THE ISSUE OF INEQUALITY

THE ISSUE OF INEQUALITYDisclaimer:This map is the property of Penn Political Review 
                                                                                                                                               Economists have long been baffled by the issue of Income inequality for as long as economics itself has existed. The issue has been the source of serious discontent for centuries. If you have any knowledge of French history, you would probably recall the infamous Marie Antoinette, wife of King Louis XVI of France, who was so ostentatious that she almost brought the french economy to its knees. History has it, that this lady would not wear an outfit or evn jewelry twice.
And of course, we all know what happened.... She and her husband were not spared during the French Revolution. The story of Tsar Nikolas and Tsarina Alexandra who were also deposed due to their conspicuos consumption, while the masses were left in poverty.

Barack Obama has said that income inequality is the defining problem of the twenty first century. The rich are getting richer, the poor getting poorer, and the middle class is in serious stagnation. If you want to appreciate just how serious this issue is, consider this: in 2012, the 500 largest companies in the world have a collective net worth of $12 trillion and they account for 14% of global Global GDP which stood at $85 trillion. That's not all, CNN Money reported that if these 500 corporations were single country, they would be the second largest economy in the world, of course after the United States.

Inequality manifests in several ways, take a look at some of these facts about inequality:
 -The United States economy is several times that of all African countries combined

 -The combined networth of the 400 richest Americans is more than the GDP of Russia

 -The 85 richest people in the world have as much wealth as the 3.5 billion poorest people in 
   the world. That is to say, the 85 richest in Oxfam International's ground breaking report 
   Working for the Few during the World Economic Forum.

 -In the US, the wealthiest 1% of the population captured 95% of post-financial crisis growth
  since 2009, while the bottom 90% became poorer.

 -The Ivory Coast, which is one of the world's largest cocoa producing nations (producing
  1.22 million tonnes annually), the cocoa farmers are so poor, that if their income were to be 
  increased 10 fold, they would still be in the definition of 'absolute poverty'.

 -The 6 owners of Walmart (the Waltons), are richer tyhan the bottom 30% of Americans. They 
   have a combined net worth of $93 billion. You can read more on that story here.

 -Nigeria has a revised up GDP of about $510 billion, making it the largest economy in Africa,
  and accounting for about 21% of the African economy, and with one of the fastest growth rates
  in the world, yet the number of Nigerians living in poverty stands at an astounding 61% as
  reported by BBC Africa, and the CIA reports that 65% of the population of Northern Nigeria 
  lives in 'extreme poverty'.

 -Moscow holds the record fopr the city with the highest number of world-class billionaires, 
  standing at 79, as reported by Forbes.

We could go on and on about how unequal the world is, but it would only make you angrier. The issue of inequality is not only among groups of society, but also among continents, and between
genders. Currently, women on average, make just about 77 cents for every $1 made by men.


Looking at the various cases of economic/social inequality above, what could be the causes? It's neither as easy nor as complicated as you may think. For centuries, there have been the rich and the poor. In ancient times, like the Elizabethan Times, if you were born into one of the aristocratic and priviledged families, chances were, you would be rich for life. They controlled the economy, and left almost all the burden of the state tax incoome on the poor. This led to the absence of upward social or economic mobility. Those who were rich got richer, and those who were poor got poorer.

As the industrial Revolution came into play, there was the indiscriminate exploitation of national resources, often by the rich who controlled the factors of production, in order to feed the growing demand for goods and services that came as a result of an emerging middle class. As a result of this, farmlands which were being cultivated mostly by poor subsistence farmers using rudimentary means were destroyed by toxic waste, rivers which were a source of living for poor fishermen were severely polluted by poisonous gases. Taking into consideration that these were the main sources of income for a majority of the poor population, they had few other alternatives, but to look for work in the facories of the rich aristocrats. This led to some form of a poverty cycle, as these rich aristocrats would exploit them by overworking them and underpaying them. A poor factory worker could not educate his children which meant they had very little chance of becming better than their parents.

That was over a century ago. The situation nowadays is a lot more silent, but equally as deadly as back then. Nowadays, access to capital is mostly a priviledge of those who already have it. Most poor countries can't pursue their development goals because they do not have access to the required amount of capital. At the local level, many small business people in the developing world, and even in the developed world can't get access to the required capital  either for expansion, or even survival of their businesses. What this means is that these businesses either stay small, or are forced to close down, hence, the poverty cycle continues.

The decline of social structures in many countries, such as democracy, educational systems, social security structures, housing systems and wage bargaining structures, has led to the decline of upward social mobility. The educational systems of many countries are so untrustworthy nowadays, that it accounts for nothing to have a university degree. It could also manifest itself in the form of skyrocketing tuition fees at universities, even when employment is not guaranteed after graduation. In the US for example, university tuition fees have been soaring rapidly and student debt has been increasing even faster. This places a serious drag on the economy, and punishes the poor who can't afford the high cost of tuition. It comes as no surprise, that some college grads have to repay these loans for decades after graduation.

The Occupy Wall Street Movement that started in 2011 certaily focused more attention on the issue of inequality in the world. It began as a small protest in New York, but soon degenerated to dozens of other countries. The protests weere met by serious police brutality in many cities. They were seen by many as anti-capitalist, as they protested against the practices on Wall Street. They were anti-establishment, and wanted more pay for workers of big corpoarations. RThe thing is, their message really wasn't clear or organized in a way that it could have an effect, at least to some. But to others, their message was as clear as it could be, but was distorted by mainstream media, which are mostly owned by the big corporations they were protesting against.

In Africa and Asia, the main cause of the inequality is corruption.  African and Asian government officials embezzle billions of dollars each year and hide away in foreign banks. It is not only African leaders as was previously thought, but also western politicians too. The US government along with other western governments are now putting intense pressure on swiss and carribean banks to release data about rich citizens hiding money away in off-shore accounts to avoid paying their fair share of taxes. In Africa, many big business owners who contribute heavily to political campaigns can easily excempt themselves from taxes. This puts a break on development, because it deprives the economy of much needed revenue,considering the fact that these people are usually so rich that they practically control the economy. In China for example the members of the ruling Communist Party are mostly influential businessmen looking for favours and usually guilty of serious abuses of power, bribery and corruption, all for their own material benefits.

The same situation exists in some form in the developed world. It was once thought that western countries were champions of transparent politics, but recent happenings and information have led us to think differently. In the US for example, funding for political campaigns have taken an ugly turn. Even the then very young and elegant first-timer, Barack Obama, who spoke out seriously against 'super PACs' for campaigns during his 2008 campaign had a change of mind and during his 2012 re-election campaign, he raised $1.072 billion dollars acording to the New York Times.
This was even more than his republican rival. These sums of money usually come from lobbies, and individuals who have various business interests that need to be protected. So in effect, this is an investment that has to yield a return. This only fuels inequality, because the rich influence policies that favour them, and increase their wealth, usually at the detriment of the common good. it is reported that the Return On Investment of Corporate Lobbying is so high, that if the same amount were invested in a company at the going interest and inflation rate, it would not yield as much. All this because politicians pass laws in direct relation to the interest of their campaign donors.

It doesn't all have to be bad news, because there is a lot that can be done about the situation. It doesn't take a rocket scientist to know what can be done to stem the present state of income inequality. They are very simple and practical:
 -Urbanization, creates a demand for many goods and services, hence creating the demand for workers in diverse sectors.

-Open and well regulated financial markets, where there is equal investment information and opportunities for every willing investor. Studies show that the more open, transparent and regulated the financial system, the greater the potential for growth and development. A good example is Uganda.

- There should be an open and free internet for all to share information that help others make sense of events; along with a system that guarantees equality of basic opportunities for all.

-Governments should invest more in quality education and research. 

-Fair and regulated electoral systems that stem off clandestine campaign funding and guarantee that elections are free and fair.

-Better international relations, as well as trade relations among nations.

-Fair and transparent tax systems that guarantee evry citizen pay their fair shair of taxes.

-The model of the Scandinavian countries should be adopted.




EGEOGHO CARLSON KIMBI