By
Bakampa Brian Baryaguma
1.
Introduction
Very
many things can be said about the world. One is that it ‘... is a very unequal
place ....’[1] ironically,
life is characterized by a number of sharply contrasting episodes – rich or
pauper, wise or fool, brave or coward, strong or weak, master or servant/slave,
among others. These social differentiations ultimately cause inequality.[2]
Global
inequality refers to inequality among citizens of countries in the whole world,
looked at as if it were one country.[3]
Income variations are the main dimension of inequality, though not the only
one.[4]
Indeed, Professor Stiglitz says that there are many dimensions to inequality – income,
wealth, health, exposure to environmental hazards and access to justice.[5]
Nevertheless, this essay mainly discusses the dimension of income inequality.
2.
Past
Evolvement of Global Inequality
In
the past, prior to the industrial revolution, global inequality was based on
class,[6]
as determine by successive socio-economic stages that human society has gone
through in the course of development, each with different modes of production.
One’s
location or situation in the relevant stage determined his or her production
level and consequently his or her social class.[7]
Different placements on the social scale automatically resulted into unequal productivity,
thus translating into inequality in all its forms.
3.
Current
Trends of Global Inequality
The
emergence of the industrial revolution in about 1820 (at the end of Napoleon’s
reign in France and his wars in 1815) enabled many countries to accumulate
enormous wealth. But the industrial revolution was not evenly spread globally, because
it was concentrated in Europe and North America, which enabled some countries to
become richer than others, leading to enormous global inequality. Thus, a study
showed that, ‘Wealth is heavily concentrated in North America, Europe and high
income Asia-Pacific countries, [where] ... People ... collectively hold almost
90% of total world wealth.’[8]
Due
to disparities in global development, the Human Development Report 2009 (hereinafter ‘the HDR 2009’) noted that, ‘The world distribution of opportunities is
extremely unequal.’[9]
Consequently, today’s inequality is largely premised on geographical location;[10]
most of it ‘... stems from very different average incomes among countries.
One’s income thus crucially depends on citizenship, which in turn means ...
place of birth. All people born in rich countries thus receive a location
premium or a location rent; all those born in poor countries get a location
penalty.’[11]
4.
Impact
on Global Affairs
Global
inequality has immense impact on global affairs, which Professor Stiglitz says are intertwined, explaining
that societies in which many individuals believe that there are fundamental
inequities – that the system is not fair – don’t function well, such that individuals
and the economies suffer.’[12]
Unfortunately, most impacts are negative. The major
ones include the following:–
A.
Migration
Global
inequality drives migration. The HDR 2009 found that, ‘Every
year, more than 5 million people cross international borders to go and live in a developed
country.’[13]
It stated that, ‘... inequality is a key driver of human
movement and thus implies
that movement has a huge potential for improving human development.’[14]
Migration improves people’s global income position;[15]
and is considered the single most important trend to alleviate poverty and
reduce inequality.[16]
But the HDR 2009 also stated
that, ‘Yet
movement is not a pure
expression of choice—people often move under constraints that can be severe,
while the gains they reap from moving are very unequally
distributed.’[17]
Migration is also very risky.
B.
Undermining Democracy
Inequality incites feelings of marginalization
among those affected. They pull back and withdraw from participation in public
affairs, including elections, leading to corruption, non-transparency,
impunity, poor accountability and incompetence, among others. These erode democratic
values.
C.
Fuelling Social Disintegration
Perceptions of inequality stir gradual embitterment
among people living on the peripheral of society, which causes social
disintegration, particularly between the
haves and the have-nots. In some
instances, social disintegration descends into chaos and violence.
For example, in December 2007, Kenyans took to
cutting themselves with machetes, following a disputed presidential election, at
the heart of which lay a bitter tribal rivalry between Kikuyus and Luos, over
distribution of national resources – the latter accused the former of
marginalization. In other instances, social disintegration has taken a truly
national dimension, eliciting somewhat highhanded national responses. For
example, the land reform programme in Zimbabwe that confiscated large chunks of
land owned by whites, whom majority blacks accused of economic marginalization.[18]
D.
Weakening Economies
The International Monetary Fund (IMF) has found
that inequality is one of the hindrances to economic growth.[19]
Inequality denotes lack of opportunity for many people; meaning that with it,
human resources are underutilized,[20]
which weakens economic growth, because from a political economy perspective,
the more divided a society is, the more difficulty it faces in getting
political consensus behind important public investments.[21]
Moreover, increased inequality lowers aggregate demand,[22]
which curtails production of commodities in an economic system.
5.
Conclusion
Global
inequality is costly. Among others, first, we pay a high price for it, as we
could have more growth, more stability and more equality,[23]
but we do not. Second, it poses a vicious circle, where more economic
inequality leads to more political inequality; and more political inequality
leads to amplified economic inequality.[24]
Third, global inequality undermines national, regional and international
stability, because it induces intense feelings of segregation and deprivation
that find expression in physical and other forms of overt violence.
The
net effect of these ills on the human mind is so horrendous that inequality is
a sticky and most dreaded subject to talk about,[25]
which calls for more effort in curtailing it.
Fortunately,
there is some good news: the world is getting less unequal, which trend may be
accelerated in the coming years, with the emergence of a global middle class.[26]
The growth and expansion of international trade contributes to the gradual
reduction of global inequality.[27]
Notes and References
[1] Branko Milanovic, The Haves and the
Have-Nots: A Brief and Idiosyncratic History of Global Inequality (2010),
at 120.
[2] Surprisingly,
upon close scrutiny, one finds that God or as the atheists would have it,
Nature, may be the ultimate source of this inequality. Indeed, the Bible, in
the book of Proverbs 10:22 states that, ‘It is the Lord’s blessing that makes
you wealthy. Hard work can make you no richer.’ So, we may as well take it that
the world’s paupers are poor because God wishes it, by not blessing them;
conversely, the wealthy are rich because God wills it. In this regard
therefore, He is the source and cause of financial and material inequality.
[3] Branko Milanovic, in his Week 10 lecture on ‘Global Inequality,’ in the
Global Civics lecture series, of the Global Civics Academy.
[4] Christian Morrisson & Fabrice Murtin, ‘The World Distribution of
Human Capital, Life Expectancy and Income: a Multi-dimensional Approach’
(2005), at 1. To them, longevity and education are also interesting components
of welfare, after income and should be duly paid attention to, although they
are completely different.
[5] Professor Joseph E. Stiglitz, ‘Causes and Consequences of Growing
Inequality and What Can be done about It’ (2014). He was speaking during the
fourth Annual Oxford Fulbright Distinguished Lecture on International Relations,
on 23 May 2014. According to him, inequalities in many of these areas are
greater than in income.
Professor Stiglitz
also says that there are many aspects of inequality: more income and wealth
going to the top; hollowing out of the middle class in many advanced countries,
with more people in tails of distribution; increases in poverty in some
advanced countries; and worsening of income distribution in most countries.
According to him, each
aspect of inequality has its cause – social, economic, political – although
they are interrelated. He however, emphasizes that the problem is not just in
the economics, but in the policies and politics too, that seem to matter most,
yet whose inadequate and often haphazard response makes matters worse. For
instance, it is assumed that growth benefits all and that there is always a
trickle down effect in the economy, which is not necessarily true. Professor
Stiglitz says that these aspects of inequality result into two broad categories
of inequality: inequality of opportunity and inequality of outcomes. These are
closely linked, because the one leads to the other and vice versa.
[6] Branko Milanovic, Global Inequality Lecture,
supra note 3.
[7] Ernest K. Beyaraza, Social Foundations of Law: A Philosophical
Analysis (2 edn), at 33-34, lists and explains the different socio-economic
stages of human growth.
First
was the primitive or communalist society, in which existed no social classes,
since the modes of production were communally owned. Here, everybody was equal.
Second
was the slave society – the first socially stratified or differentiated society
– where human beings belonged to other human beings. Slaves were acquired,
owned, used and disposed of by their masters. Slaves owned nothing and
comprised part of the masters’ property. This social differentiation resulted
into unequal wealth and power relations among people.
Third
was feudal society, which was premised on land ownership by one group of
people, the nobles – monarchs, royals (especially princes) and aristocrats –
doubling as landlords, on the one hand; and landless peasants, doubling as
tenants, on the other. Peasants were socially marginalized and disempowered
vis-a-vis nobles who were highly privileged and powerful, thus translating into
unequal power relations.
Fourth
is capitalism that is characterized by the existence of owners of the means of
production (capitalists, controlling land, money and raw materials) and their
workers (supplying labour), whereby the former extract value from the latter
for a wage. This inevitably results into inequality.
Fifth
is socialism, which presupposes a classless society where the means of
production are socially owned, emphasizing predominance of the majority working
group. This premise of socialism, at the heart of which is the idea that from each according to his ability; and to each according to his
needs, is an impractical hoax, which, even if it were real and feasible,
still encourages inequality in the form of predominance of one group of people
(the workers) over others.
One’s
social status in each of these stages determined his or her financial and
material prosperity. Since all people could not have occupied the same
position, inequality was inevitable.
[8] United Nations
University World Institute for Development
Economics Research, ‘Richest 2% own half the world's wealth’ (2006).
Available at http://archive.unu.edu/update/issue44_22.htm
(accessed on 8 November 2014, at 00:26 hrs). The study found that, ‘Although
North America has only 6% of the world adult population, it accounts for 34% of
household wealth. Europe and high income Asia-Pacific countries also own disproportionate
amounts of wealth,’ yet, ‘In contrast, the overall share of wealth owned by
people in Africa, China, India, and other lower income countries in Asia is
considerably less than their population share, sometimes by a factor of more
than 10.’
But it should be noted
that even the rich countries succumbed to high rates of internal inequality
that are subsisting to this day. For example, Professor
Joseph E. Stiglitz, supra note 4, gives shocking
information and statistics on inequality in the United States of America, which
he says has the highest level of inequality among advanced economies, where the
top 1% of US income earners take home 22.5% of income; the top 0.1% take home
11.3% of income; the top 0.01% take home 5.5% of income; and 95% of increase in
income went to the upper 1% between 2009-2012.
Professor Mohammed
Razeen, speaking in his Week 3 lecture on
‘International Trade,’ in the Global Civics lecture series, of the Global
Civics Academy, said that this level of inequality is ‘obscene.’
Professor Stiglitz further says that countries that have emulated the US
economic model are seeing increases in inequality, for example, the United
Kingdom, which now ranks second in inequality.
[9] United Nations Development
Programme, Overcoming Barriers: Human Mobility and Development (2009),
at 8.
[10] Branko Milanovic, Global Inequality
Lecture, supra note 3.
[11] Branko Milanovic, The Haves and the
Have-Nots, supra note 1. According to him, place of birth determines
most of one’s lifetime income and explains more than 60% of variability in
global incomes.
Speaking elsewhere, Branko
Milanovic, Global
Inequality Lecture, supra note 3, gives an example comparing the income
variations of the United States of America and the Congo: while the former has
more than USD 4000$ per capita, the latter has less than USD 400$ per capita,
which translates into a ratio of 100:1. This means that a person living in the
United States earns more than his or her Congolese counterpart and so the US
resident is more empowered than the Congolese resident, because of the many
privileges that come with financial prosperity, including enhanced literacy,
greater access to information, ability to enforce one’s human rights and living
a healthy and wholesome life.
[12] Professor Joseph E. Stiglitz, supra
note 5. He submits that inequality in health undermines economic performance.
[13] United Nations Development
Programme, supra note 9.
[14] Ibid. According
to the report, at page 9 thereof, ‘A person’s opportunities to lead a long and healthy
life, to have access to education, health care and material goods, to enjoy
political freedoms and to be protected from violence are all strongly
influenced by where they live. Someone born in Thailand can expect to live
seven more years, to have almost three times as many years of education, and to
spend and save eight times as much as someone born in neighbouring Myanmar.
These differences in opportunity create immense pressures to move.’
[15] Branko Milanovic, The Haves and the
Have-Nots, supra note 1, at 123. According to Mr Milanovic, ‘... one’s own
efforts, one’s country doing well, and migration are three ways in which people
can improve their global income position,’ but he stresses that, ‘The role a
person’s effort plays is small; he cannot influence his country’s growth rate,
so the only alternative that remains is migration.’ See, ibid.
[16] Hakan Altinay, in his follow-up remarks to the Week 10 lecture on ‘Global
Inequality,’ in the Global Civics lecture series, of the Global Civics Academy.
Unfortunately,
according to Branko Milanovic, Global
Inequality Lecture, supra note 3, the rich countries are placing large obstacles
to migration, because the temptation for people to migrate from poor countries
are very high; and writing elsewhere, Branko Milanovic, The Haves and the Have-Nots, supra note
1, at 164, he has warned of consequences that this will have on the crucial
subject of globalization, saying that, ‘... if both large income gaps between
countries persist and rich countries limit or prevent migration, globalization
may have to be scaled back.’
[17] United Nations Development
Programme, supra note 9. The report
observes, at page 9 thereof, that, ‘For people who move, the journey almost
always entails sacrifices and uncertainty. The possible costs range from the
emotional cost of separation from families and friends to high monetary fees.
The risks can include the physical dangers of working in dangerous occupations.
In some cases, such as those of illegal border crossings, movers face a risk of
death. Nevertheless, millions of people are willing to incur these costs or risks
in order to improve their living standards and those of their families.’
[18] For more information,
see, Wikipedia, ‘Land Reform in Zimbabwe’ (2014), available at http://en.wikipedia.org/wiki/Land_reform_in_Zimbabwe
(Accessed on 6 November 2014, at 00:07 hrs).
[19] Professor Joseph E. Stiglitz, supra
note 5.
[20] Ibid. For instance, the Professor says that
children of poor people are not living up to their potential.
[21] Ibid.
[22] Ibid.
[23] Ibid.
[24] Ibid.
[25] Ibid. Professor Stiglitz refers to one American
presidential candidate who reportedly said that you only talk about inequality
in economics behind closed doors, in quiet voices.
[26] Per Hakan Altinay, supra note 16; Professor
Stiglitz, supra note 5.
Christian Morrisson & Fabrice Murtin, supra note 4, reveal a lot of good news on reduction of inequality.
They state that, ‘Inequality in life expectancy has increased from 1820 to 1930
and fallen considerably from 1930 to the present day.’ (See page 2 thereof); that,
‘The world in 1870 was characterized by a huge gap between the literate and
illiterate populations which we hardly can think of today.’ (See page 4
thereof); that, ‘education inequality has decreased steadily since 1870 whereas
income inequality has reached its maximum in the middle of the 20th century and
lessened only slightly since 1980.’ (See page 5 thereof); and that the extreme
poverty rate has decreased from 75% to 20% since 1870 (See page 5 thereof).
Overall, they say that, ‘The period between 1870 and 1930 is characterized by
an increasing gap in income, life expectancy and education between Western
Europe and the rest of the world, particularly Asia and Africa. There are some
important interactions between the three components of human development: the
success of industrialization and exports of manufactured goods in Western
Europe results partially from the technological pace and the gains in
productivity induced by important investment in education. The longevity could
increase rapidly because average consumption of food improved and health
services progressed thanks to education improvement. So that Western Europe
populations were involved in a virtuous circle of human development which was
out of reach of most other countries before 1950, even if small minorities had
access to the same income or education.
But since 1930 and especially since 1950-1960, several other countries
have progressively combined accumulation of human capital and increasing
income. As a result they have obtained longer longevity and higher human
development....’ (See page 12 thereof).
[27] Professor Mohammed
Razeen, speaking in his Week 3 lecture on ‘International
Trade,’ in the Global Civics lecture series, of the Global Civics Academy,
argued that trade has enabled an upsurge of foreign investments in many
countries, bringing with it a string of several benefits like capital, human
resource skills, technology, management expertise and global networks in
marketing, finance, etc. These benefits contribute to the reduction of global
inequality.
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