Spotlight on Worldwide Inequality

For many people around the world, where and to whom one is born is the single most important factor in deciding the trajectory of one’s life. If you are born to middle class parents in one of the developed wealthy nations of the world, you will be blessed with comfort, opportunity, good healthcare and education, and a life of profitable possibilities. On the other hand, find yourself in a slum in Nairobi in Kenya or if you are the daughter of tea pickers in Assam in India, then all a life of poverty, uncertainty, suffering and the threat of extreme exploitation awaits you.

Shocking statistics

We live in a world rife with inequality of wealth, income, power and influence. It is the underlying cause of deep-seated social tensions, community divisions and a range of poisons that cause terrible suffering to millions of people.

The disparity between the wealthy minority and the billions living in suffocating poverty is greater than it has ever been.

Worldwide it is estimated that the wealthiest 10 per cent owns 85 per cent of global household wealth. According to Wikipedia, “As of May 2005, the three richest people in the world have assets that exceed the combined gross domestic product of the 47 countries with the last GDP”, and “The richest 2 per cent of the world population own more than 51 per cent of the global assets”.

At the other, more densely populated, less perfumed end of the scale, Global Issues reports that: almost half the world’s people (over 3.5 billion) live on less than 2.50 US dollars a day; and 80 per cent live on less than 10 dollars a day. The largest proportion of those living in poverty are in India, rural China and sub-Saharan Africa, where despite the fact that some countries within the last decade or two have seen economic growth, poverty rates have remained unchanged and “some countries – Angola, the Democratic Republic of the Congo and Gabon – have actually seen an increase in the percentage of their population living in extreme poverty”. And there would seem to be no light at the end of the tunnel. According to UNICEF, “it would take more than 800 years for the bottom billion to achieve 10 per cent of global income under the current rate of change”.

The world of income and wealth inequality is awash with shocking statistics. Figures disclosed by World Bank economist Branko Milanovic, and reported by Nobel Prize winning economist Joseph Stiglitz, are shocking and revealing: “Eight per cent of humanity takes home 50 per cent of global income, the top 1 per cent alone takes home 15 percent.” America, he states, “provides a particularly grim example for the world.” It is where income and wealth inequality reach their zenith, and where one in four children live in poverty. The countrys wealthiest 1 per cent (incomes above 394,000 dollars) take “home 22 per cent of the nation’s income; the top 0.1 per cent, make do with a colossal 11 per cent. Stiglitz goes on to make the staggering point that an average American worker earns less today than he did 45 years ago (inflation adjusted), and that men without a university degree earn “almost 40 per cent less than they did four decades ago”.

The figures depicting poverty and hardship are many and varied. Over 20 per cent of the world’s population (that is 1.4 billion people) live on less than 1.25 dollars a day, 75 cents below the official World Bank poverty threshold. UNICEF states that 22,000 children (under the age of five; if it was six or seven the numbers would be even higher) die every day due to poverty-related issues. Of the two billion children in the world, half are currently living their lives in extreme poverty, with limited or no access to clean water or sanitation, healthcare and education worth the name. The greatest concentrations of people living below the 2-dollars-per-day poverty line are to be found in rural areas, where three in every four of those below the poverty line are to be found. Life is little better in the cities, where over half the world’s 7.2 billion population now live, one in three of whom are living in a slum.

The unequal are always with us

Income and wealth inequality have always existed. However, the worldwide gap between the “rich and the rest”, as Stiglitz puts it, “widened even more, right up through about World War II”. But it took the combined doctrinal political idealism of British Prime Minister Margaret Thatcher (in power during 1979-90) and US President Ronald Reagan (1981-89) to hyper-accelerate levels of inequality, and set the divisive competitive tone for the years that followed.

The Organization for Economic Cooperation and Development (OECD) states that income inequality “first started to rise in the late ‘70s and early ‘80s in America and Britain (and also in Israel)”. The ratio between the average incomes of the top 5 per cent to the bottom 5 per cent in the world increased from 78:1 in 1988, to 114:1 in 1993. During the Thatcher/Reagan reign, income tax was lowered for higher earners, trade unions were broken and the financial sector was deregulated with, we now know, devastating consequences. The inequality trend became more widespread starting in the late 1980s, and continues to poison the social fabric of countries throughout the world, including more egalitarian nations, like Sweden, Finland, Germany and Denmark.

Stiglitz relays that from 1988 to 2008 people in the world’s top 1 per cent saw their incomes increase by 60 per cent, while those in the bottom 5 per cent had no change in their income. In America, home to the 2008 recession, from 2009 to 2012, incomes of the top 1 per cent in America, many of which no doubt had a greedy hand in the causes of the meltdown, increased more than 31 per cent, while the incomes of the 99 per cent grew 0.4 per cent less than half a percentage point.

Flowing from wealth and income inequality (combining to create the powerful elite), is the inequitable use and distribution of water and food, minerals, information, technology and skills. The United States, for example, with a mere 5 per cent of the world’s population, uses 30 per cent of natural resources; the 25 per cent of people living in developed countries use 80 per cent of the world’s non-fuel minerals. Many of these are found in poor developing countries, which have little or no control over their resources and on the whole benefit little from their extraction and sale. Not only do the wealthy countries usurp and waste 80 per cent of the world’s resources but, according to a United Nations report, their “voracious consumption of resources cannot be sustained”.

Inequality, vulnerability, exploitation

The extreme dualities of poverty and wealth inevitably create the vulnerable and the powerful, the abuser and the abused. There are wide ranging consequences of such social division, foremost being the erosion or denial of democracy. With money comes power and with power comes political influence, making it inevitable that “inequality reinforces itself by corroding our political system and our democratic governance,” as Stiglitz says. Man-made climate change, though affecting everyone, impacts most acutely on the poorest people living in the poorest countries. As a recent World Bank report makes clear, “global warming will lead to a major food-crisis in the future. Sub-Saharan Africa and southeast Asia are expected to be the worst-hit.” That is, the regions with the largest concentrations of people living in utter poverty.

One of the gravest consequences of this social-economic imbalance is the worldwide movement of people, from impoverished communities with few employment opportunities, to a rich or richer region or nation. The International Organization for Migration (IOM) estimates there to be over “105 million persons [excluding children] working in a country other than their country of birth”. Women make up the lion’s share of this army of workers, many of whom are vulnerable to trafficking. The US State Department states that up to 800,000 persons are trafficked every year (although the figure is probably considerably higher): 80 per cent of victims are women, of which 80 per cent are sold into the commercial sex industry. Trafficking (which is the second most widespread and profitable worldwide criminal activity) often arises from debt bondage, resulting in forced labour. Trafficking is nothing less than modern day slavery, there are thought to be more people living as slaves (that is people held against their will, forced to work and paid nothing) now than at any time in history. For those with the means they are cheap: on average, 90 dollars will buy you a human being, according to Free the slaves.

Working within an economic system that disempowers the disadvantaged, migrant workers form an economic lifeline for millions of families. In 2012 they sent, “406 billion dollars in savings to their families in developing countries”, the World Bank reports. Such money is often earned through domestic servitude, with its inherent dangers of mistreatment, or construction work in appalling and often dangerous conditions.

It is poverty in its many manifestations – poor education and healthcare, poor sanitation and water supplies, poor living conditions, poor or low self-esteem and an absence of hope – which drives migration and creates the environment in which trafficking and extreme exploitation can flourish.

In a world of plenty why are hundreds of millions, perhaps billions of people vulnerable at all? The vulnerable and exploited exist because of an inherently unjust social-economic system, which has caused extreme global inequality and built a divided and fractured world society.

Inequality, sharing, justice

The complacent party line of the wealthy is that there is no alternative to the present unhealthy, divisive economic model. The advocates of market fundamentalism have sought to close down totally the intellectual space for enquiry and discourse. As Stiglitz says, if indeed there is no alternative, inequality and poverty will continue to increase, building intensely

divided societies, [where] the rich will hunker in gated communities, almost completely separated from the poor, whose lives will be almost unfathomable to them, and vice versa. I’ve visited societies that seem to have chosen this path. They are not places in which most of us would want to live, whether in their cloistered enclaves or their desperate shantytowns.

The cherished economic model of choice, market fundamentalism, has, as UNICEF makes clear, failed and continues to fail both the people and the planet. It concentrates wealth in the hands of the wealth and leads us to question, as UNICEF does,

the current development model (development for whom?) which has accrued [growth] mostly to the wealthiest billion” people. Not only does inequality slow economic growth, but it results in health and social problems and generates political instability. Inequality is dysfunctional, and there is a grave need to place equity at the centre of the development agenda.

A more just and humane model of development, based on equitable distribution of the world’s resources, is a viable alternative whose time has come.

The idea of equitable distribution – of sharing the food and water, the resources knowledge, skills, ideas and technology of the world – as the guiding principle for development and economic life is supported by Frances Stewart, Professor Emeritus at Oxford Department of International Development. She believes that “poverty can be eliminated. Essentially, what is needed is a significant reduction in the quite obscene levels of inequality that prevail today”. The distribution of resources “from the privileged to the deprived, would be enough to eliminate poverty in high and middle income countries,” she asserts. Not simply the redistribution of wealth but resources more broadly, to, as she puts it, “improve the health, the education, the assets and the productivity of the poor so that the improving of their lives can become self sustaining”.

Expanded and imaginatively applied to address the needs of the poorest people in the poorest nations, such a simple common-sense model, based on social justice and equality, would meet basic rights and needs, reduce vulnerability and exploitation, ease social tensions and slowly establish trust and unity.