Economist Article. February 8, 2010.

Textbooks often portray "income inequality" as one of the major concerns facing modern economies. Given its mention in the Oxford History reading, and the Economist article (attached), to what extent to you believe income inequality is one of the three biggest problems facing Europe in the era we are studying? Please respond on your blog with at least a paragraph.



I believe that "income inequality" was one of the problems facing Europe in the area that we are studying, but I do not believe that it was one of the top three problems. While there was economic polarization taking place (a widening gap between the rich and the poor), there were other more influential reasons why Western Europe's economy began to take a turn for the worse. One is that there was increased competition from the Far East for exports, so Western Europe's share of exports was proportionally less than it previously had been, therefore less money was coming into Western Europe due to exports. "Oil shocks" (substantial increases in oil prices) also were another significant cause, given that since the prices of oil were dramatically increasing and Western Europe was not making as much money as a whole, they did not have the money to import the amount of oil they had previously been importing, thus global trade took a downward turn as well, as Western Europe previously imported more significantly. And finally, stagflation (economic stagnation coupled with inflation) was a large problem as well. I believe all three of these issues were far more significant in changing the economic climate in Europe during the 1970s, and the uneven distribution of wealth and the eventual economic polarization was a result of these other causes, rather than vice versa. Thus it doesn't make the list of the top 3 causes for economic problems, although it was a problem of its own.