“A nation will not survive morally or economically when so few have so much, while so many have so little.”
As per a United Nations study, the inequality in developing countries has shot up by 11% between 1990 and 2010. Some of these developing countries may try to pass it off as an inevitable byproduct of a state of high growth as postulated by Kuznets Hypothesis. According to this hypothesis, growth should follow an ‘inverse U’ shape along the development process. For example, United States of America exhibited an increase from 50% in around 1770 for the top 10% of income earners, to about 75% by 1870s, and then dropped back to 50% in 1970.
However, Ajit Mishra and Indranil Dutta significantly point out in “Inequality” that “if growth process is highly uneven so that only a smaller section can benefit from it, it can have serious consequences for poverty reduction and further growth in the economy.” Mishra and Dutta have also criticized the traditional view about inequality, according to which inequality has a lot of positives in the sense that “rising income and wealth inequality fosters higher growth by generating incentives to save and invest.” The positive impact of this has not been denied by Mishra and Dutta yet they criticize the view on the basis of the inadequacy of this positive impact against stronger impacts of inequality such as social conflict and an increased demand for redistribution.
The Best and the Worst
In an article, the Guardian has referred to South Africa, Namibia and Haiti as the most unequal countries whereas Ukraine, Slovenia and Norway turned out to be the most equal countries in terms of income distribution, based on a recent research by the World Bank. According to an overview of inequality in Africa by the World Bank, one can note that the poorest 20% of the South African population consume less than 3% of total expenditure, while the wealthiest 20% consume 65%.
The initial reasons for inequalities in terms of income in South Africa were the decreased demand for labour due to technological advancement and the lack availability of opportunities for the less educated. Hence, an income gap was created between the educated and the uneducated of that time. Unfortunately, the government has failed to provide for adequate policies to successfully end this gap.
On the other hand, Norway’s best performance in terms of fewer inequalities can be inferred from its top position in the world happiness report. Among the numerous facilities provided by the Norwegian state, provisions like long term unemployment benefits and free university education play a major role in increasing the possibility of the availability of opportunities for more income generation for all. Hence, other countries have a lot to learn from Norway in this regard.
Income inequalities aren’t the only form of inequalities that exist in the world today. Inequalities also exhibit themselves in the form of the lack of basic facilities for a few and a surplus for the rest. Rural and urban disparities, gender disparities, racial disparities and several indigenous factors for various countries lead to the global issue of inequality. From the examples of South Africa and Norway, one can easily identify the factors that lead to the resolution of this problem. It is very important that social investment of every country is increased. Unless and until the concepts of universal health coverage and free, compulsory and universal education are not changed into a reality, it is not possible to have equality.
This is because these are the very elements which allow human beings to be fit enough to avail the opportunities for income generation. Further we also require more inclusive policies at national levels, because discrimination of any kind is inversely related to equality. At the international level, we have to put the issues of the developing nations at the forefront because we cannot have just a handful of countries holding larger chunks of wealth. The most important method dealing with inequality is to recognize it as a product of the state’s policy deficit instead of an inevitable byproduct of the growth process. Without acknowledging the individuality of the issue, we cannot expect to find efficient solutions to it.
-Contributed by Richa Bhatt
Picture Credits: theispot.com