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A world divided by inequality

By Sharmila Joshi

An additional $28 billion a year would make basic education, clean water, healthcare and nutrition available to all the poor people in the world. Yet Western Europe and America spend $35 billion a year on cosmetics, ice cream and pet food. Something is not right in this grossly unequal equation

The world is an extremely unequal place. One-quarter of the world’s 6 billion people in the year 2000 lived below the lower poverty line of $1 a day. About half were below the upper poverty line of $2 a day. At the other end of the disparity spectrum, the world’s richest 225 individuals have combined assets of anything from $1 to 3 trillion (this figure varies because the rich are less vulnerable to being probed and counted; they have the means to protect their wealth from official quantification).

But world inequality, as Bob Sutcliffe writes, is not a simple concept that can be assigned a single value. “Multitudinous inequalities exist in human society,” the economist writes, “of income, welfare, rights, power and prestige, based on class, caste, gender, ethnicity, age, sexual preference and many more things.” In 100 Ways of Seeing an Unequal World, a 2001 book, Sutcliffe forcefully highlights some of these inequalities

How inequality may be quantified has in fact been a matter of vigorous global debate. A vast array of indicators periodically emerge from such official statisticians of the globe as the United Nations’ multiple agencies and the World Bank. Year after year, they tell us, for example, that in Norway , amongst the UNDP’s top rankers in its annual Human Development Report, (which measures income, life expectancy and literacy), life expectancy at birth is 78.7 years, there is 100% literacy and annual income is just under $30,000. In Sierra Leone , chances of survival beyond age 35 are speculative, two in three people have no education and annual income is $470 a year.

The very fact that many of us may often have read such figures is cause for concern: what makes such an unequal world possible? What will it take to make it more equal? What is more alarming is the fact that inequality—as is evident from these agencies’ multiple indicators -- is actually growing across the globe.

During the 1990s, the number of extremely poor people in the world increased by at least 28 million people. During the same time, the wealth of Europe ’s millionaires rose by $300 billion and of Asia ’s super-rich, by $600 billion. The income of the richest few Americans is now the equivalent of the incomes of almost 2 billion of the world’s population combined.

While there have been some notable improvements across the globe in terms of access to water, sanitation, education, healthcare and employment, inequality has grown faster in the last 15 years than in the past 50, as UNDP reports over the years consistently indicate. The gaps between the rich and the poor, resource inequality, consumption, access to healthcare, water, employment: all these gaps keep growing.

In the 1960s, per capita GDP in the richest 20 countries was 18 times that in the poorest 20 countries. By 1995, this gap had widened to 37 times. More than 50 countries suffered falling living standards during the 1990s. Life expectancy and illiteracy fell in 21 countries during this decade. According to the UN Habitat Report, by 2030, one in three human beings on this planet will be living in a slum. All this at a time when, by 1999, the top 20% of the globe’s population was consuming 86% of all goods and services.

Inequality is growing sharply between countries and also within countries. On the UN’s HDR, the US is amongst the near-top rankers. But the number of Americans living in poverty rose to 12.4% during the 1990s. Among minority Blacks and Hispanics, the percentage is almost double. The wealthiest 5% of Americans, on the other hand, cornered close to 60% of the nation’s wealth.

In Sierra Leone (which ranks low on the HDR), the richest tenth receive over 80 times the income of the poorest tenth. In a number of Latin American and African countries, the ratio exceeds 40. The gap duplicates in almost every country: at a time when India was supposed to be ‘shining’, when malls were mushrooming alongside upscale restaurants and consumption of cars, the country slipped three places in the HDR. It is now ranked at 127. (See ‘Inequality in India ’).

Although the data quoted above comes from agencies hardly known for their radical agendas, a contentious debate rages about whether global inequality is indeed growing. On one side are the globalists—mainstream economists, finance ministers, the IMF, the transnational corporations -- who see the last 15-20 years of rising market-driven integration of the global economy as the cause of declining global inequalities and improving levels of human welfare. On the other side are the anti-globalists who see the expansion of the integrated international market and of corporate and financial interests as one of the main causes of the growing inequality.

New economic policies—introduced in country after country from the 1980s -- believe there is a trade-off between equity and efficiency: to have an efficiently functioning market, economy, and consistent growth, we must give up the idea of equity or more equality or more equal distribution. The opposite view says that it is the inequality of the slices that the cake is cut into that determines or impedes its size. The more equal the slices, the more the cake -- or the economy and society or equality and prosperity for all -- can grow. In other words, inequality-- and not equality -- impedes growth.

Numerous mainstream publications dismiss UN data on inequality. A Brookings Institution paper of May 2002 calls the debate on increasing trends in inequality “silly”. Such titles as Should we Worry? abound in IMF publications. A March 2004 issue of the Economist says such figures are “always larger than the likely reality”. The magazine dismisses World Bank data as “too pessimistic”. It mocks the growing concern over inequality amongst those who see a connection between the rich enjoying their privileges at the expense of the poor as a “debilitating preoccupation with ‘global inequality’.”

A formidable array of economists associated with global think-tanks and privately-funded policy institutes, who the Economist quotes, show through their work “rapid -- indeed historically unprecedented—falls in poverty during the 1980s and 1990s—the new golden age of capitalism.” According to these thinkers, the proportion of the world’s people living on less than $1 a day has fallen so greatly that “the decline has been enough to offset rising population in developing countries”. India is cited as an example of how great the benefits of global economic integration can be.

Surjit Bhalla, formerly with the Rand Corporation, the Brookings Institution and the World Bank, comes up with a stunning conclusion. He says the drop in poverty in the last decade has been so sharp that in the year 2000, when the UN announced its Millennium Development Goals on Poverty—to bring the number of people living on less than $1 a day to half the 1990 levels by 2015—the goal had already been achieved.

A lot of these squabbles relate, along with ideological beliefs about the benefits of a free market, to the murky world of statistics. Sutcliffe calls statistics the “superlative of lies”. So some of the debate centres on how precisely inequality may be measured. And some of it centres on how it might be addressed: through a more or less globally integrated market.

Sidestepping the quarrel, in a 2002 article titled ‘How to Judge Globalism’, economist Amartya Sen writes, “Even if the poor were to get just a little richer, this would not necessarily imply the poor were getting a fair share of the potentially vast benefits of global economic integration. It is not adequate to ask whether international inequality is getting marginally larger or smaller. In order to rebel against the appalling poverty and the staggering inequalities that characterise the contemporary world….it is not necessary to show that the massive inequality or distributional unfairness is also getting marginally larger. That is a separate issue altogether.”

Beyond the numbers, lie people’s real lives, struggles and deaths. Whether inequality is growing may remain contested despite the reams of available data. But, on an additional $28 billion a year, basic education, clean water, basic healthcare and basic nutrition could be made available to all the poor people in the world. When Western Europe and America spend $35 billion a year on cosmetics, ice cream and pet food, something is not right in this grossly unequal equation. As Arturo Escobar, critical anthropologist, writes, "Genuine world prosperity is indivisible. It cannot last in one part of the world if other parts live under conditions of poverty and ill-health."

InfoChange News & Features, January 2005