One often hears the phrase "The rich get richer and the poor get poorer," but how true is that statement in the United States? On one hand, according to several statistics, income inequality is widening. In 1981, the total combined income earned by the wealthiest 5 percent of Americans was 6.9 times greater than the combined income earned by the poorest 20 percent. By 2001, the ratio of the wealthiest to the poorest had increased to 8.4. On the other hand, U.S. Census Bureau studies show that during that same time, poverty rates steadily decreased—from 14 percent in 1981 to 11.7 percent in 2001. It seems almost contradictory that significant inequality ratios stand next to decreasing poverty rates. Yet this contrast exemplifies the complexity of the issues regarding income inequality.
Income inequality exists in the United States, but what does that mean for our society? Perhaps income inequality is an acceptable part of a dynamic and prosperous economy, providing incentives to work hard and advance in education. Or does it disrupt social cohesion and disenfranchise the poor? In this year’s essay contest, students are asked to consider the economics of income inequality and determine what policy, if any, the government should take regarding these issues.
The Statistics Behind Income Inequality
Economists have long debated the causes of income inequality; however, it is generally agreed that educational attainment and family structure are currently two significant factors.
Over the past few decades, more jobs have required high-skilled workers. Therefore, wages for college-educated workers have increased faster than those of low-skilled workers as demand for high-skilled workers increased. This trend accelerated during the late 1990s when companies continued to rely more on technology. In 2000, individuals with college degrees were on average paid 80 percent more than those who had graduated solely from high school. Therefore, the changing nature of the American economy, with its increasingly greater emphasis on education and information, has contributed to increased income inequality.
Changes in family structure have also widened the income gap. A growing percentage of Americans live in single-parent households. These families, often headed by single-mothers, earn about half the income of two-parent families. Among the highest paid 20 percent of households, 90 percent are married-couple families; among the poorest 20 percent of households, two-thirds are single or single-parent families. This trend in household structure is a second significant factor explaining income inequality in the United States today.
Identifying the Problem
The economic concept of externality can help identify the costs and/or benefits regarding income inequality issues and help inform the role government might play, if any, in addressing income inequality. Externalities are social costs and benefits that spill over beyond the private costs and benefits faced by an individual. One classic example of an externality is a factory's smokestack that pollutes the air and causes health problems for people living nearby. The factory does not face any costs as a result of its pollution; instead, that pollution is a cost that has "spilled over" to the people nearby, who have to "pay" for its unpleasantness and toxicity. One role of government is to sometimes step in and address this form of market failure through regulations, taxes or programs—for if left alone, a market tends not to solve externalities. One way to begin looking at the essay contest question is to ask whether there are external costs or benefits to income inequality.
On one hand, some argue that there are significant external costs due to income inequality. They argue that inequality weakens social cohesion as the lives of the rich and poor become more isolated and separate. With greater inequality, the poor feel disenfranchised and do not participate in civic life, while the rich gain an increasingly powerful influence in politics—thus weakening democracy. Greater income inequality may also result in lower health and increased crime nationally. Furthermore, some contend that poverty breeds poverty, as the children of the poor have to work harder to succeed than the children of the rich. Without intervention, the problems caused by income inequality will only get worse in the future.
On the other hand, others contest the validity of these external costs and point to possible external benefits of income inequality. Many say that some of the external costs brought up in the previous paragraph— such as higher crime, lower health and less opportunity—are not effects of income inequality, but of poverty. External costs due to poverty exist (individuals in poverty are more likely to commit crime, have health troubles and have children who enter kindergarten not ready to learn), but these problems are separate from the issue of income inequality. In fact, some contend that instead of disenfranchising, income inequality provides incentives for those who are at low- to middle-income levels to work hard, attain more education and advance to better-paying jobs.
There is a great deal of contention over the external costs and benefits of income inequality. And externalities are not the only economic lens to look through when considering the issue. Often the results of income equality and inequality are discussed as a trade-off between equity and efficiency. Some argue that relatively equal levels of income may promote social cohesion, but market efficiency may be lost due to government intervention or central planning.
Once a student has determined how they view income inequality, he or she can then begin to consider what policy, if any, government should adopt to address the issue.
What to do?
Those in favor of reducing income inequality might, in their essay, describe why income inequality results in externalities or problems and propose measures government could take to remedy them. Possible policies include a more progressive tax system, increased earned income tax credits, or other such policy that redistributes income from the rich to the poor in order to decrease the income divide. Not only, they might argue, would the external costs of income inequality be removed, but poverty itself would also be reduced.
In contrast, those opposed to government involvement in income inequality might argue that externalities do not stem from income inequality, but rather from poverty. Government should therefore focus on the welfare of the poor, rather than worrying about the income gap. Policies to address the welfare of the poor might include programs that provide preventive medical care or housing subsidies—or a policy that promotes early childhood and K-12 education in order to provide greater opportunity for all.
Other papers might argue that the government should remain out of the issue completely, arguing that income inequality is not a problem to current American society—or, perhaps, that it is a natural result of our changing economy and the increasing valuation of education.
Essay writers may also, if they wish, compare income inequality in the United States with other countries. For example, the distribution of income in Germany and France is more equal than in the United States. Germany and France also have more extensive government services, like health care and unemployment benefits. However, there may be a trade-off in these benefits. While Germany and France have lower income inequality, they also have higher unemployment rates than the United States.
The ideas suggested in this primer are just a few of the ways students can think about income inequality when they research the topic and write their essays. Students are encouraged to take an innovative position as well as carefully consider the economic concepts involved. The Minneapolis Fed staff look forward to reading this year's papers.
Best of luck!
VOID WHERE PROHIBITED. NO PURCHASE OR PAYMENT OF ANY KIND IS NECESSARY TO ENTER OR WIN THIS CONTEST. OPEN ONLY TO RESIDENTS OF THE 50 UNITED STATES AND D.C. WHO ARE ENROLLED IN GRADES 6-12 FOR THE 2017-2018 SCHOOL YEAR.
ELIGIBILITY: The Maryknoll Student Essay Contest (the “Contest”) is open only to people who are enrolled in grades 6–8 (Division I) and grades 9–12 (Division II) for the 2017-2018 school year and, as of the date of entry and the date on which the prize is offered (if applicable), are a resident of one of the 50 United States, the District of Columbia, or a province of Canada (except Quebec). Children of Maryknoll employees, associates and affiliates are not eligible. Eligibility determinations will be made by Sponsor in its discretion and will be final and binding. Void where prohibited by law.
HOW TO ENTER: The entry period for the Contest begins at 11:59 p.m. Eastern Time (ET) on August 15, 2017 and ends at 11:59 p.m. ET on November 10, 2017 (the “Entry Period”). To enter the Contest, entrants must submit an essay written by the entrant (“Essay”) that complies with the following submission guidelines: (a) the Essay must be written in English and must be approximately 500-750 words; (b) the Contest’s theme (‘Recognizing Violence and Promoting Peace’) must be at the heart of the Essay; and (c) the Essay must comply with all requirements set forth in these Official Rules, including the Submission Guidelines set forth below. Sponsor’s determination as to whether an entrant’s Essay complies with these Official Rules will be final and binding. There are two ways to enter the Contest.
Online Entry: To enter the Contest online, during the Entry Period, entrants must visit the website located at MaryknollSociety.org/Essay (the “Website”) and follow the on-screen entry instructions. Online entry is limited to only those entrants who are 13 years old or older at the start of the Entry Period (younger Entrants may submit their essay by mail). Each entrant who enters online will be required to upload his or her Essay to the Website and complete and submit the Contest entry form. Online entries must comply with all technical specifications provided on the Website (including those relating to approved file formats for the Essay) and must be submitted and received by Sponsor prior to the conclusion of the Entry Period. Entry times will be determined using Sponsor’s computer, which will be the official clock for the Contest. Normal time rates, if any, charged by the entrant’s Internet service provider will apply. In the event of a dispute regarding the identity of an entrant, the entry will be deemed made by the authorized account holder of the e-mail address submitted at the time of entry (i.e., the natural person who is assigned to an e-mail address by an Internet access provider, on-line service provider or other organization responsible for assigning e-mail addresses for the domain associated with the submitted e-mail address).
Entry by Mail: To enter the Contest by mail or delivery, entrants must send to Sponsor at the address specified in Section 12 below a package containing a hand-written or printed copy of the entrant’s Essay and a legibly completed Contest entry form. The package must be sent either via U.S. mail with proper postage affixed, or by a major courier that regularly delivers to New York City (for example, FedEx or U.P.S.) with all delivery charges prepaid. Contest entry forms will be made available on the Website and in some promotional materials for the Contest. Entrants can also request a printed copy of the Contest entry form by sending Sponsor a self-addressed, stamped envelope as described in Section 12 below. Mailed entries must be postmarked or provided to the courier service by 11:59 p.m. ET on November 10, 2017 and must be received by Sponsor by no later than December 1, 2017.
General Entry Terms and Conditions: Completion of the Contest entry form will require that the entrant provide his or her name, e-mail address (optional for entrants submitting the Contest entry form by mail and such other information as Sponsor may require. There is a limit of one entry per person. Each Essay may be submitted only once. If a particular Essay is submitted more than once, Sponsor will have the right to disqualify all entrants who submitted the Essay. Essay will not be returned. Each entrant must keep a copy of his or her Essay for his or her own records. Sponsor will not be responsible for lost, damaged, stolen or mislaid Essay.
SUBMISION GUIDELINES: All Essays submitted in the Contest must comply with the following guidelines: (i) Entries must be written in English; (ii) Entries should be 500–750 words; (iii) The core theme of the Essay cites examples of violence and tells what actions the entrant is taking or could take to promote peace; (iv) the entrant’s name must not appear anywhere within the Essay other than on the accompanying Contest entry sheet; (v) Essays submitted online must be uploaded to the Website in a single electronic file in Microsoft Word or Adobe PDF file format, and named in accordance with the following naming convention: “[ESSAY TITLE] – [FULL NAME OF ENTRANT]”; (vi) Essays submitted by mail or courier must not be bound; (vii) the Essay must be original and have been written solely by the entrant; (viii) the Essay must not previously have been published or won any award; (ix) the Essay must not contain any material that violates or infringes upon the rights of any third party, including without limitation any copyright, trademark or rights of privacy or publicity, or that is defamatory, unlawful or in violation of or contrary to any applicable law or regulation; and (x) the Essay must not contain any material that Sponsor, in its sole discretion, deems inappropriate for public viewing.
SUBMISSION RELEASE: By submitting an Essay, and in consideration of the review by the Judges (as defined in Section 5) of such Essay, each entrant irrevocably agrees to the following: The entrant understands and agrees that Sponsor does not undertake to consider the Essay in confidence. The entrant acknowledges that Sponsor must disclose the Essay to various employees of Sponsor, and may disclose the Essay to those outside Sponsor’s employ, in connection with the judging and winner selection process pursuant to these Official Rules. It is understood that no confidential or fiduciary relationship is entered into by reason of Sponsor’s receipt or consideration of the entrant’s Essay. The entrant’s submission is made with the understanding that the Judges will give his or her Essay such consideration as it merits based on the Judging Criteria (as defined in Section 5) in Sponsor’s sole and final judgment. Sponsor will not be obligated to consider or use any Essay or to offer, negotiate with or enter into an agreement with any entrant pertaining to his or her Essay or otherwise. The entrant acknowledges that no obligation of any kind is assumed by, or may be implied against, Sponsor unless and until such time, if ever, as a formal written contract has been entered into between the entrant and Sponsor. The entrant shall not be entitled to any compensation from Sponsor with respect to the review by the Judges of his or her Essay. Consideration of the Essay for purposes of the Contest is not an admission by Sponsor or the Judges of the novelty, propriety or originality of the entrant’s Essay. The entrant acknowledges that other persons, including Sponsor’s employees, may have previously originated and/or submitted to Sponsor or to others, or made public, or may hereafter originate and/or submit or make public, similar or identical material, which Sponsor will have the right to use. The entrant understands that he or she will not be entitled to any compensation because of Sponsor’s use of such other similar or identical material. Without limitation of the foregoing, Sponsor may use, without any payment or other obligation whatsoever to the entrant, any part of his or her Essay, and any idea or concept contained therein, that (a) is similar or identical to, or contains significant elements encompassed in, a concept that is under consideration or in development by Sponsor before or at the time of the submission, (b) is not unique, novel, original, and concrete so as to be entitled to intellectual property protection under applicable laws, (c) has been made public by anyone at the time of its submission to Sponsor, or otherwise is in the public domain, (d) would be freely usable by a third person if it had not been accepted as a submission or the subject of any agreement, (e) is not protected by copyright law in the pertinent territory, or (f) is similar or identical to, or contains significant elements encompassed in, an idea, concept or material that is independently created by Sponsor or its employees or contractors or those of third parties. Sponsor shall be entitled to all rights of exploitation in accordance with all applicable laws, in any ideas, concepts or materials that are created independently by Sponsor, even if similar or identical to the entrant’s Essay. The entrant agrees that his or her agreement to the foregoing is a prerequisite to Sponsor’s review of his or her Essay.
WINNER SELECTION AND NOTIFICATION: Following the conclusion of the Entry Period, the following will be selected from each of the two Divisions by judges designated by Sponsor (the “Judges”) from among all eligible entries received during the Entry Period: (i) one potential Grand Prize winner; (ii) one potential Second Place Prize winner; and (iii) one potential Third Place Prize winner. All winners will be chosen by assessing each Essay based on the following criteria (the “Judging Criteria”), weighted as indicated: overall quality of essay & adherence to the topic (50%); creativity (20%); originality (20%); and spelling & grammar (10%). Sponsor reserves the right, in its sole discretion, to select one or more additional Grand Prize winners if, in the sole opinion of Sponsor and/or the Judges, the quality of the eligible entries submitted warrants selection of more than one Grand Prize winner. Sponsor reserves the right, in its sole discretion, to not select any winner if, in the sole opinion of Sponsor and/or the Judges, none of the Essays submitted are of acceptable quality. The odds of winning depend on the number and quality of eligible entries received. Potential winner(s) will be notified by mail, telephone and/or e-mail, at Sponsor’s discretion on or about February 15, 2018. Each potential winner is subject to verification of eligibility. If a potential winner cannot be reached or does not respond within 10 days of the initial notification attempt, or if any attempted notification is returned as undeliverable, or if a potential winner is deemed ineligible by Sponsor, or if a potential winner does not otherwise comply with these Official Rules and/or cannot accept their Prize as awarded for any reason, then the potential winner may be disqualified and an alternate winner may, at Sponsor’s discretion, be selected from among the remaining eligible entries as specified in these Official Rules (in which case the foregoing provisions will apply to such newly-selected entrant).
PRIZE: A total of Two (2) Grand Prizes, Two (2) Second Place Prizes, and Two (2) Third Place Prizes will be offered (unless Sponsor elects in its discretion to increase the quantity of Grand Prizes offered). Each Grand Prize consists of a Cash Award in the amount of $1,000, and each will appear in the May/June 2018 issue of MARYKNOLL magazine. Each Second Place Prize consists of a Cash Award in the amount of $300. Each Third Place Prize consists of a Cash Award in the amount of $150. In addition, all winners will: (i) receive a certificate of merit; (ii) be published online at MaryknollSociety.org/Winners by April 1, 2018; and (iii) receive a letter of recognition from the superior general of the Maryknoll Fathers and Brothers. Each winner will not receive any part of his/her corresponding prize unless and until the standard form acceptance agreement has been signed by both parties. If a selected winner has not signed and returned to Sponsor the standard form acceptance agreement within 30 days after the date on which Sponsor provides the standard form acceptance agreement to the winner, the Prize will be deemed to have been withdrawn and Sponsor will have no further obligation or liability to the winner. No substitution, cash redemption or transfer of the right to receive any Prize is permitted. Each Prize consists only of those items expressly specified in these Official Rules as being part of the Grand Prize. Sponsor and the Judges will not provide any evaluation of or commentary on Essay submitted in connection with the Contest. All expenses or costs associated with the acceptance or use of the Prize are the responsibility of the winner. All federal, state, provincial/territorial and local taxes on the value of a Prize, if applicable, are the responsibility of the winner. FOR U.S. RESIDENTS: An IRS form 1099 will be issued in the winner’s name if required by law.
GRANT OF RIGHTS: By entering the Contest, each entrant, if selected as a potential winner, irrevocably grants to Sponsor and its affiliates, and the successors, agents, licensees, marketing contractors and assigns of each of the foregoing and Catholic Foreign Mission Society of America, Inc. (all of the foregoing, the “Contest Entities”) the right to use the entrant’s name, likeness, voice and/or biographical information, and the title of the Essay submitted by the entrant, in perpetuity, throughout the world, in all media and formats whether now or later known or developed (including without limitation on Sponsor’s websites and social media channels), for the purpose of announcing the winner(s) and administering and publicizing the Contest and future contests, without further compensation.
RELEASE AND LIMITATION OF LIABILITY: The Contest Entities, all other companies involved in the development or operation of the Contest or the provision of the Prizes, and the directors, officers, employees and agents of each of the foregoing (collectively, the “Released Parties”) are not responsible for, and will have no liability for, (a) late, lost, delayed, illegible, stolen, mislaid, damaged, corrupted, postage-due or incomplete entries or Essays, incorrect or inaccurate capture of, damage to, or loss of entries or Essays, or any other human or technical errors of any kind relating to the operation of the Website, communications or attempted communications with any entrant, the submission, collection, storage or processing of entries or Essays or the administration of the Contest, (b) undeliverable e-mails resulting from any form of active or passive e-mail filtering by a user’s Internet service provider and/or e-mail client or for insufficient space in user’s e-mail account to receive e-mail or (c) any damage to any computer system resulting from participation in or accessing or downloading information in connection with the Contest. By entering, each entrant releases and agrees to hold each of the Released Parties harmless from and against any and all claims and liabilities of any kind that the entrant ever had, now has or might in the future have arising out of or relating to the Contest, participation in the Contest, the use of the Website, the Essays (including any loss or damage to the Manuscript), the acceptance of any Prize and/or any use of the entrant’s name, likeness, voice and/or biographical information as permitted pursuant to these Official Rules, including without limitation all claims and liabilities based on any violation of the right of privacy or right of publicity, copyright infringement, misappropriation or violation of any other personal or proprietary right. Entrants assume all liability for any injury or damage caused, or claimed to be caused, by participation in the Contest, the Essay, the use of the Website, the acceptance of any Prize and/or any use of the entrant’s name, likeness, voice and/or biographical information as permitted pursuant to these Official Rules. The Released Parties are not responsible for any typographical or other error in the printing of the offer, or administration of the Contest.
GENERAL RULES: Sponsor reserves the right, in its sole discretion, to modify these Official Rules (including without limitation by adjusting any of the dates and/or timeframes stipulated in these Official Rules) or cancel, modify or suspend this Contest at any time in its discretion, including without limitation in the event that a virus, bug, technical problem, entrant fraud or misconduct, or other cause beyond the control of the Sponsor corrupts the administration, integrity, security or proper operation of the Contest or if for any other reason Sponsor is not able to conduct the Contest as planned (including without limitation in the event the operation of the Contest is interfered with by any fire, flood, epidemic, earthquake, explosion, labor dispute or strike, act of God or of public enemy, communications failure, riot or civil disturbance, war [declared or undeclared], terrorist threat or activity, federal, state, provincial/territorial or local law, order or regulation or court order). In the event of termination of the Contest, a notice will be posted on the Website and if Sponsor has received Essays of acceptable quality, a winner will be selected in accordance with the procedures set forth in these Official Rules from among all eligible entries received prior to the time of termination. Sponsor reserves the right, in its sole discretion, to disqualify or prohibit from participating in the Contest any individual who, in Sponsor’s discretion, Sponsor determines or believes (i) has tampered with the entry process, or has undermined the legitimate operation of the Website or the Contest by cheating, hacking, deception or other unfair playing practices, or (ii) has engaged in conduct that annoys, abuses, threatens or harasses any other entrants or any representative of Sponsor, or (iii) has attempted or intends to attempt any of the foregoing. CAUTION: ANY ATTEMPT BY AN ENTRANT TO DELIBERATELY DAMAGE ANY WEBSITE OR UNDERMINE THE LEGITIMATE OPERATION OF THIS CONTEST IS A VIOLATION OF CRIMINAL AND CIVIL LAW. SHOULD SUCH AN ATTEMPT BE MADE, SPONSOR RESERVES THE RIGHT TO SEEK DAMAGES FROM ANY SUCH INDIVIDUAL TO THE FULLEST EXTENT PERMITTED BY LAW. The use of agents or automated devices, programs or methods to submit entries is prohibited and Sponsor reserves the right, in its sole discretion, to disqualify any entry that it believes may have been submitted using such an automated device, program or method. All federal, state, provincial/territorial and local laws and regulations apply. All entry materials become the property of Sponsor and will not be verified or returned. By participating in this Contest, entrants agree to be bound by the Official Rules and the decisions of Sponsor and the judges, which are final and binding in all respects. These Official Rules may not be reprinted or republished in any way without the prior written consent of Sponsor.
DISPUTES: By entering the Contest, each entrant agrees that, to the maximum extent permitted by applicable law, (a) any and all disputes, claims, and causes of action arising out of or connected with the Contest, the Essay, shall be resolved individually, without resort to any form of class action (Note: Some jurisdictions do not allow restricting access to class actions. This provision will not apply to you if you live in such a jurisdiction.); and (b) any and all claims, judgments and awards shall be limited to actual out-of-pocket costs incurred, including costs associated with entering the Contest, but in no event attorneys’ fees; and (c) under no circumstances will any entrant be permitted to obtain any award for, and entrant hereby waives all rights to claim, punitive, special, incidental or consequential damages and any and all rights to have damages multiplied or otherwise increased and any other damages, other than for actual out-of-pocket expenses. All issues and questions concerning the construction, validity, interpretation and enforceability of these Official Rules, or the rights and obligations of the entrants and Sponsor in connection with the Contest, shall be governed by, and construed in accordance with the laws of the State of New York without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of New York. Any legal proceedings arising out of this Contest or relating to these Official Rules shall be instituted only in the federal or state courts located in the State of New York, waiving any right to trial by jury, and each entrant consents to jurisdiction therein with respect to any legal proceedings or disputes of whatever nature arising under or relating to these rules or the Contest. In the event of any conflict between these Official Rules and any Contest information provided elsewhere (including but not limited in advertising or marketing materials), these Official Rules shall prevail. All entries are subject to verification at any time.
REQUESTS FOR WINNER’S NAME, RULES AND ENTRY FORMS: For additional copies of these Official Rules, copies of the Contest entry form and/or the name of the winner (which will be available after approximately February 15, 2018), send a self-addressed, stamped envelope to: Maryknoll Fathers and Brothers, 2017 Student Essay Contest, Division I (or II), PO Box 302, Maryknoll, New York 10545-0302.
SPONSOR: Catholic Foreign Mission Society of America, Inc. (aka Maryknoll Fathers and Brothers), PO Box 302, Maryknoll, New York 10545-0302.