Fifteen years ago, the Report on the World Social Situation 2005 warned that growing inequality could jeopardize the achievement of internationally agreed development goals. The report noted that the world was at a crossroads. If the vision of a shared future was to be carried forward, world leaders had to seize every opportunity to take bold and decisive action to reduce inequality (United Nations, 2005).
Inequality has since moved to the forefront of the policy debate. “Leave no one behind” is the rallying cry of the 2030 Agenda for Sustainable Development. Reducing inequality within and among countries is Goal 10 of the Sustainable Development Goals (SDGs) – with good reason. The extraordinary economic growth and widespread improvements in well-being observed over the last several decades have failed to close the deep divides within and across countries. United Nations examines the impact of four such megatrends on inequality: technological innovation, climate change, urbanization and international migration.
Technological change can be an engine of economic growth, offering new possibilities in health care, education, communication and productivity. But it can also exacerbate wage inequality and displace workers. The accelerating impacts of climate change are being felt around the world, but the poorest countries and groups are suffering most, especially those trying to eke out a living in rural areas.
Urbanization offers unmatched opportunities, yet cities find poverty and wealth in close proximity, making high and growing levels of inequality all the more glaring. International migration allows millions of people to seek new opportunities and can help reduce global disparities, but only if it occurs under orderly and safe conditions. While these megatrends and the policies aimed at managing them interact with each other in multiple ways, the focus of this report is exclusively on the direct effect of each megatrend on inequality.
Countries where inequality has grown are home to more than two thirds (71 per cent) of the world population. Yet growing inequality is not a universal trend. The Gini coefficient of income inequality has declined in most countries of Latin America and the Caribbean and in several African and Asian countries over the last two decades.
INEQUALITY ,GAPS AND DISPARITY
While economic inequality has grown within many countries, inequality among countries is declining in relative terms. MStrong economic growth in China and other emerging economies in Asia has been the main driver of this decline. However, this convergence is not evenly distributed, and the differences among some countries and regions are still considerable.While high and growing income inequality is fuelling polarized political debates around the globe, a consensus has indeed emerged that all should enjoy equal access to opportunity – that one’s chances to succeed in life should not be determined by circumstances beyond an individual’s control.
Gaps in learning outcomes are large and persistent as well. Such inequalities have historical roots, but often continue even after the conditions that generated them change. Ethnic minorities, for instance, often remain disadvantaged even in countries where special efforts are made to promote their inclusion. Members of groups that suffered from discrimination in the past start off with fewer assets and lower levels of social and human capital than other groups.While prejudice and discrimination are decried around the globe, they remain pervasive obstacles to equal opportunity – and to the achievement of the SDGs.
Highly unequal societies are less effective at reducing poverty than those with low levels of inequality. They also grow more slowly and are less successful at sustaining economic growth. Disparities in health and education make it challenging for people to break out of the cycle of poverty, leading to the transmission of disadvantage from one generation to the next. Without appropriate policies and institutions in place, inequalities concentrate political influence among those who are already better off, which tends to preserve or even widen opportunity gaps. Growing political influence among the more fortunate erodes trust in the ability of Governments to address the needs of the majority. This lack of trust, in turn, can destabilize political systems and hinder the functioning of democracy. Today, popular discontent is high even in countries that have fully recovered from the 2008 financial and economic crisis and have benefited from steady growth in recent years.
GLOBALIZATION AND THE GLOBAL NORTH -SOUTH
Neo-liberalism supports free trade, privatization and reduction of governmental intervention in the economy. Although neo-liberal globalization accelerates economic growth on a global scale, it increases political, economic and social inequalities between nations. Due to globalization, multinational companies hire cheaper labor from developing countries like China, India and Philippines thereby increasing the unemployment rate in the Global North. Recession and unemployment has put political pressure on governments of global north to limit “job threatening” imports.
A growing number of developing countries such as Singapore and South Korea have achieved rapid, export-led growth. This has caused trade imbalances. This has strained the relationships between some trading countries, which lead to various developed countries to implement protectionist measures. In spite of free trade agreements with US, China was exporting Solar Panels in US at a lower cost than cost of production (dumping) in 2012. This forced the US to implement anti-dumping protectionist policies. Neo-liberal globalization has lead to more inequalities in Global South.
Globalization has harmed the sovereignty and culture of developing countries because these countries have adopted a western lifestyle. Globalization has also lead to the rapid growth of Multinational corporations. Access to cheap labor and control over scarce resources has made these multinational corporations the global monopolies giving them an upper hand (advantage) when competing on an international scale. This has caused economic inequality by stunting the growth of infant industries. International lenders give loans to the multinational companies operating in a country and are less likely to invest in local businesses, giving an advantage to international firms. This increases the dependence of Global South on the Global North for development aid. As a result, the disparities between the rich and the poor continue to increase as income gaps widen. Lastly, globalization has also resulted in an increase in poverty, and in gender inequalities. Women are exploited through unpaid or informal labor, low-wage sweatshop settings, and/or impoverishment through loss of traditional sources of income.
DEGROWTH
Degrowth movement is a way of achieving prosperity without growth through downscaling overconsumption, maximizing happiness and promoting sustainable lifestyle. Economic growth is believed to help in the creation of money, increase employment and overall standard of living hence the economic liberalists believe that de-growth is not an effective method of improving quality of life.
De-growth opposes economic growth and may result in a recession. De-growth conserves energy by creating more units of product using fewer resources by using technological advancement. However, this can lead to creativity destruction due to replacement of laborers with machines. De-growth is not an effective way to tackle poverty alleviation especially in the developing countries because it contradicts the concept of development and economic growth.
“Yet rising inequality is not inevitable. Inequality levels and trends differ among countries that are at similar levels of development and equally exposed to trade, technological innovation and even the effects of climate change.“