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Q: Is income inequality an integral part of capitalism?
Not sure if it is integral, but it is implicit. Most capitalists don't consider income inequality to be a problem. While people agree that poverty and hunger are problems, it is not convincing for the capitalists it is a problem that one person earns more than others [as long as everyone has enough of the basic necessities].
Inequality is a fundamental reality. Let's say Quora wants to make sure all the 200k+ writers in the system get equal attention and distribution, will such a system be of good quality? Will a sporting event be respected if everyone is guaranteed the same prize? If I have not achieved anything like Bill Gates, do I have right to expect the same level of income he made?
For the capitalists, saying that inequality exists is like saying ocean looks blue. It is neither good nor bad, it just exists.
That said, capitalism includes a few provisions that tries to bring down inequality in a few places [even if that is not the intention]:
- Strive for perfect competition: Many capitalist economies strive for perfect competition by making it easy for normal people to open businesses and making capital easily accessible. When a number of shops open in your area, the big shopkeeper who was making too much money has to share some of his profits.
- Transparency in the market: Markets form the core of capitalism. Capitalists strive for transparent markets and fight against fraudulent practices like "insider trading". When markets perform well, there is less fraud, less monopolies and less concentration of wealth.
- Not having government play a big role: In many emerging markets including Russia and India, you can see many rich people got there through government help. Where government has much power, corruption is rife & those with right contacts will get rich even if they don't have great skills.
Q: Why does every country in the world have debts?
A person can have both debts and investments at the same time. For instance, many people have their home mortgages while at the same time investing in the stock market. Corporations do the same and same for governments. The key here is to stay float (keep debts below assets).
Again, one individual/corporation could borrow from an another country, while other individuals of that parent country could lend to the said country.
What is important here is not the "External Debt" statistic, but the Net international investment position (NIIP) that measures a country's investments minus debts. As you can see, some countries have a large investment while other countries have a large debt.
See more: International Investment Position (IIP), Net Data Report
(The author is Mr.Balaji Vishwanathan who is a Top Writer on Quora with more than 216,000 followers)
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