depression	K complete destruction
12 predictable	L the cost of borrowing
	money
13 event	M not foreign
14 workforce	N a very bad period for the
	economy

Macroeconomics

In the 1930 s one of the worlds strongest economies suffered a devastating collapse. It was the American economy, and the disaster was the Great Depression. The effects of the Great Depression were tell all around the world, and it brought about a change in economic thinking Economists began to realise that looking at the behaviour or individual consumers and suppliers in the economy was not enough. Economists and governments bad to understand how the whole economy worked. In other words, they had to have an understanding of macroeconomics.

Microeconomics looks at how the details of the economy work. Macroeconomics lakes a few steps back and looks at the whole picture While microeconomics looks at Supply and demand for a single product or industry, macroeconomics follows supply and demand patterns for the whole economy. Whereas macroeconomics about

economic events at home, macroeconomics looks

at how the domestic economy interacts withthe economies of other countries.

However, macroeconomics isn't only about knowing what's happening in the economy. Alter the shock of the Great Depression, governments realised that an economy needs to be managed. Most governments aim to have steady economic

growth, to control inflation and to avoid recessions.Just managing an individual business is a hard enough task. How do you manage a whole economy? Governments have certain mechanisms which help them to do this.

 

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The first of these mechanisms is fiscal policy. Fiscal policy refers to the tax system and to government spending. Bу increasing or decreasing the amount of tax people must pay, the government can affect how much money people havе available to spend (disposable income). This, in turn, has an effect on demand in the market. Bу increasing or decreasing their own spending, governments can have a huge effect on the growth of the economy

The second mechanism is monetary polic y. With its monetary policy, a government sets Interest rates and also controls the amount of money that circulates in the economy. The interest rate the government sets influences the rate that commercial banks set when they lend money to customers. Interest rates have a big impact on the economy. For example, they can affect people's divisions about saving or spending money

The third mechanism is administrative approach. This is a range of things that governments do to increase the supply erf goods and services to the economy but without increasing prices. There

are a number of ways governments try to do this.

For example, improvements in education and (raining can make the workforce more productive Investment in technology can make industry more efficient. Governments can also change employment and business laws to make the market more competitive.

With a combination of these methods, governments try to steer or guide, the economy on a s teady and predictable path. They aim for gradual economic growth and to avoid disasters like the Great Depression.

 

В Comprehension

Now read the text again and answer the questions.

1 Which countries wore affected by the Great Depression?

A only America

В just America and Europe

C the whole world

 

2 Which of the following is interested in foreign economies?

A microeconomics

B macroeconomics

С both micro and macro economics

 

3 The three different mechanisms which governments use are...

A all concerned with how much money people have to spend.

В aimed at improving education and training.

С all different ways of managing an economy.

 

4 Which mechanisms involve changing interest rates?

A fiscal policy

B monetary policy

С administrative approach

 

5 Which mechanisms might involve creating job training schemes for school leavers?

A fiscal policy

B monetary policy

С administrative approach

 

6 What do governments want to achieve with their macroeconomic policies?

A to predict what will happen in the economy

В to create steady economic growth

C to combine different paths for economic growth

Before you listen _

Discuss the following with your partner.

You're going to hear about the Great Depression -the worst economic recession in recorded history. Before you listen, see if you can put these events in the order that they happened.

the economy began to recover

companies produced more goods for

future demand World War 2 began

people started selling their stocks and shares the stock market crashed people lost jobs and farmers left their farms people borrowed money to invest in stocks

and shares demand began to fall

С Listening)))

 

Now listen and check your answers.

 

 

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Before you read

Discuss the following with your partner.

In soma ways, running a large economy is like running a small business. What do you think are the similarities and what are the differences?

Reading 2

Aggregate demand and aggregate supply

When a company makes plans for how much to produce and what prices to set. it needs information. The company needs to predict the level of supply that will he required to meet demand. It needs to set prices that will keep the business running. In the same way. governments need this information for the whole economy. The total level of demand for all products and services is called the aggregate demand. The total supply is called the aggregate supply.

The demand for products and services is how much is wanted. For a company, the demand conies from customers. For a whole economy, things are a little more complicated. Demand in the whole economy comes from the following:

from consumers, because they buy products and services (consumption)

from companies, because they invest money to build factories and buy machines (investment)

from the government, because they spend money on services and projects (government spending)

from exports, because these are sales to customers in other countries (export)

 

 

D Vocabulary