"Social and economic inequality is detrimental to the health of any society. Especially when the society is diverse, multicultural, overpopulated and undergoing rapid but unequal economic growth."
~Milind Deogaonkar, MD~
Over the last 50 years economic inequality has increased tremendously both within and between countries worldwide.
The richest 1% of adults alone owned 40% of global assets in the year 2000. Half the world, nearly 3 billion people, live on less than $2 a day. The three richest people in the world –- Microsoft Chairman Bill Gates, investor Warren Buffett and Mexican Telecom mogul Carlos Slim Helú -- have more money than the poorest 48 nations combined.Overall, wealth is mostly concentrated in North America, Europe and high-income Asia-Pacific countries. People in these countries collectively hold almost 90% of total world wealth. As striking as these numbers may be they fail to explain that wealth and income are also highly unequal within the U.S., China, and other countries of the world. In 2005 little more than 50 million people in China had more than roughly $3000 (CNY 20,000) of disposable income, while almost 750 million people didn’t even have $800 (CNY 5,000) of disposable income. In the rural areas of China, where the majority of the population is, the poorest 10 percent now hold only 2% of wealth while the richest 10% hold 31% of all wealth. The major disparities in wealth and income are not unique to China. In fact, 30 out of 177 countries had sharper income inequality than China in 2006
A 2011 report by the Organisation for Economic Co-operation and Development (OECD) finds that
1) Across OECD countries, the average income of the richest 10% of the population is nine times that of the poorest 10%. Additionally, with the exceptions of only France, Japan and Spain, wages of the 10% best-paid workers have risen relative to those of the 10% least-paid workers; and
2), the differential between the top and bottom 10% varies greatly from country to country: “While this ratio is much lower in the Nordic countries and in many continental European countries, it rises to around 14 to 1 in Israel, Turkey and the United States, to a high of 27 to 1 in Chile and Mexico.”
In the U.S., the share of income now going to the top .1% has more than tripled since the 1980s. In the 1980s a successful CEO could expect to take home about 40 times more pay than their average worker but in 2001 the same CEO could take home as much as 350 times the pay of typical workers. In 2005, Wal-Mart’s CEO Lee Scott Jr., made more than 900 times the pay and benefits the typical Wal-Mart worker made in 2005, or roughly the same amount the average Wal-Mart worker earns in a lifetime.
To shed some light on the relative poverty of the poorest countries to the wealthiest, imagine this: average wages of people in poor exporting countries are one-tenth that of average wages in U.S., and so are perhaps almost 9000 times less than the wage of an American CEO such as Lee Scott Jr.
Moreover, there is a common misconception that rising inequality is acceptable because absolute gains have been seen by all, however, this is not the case. In China for example, despite an increase in total income, the average income of the poorest 10% of households fell by 2.5%. Not surprisingly, inequalities in standards of living are also greater today than they have been for 50 to 100 years, and many economists expect the growth of these inequalities to continue.
A main reason for the increasing disparities are globalization and skill-biased technological advances.
As robotics and artificial intelligence develop further, even many skilled jobs may be threatened. Technologies such as machine learning may ultimately allow computers to do many knowledge-based jobs that require significant education. This may result in substantial unemployment at all skill levels, stagnant or falling wages for most workers, and increased concentration of income and wealth as the owners of capital capture an ever larger fraction of the economy. This in turn could lead to depressed consumer spending and economic growth as the bulk of the population lacks sufficient discretionary income to purchase the products and services produced by the economy.
Machine learning is one of the primary technologies that powers IBM’s Watson computer. Watson was able to achieve championship-level proficiency at Jeopardy! by analysing thousands of previous Jeopardy! questions. Jobs that are routine and repetitive in nature—regardless of the skill and education required to perform the job—are going to be increasingly susceptible to automation. Now, most people would probably not characterize playing Jeopardy! at a championship level as a “routine and repetitive” activity. Yet, a machine was able to prevail.
Machine learning essentially allows a computer to analyse past situations (together with outcomes) and develop optimal, statistical-based rules that can be applied in the future. In other words, machine learning is basically a way to take a seemingly non-routine task or job and turn it into something that can be handled by a computer.
One important factor in the creation of inequality is variation in individuals' access to education.
Research shows that growing up in a poor neighbourhood is associated with worse outcomes for children. This suggests that economic segregation may be harmful to children.If rising economic inequality among adults has led to more economic segregation and if increased economic segregation led to more inequality in children’s outcomes such as educational attainment, increases in economic inequality among parents are likely to be transmitted to the next generation perpetuating economic segregation.
Crime rates and inequality are positively correlated (within each country and, particularly, between countries), and it appears that this correlation reflects causation from inequality to crime rates, even controlling for other crime determinants.
“with a degree of consistency which is unusual in social sciences, lower-class people, and people living in lower class areas, have higher official crime rates than other groups.”
~John Braithwaite, Inequality, Crime, and Public Policy~
One of the leading sociological paradigms on crime, the theory of “relative deprivation,” states that inequality breeds social tensions as the less well-off feel dispossessed when compared with wealthier people. The feeling of disadvantage and unfairness leads the poor to seek compensation and satisfaction by all means, including committing crimes against both poor and rich.
An increase in income inequality has a significant and robust effect of raising crime rates. Since the rate of growth and distribution of income jointly determine the rate of poverty reduction, the two aforementioned results imply that the rate of poverty alleviation has a crime-reducing effect. Crime rates and inequality are positively correlated (within each country and, particularly, between countries), and it appears that this correlation reflects causation from inequality to crime rates, even controlling for other crime determinants.
“How cohesive a society is, how much people trust each other and are involved in community life, is an important social asset that makes a very substantial contribution to the quality of life.”
~Richard Wilkinson~
Studies show that people actually trust each other much less in countries with larger income differences.
Brazil, a country with high income inequality, had the lowest levels of trust, while Sweden, which has a very equal income distribution, had the highest level of trust.
It should now be clear that extreme economic inequality is detrimental to the cohesion and safety of societies and also of the international community. As Wilkinson put it, “What the relationship with inequality actually demonstrates is that societies that tolerate the injustices of great inequality will almost inescapably suffer their social consequences: they will be unfriendly and violent societies, recognized more for their hostility than for their hospitality.”
Another concerning feature of economic inequality is it’s impact on health and happiness. In the U.S. the gap in life expectancy has dramatically widened as inequality has grown. In 2000 for example, men in deprived counties had an average of 10 years’ shorter life expectancy than women of affluent counties, and poor black men lived almost 14 years less than affluent whites. Another study in 2007 showed that people with incomes less than $50,000 a year have a significantly shorter lifespan than those with incomes above $50,000.
The trend of economic inequality will not end if nothing is done to stop it. If anything, inequality will likely rise in the coming future without comprehensive intervention, the extent of economic inequality that now exists in the world is so extreme that it is unjust to let it continue.
In a monetary system, the major aim is profit: maintaining the competitive edge and the bottom line is all that matters. The social and health problems that arise from mass unemployment of people rendered obsolete by automation are considered irrelevant, if they are considered at all.
Any social need that may be met is secondary to acquiring a profit for the business. If the profit is insufficient, the service will be withdrawn. Everything is subordinate to increasing the profit margin for shareholders. It does not serve the interest of a money-based society to engage in the production of goods and services to enhance the lives of people, just as man made laws enacted do not protect the lives of citizens.
All of the world’s economic systems – socialism, communism, fascism, and even our free enterprise capitalist system- perpetuate social stratification, elitism, nationalism, and racism, based primarily on economic disparity. As long as a social system uses money or barter, people and nations will seek differential advantage by maintaining their economic competitive edge or by military intervention.
The Earth is abundant with resources our practice of rationing resources through monetary methods is irrelevant and counter-productive to the well-being of people. Modern society has highly advanced technologies and can easily provide more than enough for a high standard of living for all by implementing a resource-based economy.
Simply stated, a resource –based economy uses existing resources rather than money, and provides an equitable distribution of goods and services in a humane and efficient manner for the entire population.
To gain a better understanding of a resource based economy please visit The Venus ProjectReferences:
http://www.equalitytrust.org.uk/resources/slides
http://en.wikipedia.org/wiki/Economic_inequality
http://www.sociology.org/content/vol8.1/deogaonkar.html
http://articles.moneycentral.msn.com/News/StudyRevealsOverwhelmingWealthGap.aspx
http://journalistsresource.org/studies/government/international/income-inequality-in-oecd-countries/
http://econfuture.wordpress.com/2011/04/14/machine-learning-a-job-killer/
http://siteresources.worldbank.org/DEC/Resources/Crime&Inequality.pdf
http://keepthemiddleclassalive.com/is-economic-inequality-ethical/
http://www.thevenusproject.com/en/store?page=shop.product_details&flypage=flypage.tpl&product_id=19&category_id=6
In 2005, Wal-Mart’s CEO Lee Scott Jr., made more than 900 times the pay and benefits the typical Wal-Mart worker made in 2005, or roughly the same amount the average Wal-Mart worker earns in a lifetime.
ReplyDeleteShould be: "or roughly the same amount the average Wal-Mart worker earns in a lifetime every month."