Skip to main content

Growing inequality is disastrous but not inevitable

311014 PUDI report - Regular reports on the growing Poverty, Unemployment, Debt and Inequality of the neo-capitalist world

globinfo freexchange

Highlights:

Many feel that some economic inequality is acceptable as long as those who study and work hard are able to succeed and become richer. This idea is deeply entrenched in popular narratives and reinforced through dozens of Hollywood films, whose rags-to-riches stories continue to feed the myth of the American Dream around the world.

Experimental research has shown just how important fairness is to most individuals, contrary to the prevailing assumption that people have an inherent tendency to pursue self-interest.*

Many believe that inequality is somehow inevitable, or is a necessary consequence of globalization and technological progress. But the experiences of different countries throughout history have shown that, in fact, deliberate political and economic choices can lead to greater inequality. There are two powerful economic and political drivers of inequality, which go a long way to explaining the extremes seen today: market fundamentalism and the capture of power by economic elites.**

... as economist Thomas Piketty demonstrated in Capital in the Twenty-First Century, without government intervention, the market economy tends to concentrate wealth in the hands of a small minority, causing inequality to rise. Despite this, in recent years economic thinking has been dominated by a ‘market fundamentalist’ approach, that insists that sustained economic growth only comes from reducing government interventions and leaving markets to their own devices. However, this undermines the regulation and taxation that are needed to keep inequality in check.

In the 1980s and 1990s, debt crises saw countries in Latin America, Africa, Asia and the former Eastern bloc subjected to a cold shower of deregulation, rapid reductions in public spending, privatization, financial and trade liberalization, generous tax cuts for corporations and the wealthy, and a ‘race to the bottom’ to weaken labour rights. Inequality rose as a result. By 2000, inequality in Latin America had reached an all-time high, with most countries in the region registering an increase in income inequality over the previous two decades. It is estimated that half of the increase in poverty over this period was due to redistribution of wealth in favour of the richest. In Russia, income inequality almost doubled in the 20 years from 1991, after economic reforms focused on liberalization and deregulation.***

Despite the fact that market fundamentalism played a strong role in causing the recent global economic crisis, it remains the dominant ideological world view and continues to drive inequality. It has been central to the conditions imposed on indebted European countries, forcing them to deregulate, privatize and cut their welfare provision for the poorest, while reducing taxes on the rich. There will be no cure for inequality while countries are forced to swallow this medicine.

Despite the evidence that it increases inequality, rich-country governments and donor agencies, such as the UK, the USA and the World Bank, are pushing for greater private sector involvement in service delivery.

From Ghana to Germany, South Africa to Spain, the gap between rich and poor is rapidly increasing, and economic inequality has reached extreme levels. In South Africa, inequality is greater today than at the end of Apartheid.”

Today, hundreds of millions of people are living without access to clean drinking water and without enough food to feed their families; many are working themselves into the ground just to get by. We can only improve life for the majority if we tackle the extreme concentration of wealth and power in the hands of elites.”

Extreme economic inequality has exploded across the world in the last 30 years, making it one of the biggest economic, social and political challenges of our time. Age-old inequalities on the basis of gender, caste, race and religion – injustices in themselves – are exacerbated by the growing gap between the haves and the have-nots.”

Seven out of 10 people live in countries where the gap between rich and poor is greater than it was 30 years ago. In countries around the world, a wealthy minority are taking an ever-increasing share of their nation’s income.”

Today, there are 16 billionaires in sub-Saharan Africa, alongside the 358 million people living in extreme poverty. Absurd levels of wealth exist alongside desperate poverty around the world.”

If India stops inequality from rising, it could end extreme poverty for 90 million people by 2019. If it goes further and reduces inequality by 36 percent, it could virtually eliminate extreme poverty. [...] In a scenario where inequality is reduced, 463 million more people are lifted out of poverty compared with a scenario where inequality increases.”

Bangladesh and Nigeria, for instance, have similar average incomes. Nigeria is only slightly richer, but it is far less equal. The result is that a child born in Nigeria is three times more likely to die before their fifth birthday than a child born in Bangladesh.”

... in Zambia, GDP per capita growth averaged three percent every year between 2004 and 2013, pushing Zambia into the World Bank’s lower-middle income category. Despite this growth, the number of people living below the $1.25 poverty line grew from 65 percent in 2003 to 74 percent in 2010.”

... women make up the vast majority of the lowest-paid workers and those in the most precarious jobs. In Bangladesh, for instance, women account for almost 85 percent of workers in the garment industry. These jobs, while often better for women than subsistence farming, offer minimal job security or physical safety: most of those killed by the collapse of the Rana Plaza garment factory in April 2013 were women.”

Studies show that in more economically unequal societies, fewer women complete higher education, fewer women are represented in the legislature, and the pay gap between women and men is wider.”

In Australia, Aboriginal and Torres Strait Islander Peoples are disproportionately affected by poverty, unemployment, chronic illness and disability; they are more likely to die young and to spend time in prison.”

... the poorest people have the odds stacked against them in terms of education and life expectancy. The latest national Demographic and Health Surveys demonstrate how poverty interacts with economic and other inequalities to create ‘traps of disadvantage’ that push the poorest and most marginalized people to the bottom – and keep them there.”

Many feel that some economic inequality is acceptable as long as those who study and work hard are able to succeed and become richer. This idea is deeply entrenched in popular narratives and reinforced through dozens of Hollywood films, whose rags-to-riches stories continue to feed the myth of the American Dream around the world. However, in countries with extreme inequality, the reality is that the children of the rich will largely replace their parents in the economic hierarchy, as will the children of those living in poverty – regardless of their potential or how hard they work.”

If you are born poor in a highly unequal country you will most probably die poor, and your children and grandchildren will be poor too. In Pakistan, for instance, a boy born in a rural area to a father from the poorest 20 percent of the population has only a 1.9 percent chance of ever moving to the richest 20 percent. In the USA, nearly half of all children born to low-income parents will become low-income adults.”

Many of the most unequal countries are also affected by conflict or instability. Alongside a host of political factors, Syria’s hidden instability before 2011 was, in part, driven by rising inequality, as falling government subsidies and reduced public sector employment affected some groups more than others.”

Experimental research has shown just how important fairness is to most individuals, contrary to the prevailing assumption that people have an inherent tendency to pursue self-interest. A 2013 survey in six countries (Spain, Brazil, India, South Africa, the UK and the USA) showed that a majority of people believe the gap between the wealthiest people and the rest of society is too large. In the USA, 92 percent of people surveyed indicated a preference for greater economic equality, by choosing an ideal income distribution the same as Sweden’s and rejecting one that represented the reality in the USA.”

Across the world, religion, literature, folklore and philosophy show remarkable confluence in their concern that an extreme gap between rich and poor is inherently unfair and morally wrong. This concern is prevalent across different cultures and societies, suggesting a fundamental human preference for fairness and equality.”

Many believe that inequality is somehow inevitable, or is a necessary consequence of globalization and technological progress. But the experiences of different countries throughout history have shown that, in fact, deliberate political and economic choices can lead to greater inequality. There are two powerful economic and political drivers of inequality, which go a long way to explaining the extremes seen today: market fundamentalism and the capture of power by economic elites.”

... as economist Thomas Piketty demonstrated in Capital in the Twenty-First Century, without government intervention, the market economy tends to concentrate wealth in the hands of a small minority, causing inequality to rise. Despite this, in recent years economic thinking has been dominated by a ‘market fundamentalist’ approach, that insists that sustained economic growth only comes from reducing government interventions and leaving markets to their own devices. However, this undermines the regulation and taxation that are needed to keep inequality in check.”

In the 1980s and 1990s, debt crises saw countries in Latin America, Africa, Asia and the former Eastern bloc subjected to a cold shower of deregulation, rapid reductions in public spending, privatization, financial and trade liberalization, generous tax cuts for corporations and the wealthy, and a ‘race to the bottom’ to weaken labour rights. Inequality rose as a result. By 2000, inequality in Latin America had reached an all-time high, with most countries in the region registering an increase in income inequality over the previous two decades. It is estimated that half of the increase in poverty over this period was due to redistribution of wealth in favour of the richest. In Russia, income inequality almost doubled in the 20 years from 1991, after economic reforms focused on liberalization and deregulation.”

Despite the fact that market fundamentalism played a strong role in causing the recent global economic crisis, it remains the dominant ideological world view and continues to drive inequality. It has been central to the conditions imposed on indebted European countries, forcing them to deregulate, privatize and cut their welfare provision for the poorest, while reducing taxes on the rich. There will be no cure for inequality while countries are forced to swallow this medicine.”

Elites, in rich and poor countries alike, use their heightened political influence to curry government favours – including tax exemptions, sweetheart contracts, land concessions and subsidies – while blocking policies that strengthen the rights of the many. In Pakistan, the average net-worth of parliamentarians is $900,000, yet few of them pay any taxes. This undermines investment in sectors, such as education, healthcare and small-scale agriculture, which can play a vital role in reducing inequality and poverty.”

The massive lobbying power of rich corporations to bend the rules in their favour has increased the concentration of power and money in the hands of the few. Financial institutions spend more than €120m per year on armies of lobbyists to influence EU policies in their interests.”

Many of the richest people made their fortunes thanks to the exclusive government concessions and privatization that come with market fundamentalism. Privatization in Russia and Ukraine after the fall of communism turned political insiders into billionaires overnight. Carlos Slim made his many billions by securing exclusive rights over Mexico’s telecom sector when it was privatized in the 1990s.”

Market fundamentalism and political capture have worsened economic inequality, and undermined the rules and regulations that give the poorest, the most marginalized and women and girls, a fair chance.”

The domination of special interests and bad policy choices – especially user fees for healthcare and education, and the privatization of public services – can increase inequality. Unfortunately, too many countries are suffering as a result of these ‘low road’ policies.”

Despite the evidence that it increases inequality, rich-country governments and donor agencies, such as the UK, the USA and the World Bank, are pushing for greater private sector involvement in service delivery.”

Full Report:



* ... John Nash believed that, every man is occupied by a distrust feeling against the others and continuously plans strategic moves against them in order to benefit himself. He designed some games based on this philosophy, one of which was called "fuck your buddy", (later published as "so long sucker"), according to which, the only way someone to beat his opponent was to betray him. The game would be proved consistent under a logical basis if every player was behaving the same way. But when some analysts from the strategic analysis company RAND, tried to test it using their secretaries, the later chosen to cooperate instead of betraying each other. However, this was not enough for analysts to conclude that the philosophy of this game was wrong and thought that the secretaries were simply unsuitable people for this experiment.

Another example is that of the famous psychiatrist Ronald David Laing who used the game theory to build a certain model for human behaviour. He concluded that people are inherently selfish and spontaneously planning various strategies during their everyday transactions. All these theories enhanced the beliefs of some economists like F. A. Hayek, whose economic models were totally excluding altruism and were totally dependent on personal interest. Another economist, James M. Buchanan, disputes the concept of "public interest" and supports that organizations should be managed by people whose motive is money. Concepts like "feeling of personal fulfilment" or "sense of duty", are not included in their theories.


** Many still believe in the myth of the free market. They have an ideal situation in mind where everyone will be free from the state suppression and the free market will drive societies and individuals to balance and prosperity. It's just an illusion because in reality the game is more rigged than ever. We are not talking about capitalism, not even neoliberalism. We are talking about the new global, brutal feudalism!


Comments

  1. without government intervention, the market economy tends to concentrate wealth in the hands of a small minority, causing inequality to rise.....in russia its less than 1% controlling the wealth sucked out of the work of millions

    ReplyDelete

Post a Comment

Popular posts from this blog

Netanyahu Is Getting His War Between The U.S. & Iran!

The Jimmy Dore Show   Little progress is being made in negotiations between the United States and Iran over the latter’s nuclear program, and that may be by design. The U.S. is demanding a complete dismantling of Iran’s nuclear enrichment program, which is a non-starter for the Iranians. Meanwhile, the U.S. appears to have reneged on a promise to get a ceasefire and humanitarian aid into Gaza in exchange for the release of the last American hostage, so Hamas — and by extension Iran — feel the U.S. cannot be trusted in negotiations. Jimmy Dore and Americans’ Comedian Kurt Metzger discuss how Israel appears to be orchestrating a U.S. attack on Iran that few Americans have any interest in.    Related: Trump makes key move to beat Biden in their race to start a war with Iran

Trump in SHOCK: Putin & China FLIP His Grave Mistake into STUNNING Victory

Danny Haiphong   Putin & China just gave Trump a rude BRICS awakening, and this bombshell will change everything for generations to come. Geopolitical analyst Ben Norton details the truth about Trump's biggest failure against the rising power of BRICS led by Russia and China, and why the US's role as super power is now in serious question.     Related: Trump's tariffs: A unique opportunity for BRICS and the Global South to fully escape from dollar tyranny

Trump's attempt to divide Russia & China is failing, badly

Geopolitical Economy Report   Donald Trump claimed he would "un-unite" Russia and China, but the US divide-and-conquer strategy is failing. In a meeting in Moscow celebrating the 80th anniversary of their nations' victory in World War Two, Presidents Xi Jinping and Vladimir Putin reaffirmed that "China-Russia relations have reached the highest level in history" and will "jointly resist any attempts to interfere with and disrupt the traditional friendship and deep mutual trust between China and Russia". Ben Norton explains.     Related:   Why China supports Russia

Inside Iran's Savak torture museum

The Grayzone   Caution: This report contains depictions of simulated violence that may upset some viewers. Max Blumenthal tours one of the most disturbing museums on the planet. Set in Tehran's former Ebrat Prison run by the anti-sabotage unit of Shah Reza Pahlavi's Savak intelligence services, the museum is filled with shockingly graphic exhibits featuring lifelike mannequins recreating the hideous torture tactics deployed to repress dissidents rebelling against Iran's monarchy. Many mannequins on display represent notorious torturers who either fled or were executed after the Islamic revolution in 1979, while others are modeled after famous prisoners locked away in Ebrat like the current Leader of Iran, Ayatollah Khamanei.  

Never, Ever Let Anyone Forget What They Did To Gaza

by Caitlin Johnstone   I will never forget the Gaza holocaust. I will never let anyone else forget about the Gaza holocaust. No matter what happens or how this thing turns out, I will never let anyone my voice touches forget that our rulers did the most evil things imaginable right in front of us and lied to us about it the entire time. I will never stop doing everything I can with my own small platform to help ensure that the perpetrators of this mass atrocity are brought to justice. I will never stop doing everything I can to help bring down the western empire and to help free Palestine from the Zionist entity. I will never forget those shaking children. Those tiny shredded bodies. Those starved, skeletal forms. The explosions followed by screams. The atrocities followed by western media silence.   I will never forget, and I will never forgive. I will never forgive our leaders. I will never forgive the western press. I will never forgive Israel. I will never forgive the main...

14,000 babies could die if aid doesn’t enter Gaza in 48 hours, UN warns

Some 14,000 babies could die in Gaza in 48 hours if aid does not reach them in time, the UN’s humanitarian chief, Tom Fletcher, told the BBC today. Though Israel said it would allow “basic aid” into Gaza, only five trucks entered the enclave yesterday, two carrying shrouds to help bury Palestinians killed in Israel’s bombs. Others were in Gaza, but were being held by occupation forces and had not reached Palestinians. This was the first delivery of aid since 2 March, when Israel completely sealed the enclave. This, Fletcher explained, is a “drop in the ocean” and totally inadequate for a population of over 2.3 million, and for which no aid has been allowed to enter for 80 days.    “Tonnes of food is blocked at the [Gaza] border” by Israel, Director General of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus, said yesterday. This comes just weeks after the UN agency of Palestinian refugees (UNRWA) warned that hundreds of thousands of Palestinians eat only one mea...

They Will Starve You In A Killing Cage Too

by Nate Bear   Starvation is taking hold in Gaza. Twenty-nine people have starved to death in the last few days.  Death by starvation is horrific, the body feeding on itself, first consuming carbohydrates and fats, and then moving on to the protein parts of tissue. Once these are used up, vital organs and tissues start to fail as they aren’t being nourished by essential nutrients. The heart, lungs, muscles, ovaries, testes and brain physically shrink and shrivel. The kidneys start to fail. Eventually the body begins scavenging muscle, including the heart muscle. When this starts to happen, death is hours away, preceded by hallucinations, severe mental disturbances and convulsions. With less stored fat and higher metabolic needs, children die first. Starving parents hold their dying children, at this point nothing but skin and bone, in their arms. Adults can survive anywhere between twenty and forty days without food. Those already weak, chronically ill or immuno-compromised di...

How Israel manufactured a looting crisis to cover up its Gaza famine

by Muhammad Shehada Part 1 Since the onset of its genocide, Israel has persistently pushed a narrative that the famine devastating Gaza is not of its own making, but the result of “Hamas looting aid”. This claim, repeated across mainstream media and parroted by officials, has been used to deflect responsibility for what many human rights experts have called a deliberate starvation campaign. Even after Israel fully banned the entry of food, water, fuel, and medicine on March 2, Tel Aviv continued to maintain that Hamas looting, not Israeli policy, was to blame for the humanitarian catastrophe.   But that narrative has now been discredited by Israel’s internal reporting. Last week, the Israeli military admitted internally that out of 110 looting incidents they documented, none were carried out by Hamas. Instead, the looting was done by “armed gangs, organised clans” and, to a lesser extent, starved civilians. Those very gangs and clans are backed by Israel; they enjoy full Israeli ar...

"Kidnapped in Int'l Waters": Israel Intercepts Gaza-Bound Aid Ship, Detains Greta Thunberg & Others

Democracy Now!   Eleven peace activists and one journalist on board the Gaza Freedom Flotilla ship, the "Madleen," were detained by Israeli soldiers as their ship carrying vital humanitarian aid for starving Palestinians approached Gaza.    The ship was intercepted by Israeli forces in the middle of the night in international waters. Its supplies were seized and communications jammed. The unarmed activists will likely be transported to Israeli detention or "immediately deported," says Ann Wright, a U.S. military veteran who has participated in four Freedom Flotilla journeys and now serves on the steering committee of the Freedom Flotilla Coalition. She calls on citizens of countries around the world to push for the activists' release and an end to Israel's war on Gaza.