Students reflect on Inside Job – The 1% vs. the 99%

As discussed in What I learned watching Inside Job 25 times, I show this movie at the end of my introductory investing course. I then ask students to reflect on it. One of the questions they’re asked:

“The movie talked about how income disparity is growing between the top 1% of income earners and the other 99%. The 1%ers continue to separate themselves from other 99%. An example: a Manhattan apartment can now sell for over $100 million. But, over half of Americans have no wealth and are having trouble affording the house or apartment they live in! How do you view this? Is it a concern to you or something that’s not important, and why? Make sure to address how this could play out in the medium and long-term future, as in:  Where will this lead?”

Sophomore M.K.  I believe that compensation should be about value added towards the company, so in the case of the disparity between a CEO and a minimum wage worker, the CEO is potentially making million dollar deals, while a wage worker is doing a non-specialized task. The debate over income disparity that is occurring should not be focused on executive pay; rather, raising minimum wage to allow hourly workers to make a real living instead of living paycheck to paycheck. If something like this is not done, there will be real societal issues to follow, with hourly workers possibly going on strike or worse, leaving the economy in the lurch. This is a major issue that can and should be solved by the government, requiring companies to pay their hourly workers fair pay and benefits. After watching the documentary on Walmart earlier in the year in class, that documentary made the point that the bottom line of the company would not be reduced by such as margin where they couldn’t make money. Rather, the movie showed that with higher pay came worker satisfaction which in turn led to more efficient working. This would led to large companies making even more money, with their workforce even more efficient.

Sophomore H.R.  The US is in a bad position right now. The rich keep getting richer, and the poor keep getting poorer. This is of big concern to our country now and especially in the future. As of now, most Americans are struggling to pay rent, and are building up piles of debt. While the 1%ers are living luxuriously, taking tons of money and spending it on things they don’t need, like a 5th vacation home. While the members of a government claim they are actively finding ways to reduce taxes and keep the 99% out of extreme amounts of debt, not much has been done. Bush complained that taxes were too high, and insisted something should be implemented to lower taxes. Glenn Hubbard, a member of the Bush administration, proposed that taxes should be reduced on stock gains. Bush gave a big speech, talking about how he reduced taxes for the people, but really these taxes only affected people who had stock in companies. You need to have money to start with to invest, so those that are barely affording rent are not affected by this at all. Once again, the rich get richer, and the poor get poorer.

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