Inequality has recently become one of the most prevalent growing issues around the world since there is becoming a larger disparity between different regions within a country and countries both economically and socially, which are the two most extreme forms of inequality.
Inequality is when there is a lack of regularity of a certain thing and here it is the lack of regularity between different societies, regions and countries, affected by a number of things. Inevitable means that something is certain to happen, so I am investigating whether the inconsistency between treated equally as people and having the same amount of money is imminent, focusing on economic and social inequality.
The OEDC (2017) said “Addressing regional disparities is a key element of strategy to reduce inequality and increase (social) well-being. Evidence shows that the factors that most influence peoples’ (social) well-being are local issues,” such as equal employment regardless of race and ethnic background. This means that any policies made to reduce inequality would be most effective if they are locally targeted, and so places that have more inequality can be targeted earlier and stronger enforcements can be put in place, so that eventually, the whole country will have significantly reduced its inequality.
The OEDC (2017) said “Addressing regional disparities is a key element of a strategy to reduce inequality and increase well-being. Evidence shows that the factors that most influence peoples’ well-being are local issues, such as employment, access to health services, pollution and security.” This means that any policies made to reduce inequality should be locally targeted, which will reduce the inequality of the whole country eventually.
Economic inequality is commonly measured using the Gini coefficient which is a measure of statistical dispersion intended to represent wealth distribution of a nation’s residents, using figures from taxing, however it is not totally accurate because informal economy doesn’t go through the government and so is not accounted for in the gross domestic product of a country or region, which is the measure that the Gini coefficient uses. It would also be more accurate if it was adjusted to the purchasing power parity of a country or region. 0 on the Gini coefficient expresses total equality and 100 signifies maximal inequality.
To reach total economic equality, would mean a communist government instead of a capitalist government which is much more common. There are only five communist countries today; China, North Korea, Vietnam, Cuba and Laos, according to Nina Porzucki (2013) though these countries actually follow the socialist view, with the exception of North Korea, which Robert Service (2007) said is “the country that adheres most strictly to communist principles.”
Equal share of profit and property.
Absence of money and ownership to establish social order and everyone should get as much as they need and work as much as they can.
The communist idea has been proved not to work as it removes the incentive for people to work harder than they absolutely have to and this leads to the resentment of people who work less hard but earn the same. The Cambodian genocide under the Khmer Rouge is an example of why communism fails to do what it intended. Over the four-year regime, Khmer Rouge killed more than 1.7 million people so about 25% of the population died, through work, starvation and torture. They attempted agricultural reform which led to famine and their insistence on self-sufficiency lead do many deaths from malaria, as not even medicine was allowed.
If the communist countries today followed the actual communist view, it would be hard to control the civilians without capital punishment, which is seen as inhumane. However, communism wasn’t intended to have these negative impacts. Communism means that all property is owned by the community and each person receives and contributes according to their ability and needs. All means of production and manufacturing are equally owned by all the members of a state. The intended result is to eliminate the capitalist inspired class system where one class does all the work and the other class gets all the money. The most common forms of communism are based on Karl Marx’s views, which focuses on the exploitation of a worker; based on if any profit is generated by the worker, but instead goes to the business owner is a form of inequality and should be abolished. The idea of exploitation being bad actually began to come into practice after the industrialisation of a country, when people began to have to work long hours without breaks in harsh conditions as arable farming took over from subsistence farming and people had to turn to the secondary sector for work.
This is why, we cannot use communism as a way to abolish economic inequality for communism is great in theory but disastrous in practice. This is why we may never reach complete economic equality but it would be better to reach a point where everyone has access to healthcare, food, education and shelter and where poverty is redefined and the standards of living are raised across the globe.
The United States of America is a good example of an unequal country, and is the 39th most economically unequal country as stated by Kevin Lincoln (2011), with a Gini coefficient of 45.0. John Powell pointed out 6 actions the USA has been taking to reduce the economic inequality across the country:
1. Increasing the minimum wage – “Research shows that higher wages for the lowest-paid workers has the potential to help nearly 4.6 million people out of poverty,” and it won’t delay economic growth or affect employment.
2. Improving the earned income tax credit – “In recent years, the EITC has been shown to have a positive impact on families, lifting roughly 4.7 million children above the poverty line on an annual basis,” whilst also being able to provide more working support for the poor.
3. Building assets for working families – “Policies that encourage higher savings rates and lower the cost of building assets for working and middle-class households can provide better economic security for struggling families,” and having new programs that automatically enrol workers in retirement plans like the 401 (k) which was introduced in 1978.
4. Investing in education – “Differences in early education and school quality are the most important components contributing to persistent inequality across generations.” Investing in education starting with childhood programs like “Head Start” and “Universal Pre-K” can increase economic mobility and provide more working options for the future.
5. Making the tax code more progressive – “Data show we have created bad tax policy by giving capital gains,” and because of these, the tax rates for the richest people have been declining as their income and wealth has increased dramatically. If the capital gains tax rates are adjusted to be in line with the income tax rates, this can provide benefits for lower income families.
6. Ending residential segregation – “Higher levels of racial residential segregation within a metropolitan region are strongly correlated with significantly reduced levels of intergenerational upward mobility for all residents of that area.” The isolation of low income house holds have been proven to correlate with significantly reduced levels of social mobility, therefore, eliminating residential segregation by income and race can boost social mobility for everyone.
Social inequality is also now a big determining factor of a countries wealth and how well it is doing, making significant impact on the human development index of a region or country.
Social equality means everyone within a specific society or isolated group have the same status, regarding civil rights, freedom of speech, property rights and equal access to social goods and services.
Reaching total social equality would actually mean having no one in power, and a fully democratic society, which would mean that it would be difficult for countries to move forward and it there would be civil unrest with many people demanding different things to happen to the country, but with no one to execute their wishes. Complete social equality would actually hold back a country or regions growth, but having complete social equality to the extent of race and ethnic background and not social status, would have positive impacts on a countries development.
There is a direct link and correlation between being an equal country and being the most developed country. For example, according to Kevin Lincoln (2011), Norway is the third most equal country in the world with a Gini coefficient of 25.0, and Wikipedia (2016) stated that in 2015, Norway was the most developed country in the world with a human development index of 0.898. On the other hand, Kevin Lincoln (2011) stated that the Central African Republic was the sixth most unequal country with a Gini coefficient 0f 61.3, and Wikipedia (2016) disclosed that in 2015, the Central African Republic was the least developed country with a human development index of 0.199. this proves that by having not only economic but also social equality, countries tend to develop more. The Gini coefficient is relevant to social inequality because according to Lisa Smith in the case of income inequality specifically, which is the main source of economic inequality, governments will sometimes redistribute wealth through social programs and taxation policies.
Dani Rodrick (1999) conveys that “domestic (inter-country) social conflicts are key to understanding why growth rates lack persistence and why so many countries have experienced a growth collapse since the mid-1970’s,” emphasising the manner of which social conflicts and the strength of domestic institutions of conflict management have dramatic impacts on a countries development. Econometric evidence proves this, as countries that experienced the sharpest drops in growth after 1975, were those with both, the most divided societies, evaluated using indicators of mainly economic inequality as well as ethnic fragmentation, and the weakest institutions of conflict management, proxied using indicators of the quality of government institutions, rule of law, democratic rights and social safety nets.
OEDC (2017) http://www.oecd.org/social/inequality.htm
Robert Service (2007) said is “the country that adheres most strictly to communist principles.” – comrades!- book name
Nina Porzucki (2013) https://www.pri.org/stories/2013-12-10/can-you-name-five-remaining-communist-countries-world
by Kevin Lincoln (2011) http://uk.businessinsider.com/most-unequal-countries-in-the-world-2011-10?r=US=T/#39-united-states-of-america-gini-450-1
Kevin Lincoln 2011 http://www.businessinsider.com/the-11-most-equal-countries-in-the-world-2011-10?IR=T#
Wikipedia (2016) https://en.wikipedia.org/wiki/List_of_countries_by_inequality-adjusted_HDI
Kevin Lincoln 2011 http://uk.businessinsider.com/most-unequal-countries-in-the-world-2011-10?r=US=T/#central-african-republic-gini-613-34
Lisa Smith https://www.investopedia.com/articles/economics/08/gini-index.asp