Promised to write something about inequality, so here it is…
This writing mostly taken and inspired by “The Great Divide”
, I accidentally found this book on my mentor’s bookshelf. It’s written by (believe it or not) her friend, Joseph E. Stiglitz
, a recipient of the Nobel Memorial Prize in Economic Sciences and the John Bates Clark Medal. The book mainly focus on inequality as diagnosed greatest economic challenge in America but still relevant to inequality everywhere.
Cover of “The Great Divide”
There are many things claimed as reasons for inequality; labour-saving technology, worldwide marketplace triggered by globalisation, but another thing could not be ignored, the fact that there is a group of people benefited from this circumstance. One of big reason why we have so much inequality is that the top 1% want it that way. With the money and power they can have profit from tax policy, monopolising the market, and manipulating the the financial system.
What’s so wrong with that? Imagine 1% or maybe less, have control over massive share of wealth and where a main determinant of power is wealth, the system tends to corrupt, holding back policies that would improve life for people in general. When a certain group holds too much power, the policies stipulated to gain profits for themselves in short term rather than help society in long term. With too much money piled up on top, the consumption rate or average spending will be declined, and the demand will suffer. Inequality plays significant role in distorting our society in every imaginable way. With social media as a well documented lifestyle, it affects people outside the top 1% to progressively live beyond their means, in America it relates to credit bubble, another way of widening gap. The most damaging consequence of income inequality is inequality in chances. No children in this world could choose their family or where they want to grow up. But unfortunately, as result of inequality, they have different condition of welfare, education, social justice, political right, basically anything that can help them to live up their potential.
When is this going to end? It will eventually stop when rules of economic globalisation are no longer likewise designated to the rich. Government holds a significant role to make policies in favour with people. We need to define growth better than merely GDP. Government should start to aim more for sustainability; by developing and investing in infrastructure, education, and technology, and by preserving the truly most valuable resource: people, so they can live up their potential.
“The only true and sustainable prosperity is shared prosperity.”
― Joseph E. Stiglitz
“Self-interest rightly understood.”
Without doubt, everyone has their own self-interest. But rightly understood? This makes quite contrast. Alexis de Tocqueville observed that Americans voluntarily join together in associations to further the interests of the group and, thereby, eventually to serve their own interests. Putting common self-interest becomes essential condition before attaining self-interest. Turns out taking care of other isn’t only a good for soul but also for economy.
Alexis de Tocqueville
In the beginning of history, the concept of “self-interest rightly understood” is one of many motivating forces behind democracy, transforming United States into a strong economy power country. What about now? America is still the richest but it’s also the most unequal nation. What does it mean? The economic growth has not been fairly shared and the gap between rich and poor become wider. In a nutshell, the rich get richer and the poor get poorer, with higher presentation goes to, of course, the poor. Does it happen only in America or other rich countries? No, it happens across the globe. In developing countries, as stated in UNDP report (2015), a significant majority of households in developing countries—more than 75 percent of the population—are living today in societies where income is more unequally distributed than it was in the 1990s with the income inequality rate increasing 11 percent in only 10 years.
I plan to write about why does inequality matter and what we can we do about it in the next post. Anyway it’s been 5 months since the last post (phew, what have I been doing tho? Like seriously?). Hope we don’t have to wait that long for the next post. In addition, here are few great related articles:
For more comprehensive source about income inequality, I recommend you “The Great Divide: Unequal Societies and What We Can Do About Them” by Joseph Stiglitz, a Nobel laureate and former chief economist of the World Bank.