Professor Kirk Davidson, Sr. School of Business, Mount St. Mary's University (US) gave the speech “Income Disparity: A View from the United States” at Panel 1.
Professor Davidson began the speech with the income disparity in the US and emphasized that the issue is of equal significance in developedaswellasdeveloping countries. He also gave his own opinion from the perspective of economic ethics.
According to Professor Davidson, poverty and income disparity are the two challenges we arefacingatthemoment. Instead of giving sufficient attention on income disparity, the US government focused more on creating equal opportunities in the past. The outburst of Occupy Wall Street put income disparity in a more prominent position. 1% of the population possesses 99% of the fortune. Compared with the situation in the economic recession, nowadays income is distributed in a more unbalanced way.
In the recent US presidential election, both parties gave their solutions on addressing income disparity. Romney calls for tax break and reduction of fiscal expenditure while Obama is in favor of higher middle-and-upper class taxes. The wide-spread concern of income shows that people want more social equality.
Professor Davidson thinks that both developed and developing countries must work out measures to realize a balanced and fair distribution of income without which people will not be confident about the existing economic and political system, thus threatening social stability.
Then Professor Davidson elaborated on income disparity from the perspective of economics and ethics. If the owner of a company reduces employees’ salaries, the cost of production is reduced and the profits maximized. However, in this case, only economic profits emphasized while economic ethics is ignored. Employees are not supposed to be a factor of production. In fact, they are a component of businesses. Therefore, employers must shoulder relevant responsibility for employees.
Professor Davidson talked about the compensation mechanism in American businesses. In his opinion, instead of benefiting stakeholders, especially employees, the mechanism widens income disparity between managerial personnel and ordinary employees. Two suggestions are raised in this regard: First, the mechanism must be carried out in a more transparent way; second, income must be distributed in an equitable way among employees of different levels. He lastlyreaffirmed that income disparity, as a serious problem both in developed as well as developing countries, needs the solutions of every country so that stability of global political and economic environment and a freer and more open market can be realized.
Intern reporter: Zhang Mengsha
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