06 global issues

Global Issues

Rising Income Equality Should Not be Allowed to go out of Hand

The call for reduction in poverty has not yielded significant results as the world over the rich are getting richer and the poor are getting poorer.

By Mohammad Akram Qasmi

T

oday the situation of the world is that all countries are suffering from economic crisises. Poverty claws at entails of the society. People do not have shelter to hide their heads and provisions to eat for surviving.

Millions or even billions of people are suffering from starvation in this advanced world.

It’s one of the biggest socioeconomic questions all over the world: Why is income inequality increasing dangerously not in any particular country but globally?

Economic inequality is the difference between individuals or populations in the distribution of their assets, wealth, or income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. The issue of economic inequality involves equity, equality of outcome, equality of opportunity, and life expectancy.

Opinions differ on the utility of inequality and its effects. Some studies have emphasized inequality as a growing social problem.

While some inequality promotes investment, too much inequality is

15 EASTERN CRESCENT | MAY 2014

destructive. Income inequality can hinder long term growth. Statistical studies comparing inequality to yearover-year economic growth have

The per capita expenditure gap between urban and rural areas was 63 per cent in 199394 and it has touched 84 per cent in 2011-12. This gap left no village in richest and poorest states which has been affected by inequality.

been inconclusive; however in 2011, researchers from the International Monetary Fund published work which indicated that income equality increased the duration of countries’ economic growth has a more dramatic impact than free trade,

low government corruption, foreign investment, or low foreign debt.

As a consequence of rising income inequality, great disturbance is created in the society. Middle and low class people are falling behind further and the rich people are getting richer. A study by the World Institute for Development Economics Research at United Nations University reports that the richest 1% of adults alone owned 40% of global assets in the year 2000.

The three richest people in the world possess more financial assets than the lowest 48 nations combined. A January 2014 report by Oxfam claims that the 85 wealthiest individuals in the world have a combined wealth equal to that of the bottom 50% of the world’s population, or about 3.5 billion people.

The history is no different in India. It is a report of the OECD (Organization for Economic Cooperation and Development) that income inequality has doubled in India over the last two decades and according to India’s own national surveys, regional disparities have skyrocketed. The per capita expenditure gap between urban and

Global Issues

According to a report of the “New York Times, some scientists believe that growing inequality leads to more health problems in the overall population and income inequality can breed corruption.

rural areas was 63 per cent in 199394 and it has touched 84 per cent in 2011-12. This gap left no village in richest and poorest states which has been affected by inequality. India is becoming an increasingly inequitable country However, some people are getting huge amount of wages while the others in the middle or at the bottom of the ladder obtain very

16 EASTERN CRESCENT | MAY 2014

less. Unemployment is growing incredibly across the world. This inequality leads to the monopolizing of power for those firms who become in a position to set higher prices to the consumers. It causes monopsony (a market in which goods or services are offered by several sellers but there is only one buyer) power to come into existence. It means the wage workers are paid will be lower than the marginal revenue product of labor. This leads to an unfair distribution of income among the workers.

Some politicians, philosophers and economists believe that income inequality is detrimental to economic growth, social justice and human well-being. For example, the World Bank reports that high inequality threatens a country’s political stability, as those without high incomes are dissatisfied with their economic status. In this view, political gridlock, failure to build national harmony, and even violent conflicts can result.

According to a report of the “New York Times, some scientists

believe that growing inequality leads to more health problems in the overall population and income inequality can breed corruption.

However, in one hand, income inequality has a lot of disadvantages but on the other hand it has advantages. Income inequality is natural. All are never going to be equal to each other. All people may be born equal in terms of inalienable rights like freedom and dignity, but by no means are they born equal.

Whether due to their parent’s poverty or wealth, innate abilities, diet, or even geography, both nature and nurture militate against equality at the starting line.

As evolutionary biomathematician Ulf Dieckmann puts it so charmingly, “The real world is full of heterogeneity.” As those famously dueling percentages, one and 99, remind us, equality can get even more elusive as we approach the finish line. If it happens that all people are equal then the personal conflicts grow largely because no one can support each other.

According to a political thinktank of the American Enterprise Institute growing inequality gap is associated with growing opportunity in this case, the opportunity to advance through education.

Overall we neither support income inequality nor go against it at all, but the government of every country should take such steps which bring modest improvements in the income levels of those at the bottom, which may knock out the rising income inequality and its consequences such as unemployment monopoly, monopsony etc.