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Worlds apart

Jomo K. S. is Assistant Secretary General for Economic Development in the United Nations Department of Economic and Social Affairs (DESA).

by Jomo K.S.

Macroeconomic policies, financial globalisation, and changes in labour market institutions have exacerbated inequality in recent decades, not only in income and wealth, but also in access to education, healthcare, social protection, as well as in political participation and influence. Even within countries experiencing rapid economic growth, an array of factors, exacerbated by tremendous demographic changes, has conspired to transmit inequality of knowledge, social responsibility, and life chances from one generation to the next.

As surveyed in the United Nations report The Inequality Predicament, few countries, rich or poor, have proved immune to the global trend of rising inequality, or to its consequences for education, health, and social welfare.

Of course, there is no simple causal relationship linking poverty and inequality to violence. But inequality and a sense of deprivation do contribute to resentment and social instability, threatening security. Excluded and facing bleak life prospects, young people, in particular, often experience anomie and may turn to anti-social behavior, including violence.

Nor is there a simple explanation of what causes poverty. Clearly, however, poverty arises from various complex conditions, and its amelioration requires a multidimensional approach. It is hard to imagine, for example, how to “make poverty history” without also generating enough decent work, educational opportunities, and healthcare for all.

To be sure, the world has seen progress on some fronts in recent decades. Access to education for girls has improved, and some gender gaps have been reduced. Despite AIDS and the resurgence of malaria and tuberculosis, life expectancy has increased in much of the world due to improved public health systems. Overall, however, the inequality gaps are large and, in many cases, growing.

The most important determinant of income inequality today is wealth inequality, with the increasing concentration of asset ownership in recent years principally responsible for greater income inequality in most countries. Meanwhile, growing unemployment, widening skill and productivity gaps, and the “informalisation” or “casualisation” of labour markets have exacerbated income inequalities worldwide, as the number of “working poor” and the incidence of “jobless growth” has spread.

Nor have stabilisation and structural adjustment programs, imposed since the 1980’s, delivered on their promise of achieving higher economic growth. Growth in much of the world during the past quarter-century has been slower than in the previous 25 years, despite more rapid growth in East Asia, India, and a few other countries.

Such growth differences suggest that overall global inequality may not have increased unequivocally. But inequalities at the national level have deepened in most countries in recent years, largely due to economic liberalisation at both the national and international levels. Indeed, in much of the world, such economic reforms have actually undermined growth rates as well as the progressive role of government, while otherwise increasing overall inequalities.

The few exceptions have been due largely to continued or new progressive government interventions. But they are exceptions: the cumulative impact of these reforms over the past 25 years has been greater inequality in most developed and developing countries, with rising unemployment, greater earnings disparities, reduced social protection, and environmental degradation.

International financial liberalisation, for example, has undermined the use of more inclusive and targeted developmental credit to promote desired economic activities. In addition, contrary to the promises of its proponents, financial liberalisation has actually resulted in net capital flows from the capital-poor to the capital-rich over the long term, while increasing financial volatility and weakening economic activity.

Meanwhile, free-trade negotiations seem to ignore historical trends. Developing countries’ international terms of trade have worsened: prices of primary commodities have declined in relation to manufactures, as have tropical agriculture prices against temperate agriculture, and prices of generic manufactures have fallen relative to output protected by intellectual property rights.

As a result, trade liberalisation of manufactures has resulted in de-industrialisation and greater unemployment in much of the world, as in the case of garments this year. And, while agricultural trade liberalisation may enhance export earnings for some poor countries, the main beneficiaries will be the more well-to-do agricultural exporters. Countries that import currently subsidized food will be worse off.

The “retreat of the state” in much of the developing world in recent decades has involved a generally reduced role for government, including the capacity to lead and sustain development, as well as its progressive social interventions in areas such as public education, health, housing, and utilities.

The economic liberalisation carried out in much of the world in the last 25 years was a flawed policy from the start, and its consequences have become glaringly obvious. Unless the world refocuses economic policies to address the adverse impact of economic inequality on growth and poverty reduction, the poor and the privileged will continue to live worlds apart.

Copyright: Project Syndicate, 2006.
www.project-syndicate.org

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Race based tax?

A short perusal of Professor Jomo’s articles is all that is needed to guess at the type of policies that he would like to implement at a global level.

It seems that justifying the redistribution of wealth from Chinese to Malays and the associated ethnic based privileges in that country are now grist for the mill on a global canvas.

Of course notwithstanding that colonialism ended thirty years ago the targets for his redistribution agenda will be the so called rich (mainly white) western countries.

The fact that capital (savings) in so much of the developing world is unable to form due to the lack of the rule of law, confiscatory taxation and the type of redistributive policies advocated by Prof Jomo is however apparently nothing to do with the problem.

The struggle for hearts and minds

Thank you, Paul, for showing us the state of your heart. You have outlined very well the reasons mine is often so heavy and I'm sure your words will have resonated with others too.

 We can not give in to despair, though. Tempting as it is to believe that the beast of greed is unbridled and grown much too powerful to be confronted, somehow those of us in the West with hearts that are bleeding but still at least partly flesh rather than stone, must bind them up and do the confronting.

This will sound loopy to some, but I am convinced this is a spiritual struggle that must be won in the West if humanity is to survive in anywhere near the numbers we have now.

 How? Well I don't know exactly, but I think it must start by detaching the suckers on the tentacles of that beast that have managed to work their way inside each of us. Once freer and healthier ourselves we should be able to tackle some of those bigger arms that entwine us collectively, and then... who knows what we can do? In long and wearying struggles, tipping points are sometimes reached unexpectedly and people quickly find themselves surfing the wave of success.

Keep working towards what could be, fellow bleeding hearts, as well as looking at what is! It may really be impossible and it certainly seems overwhelming, but it may also be that many of those other hearts aren’t really stone at all when it comes right down to it.

Jomo KS and Steiglitz/Bilmes-overview

Really, to read Steiglitz / Bilmes, and Jomo K.S.afterwards, is truly to create the preconditions for a broken heart, for a weep at the squandering of life opportunities for billions of souls across the planet, over the last generation or two (perhaps WW2 is a good starting point; the beginning of the modern era).

Currently, westerners witness the reality and then must imagine, if they have the wit and inclination, what the reality of life for the poor must  feel like, at second remove for us lucky ones, largely only after the media depictions of disasters like Dharfour and Pakistan that are so large they CAN'T be concealed, give us an inkling of what life is like for so many in that real world, out there

All this unnecessary suffering for what? To bolster the bank accounts and vanity of a relatively few misguided oligarch barbarians largely located in West, and their client thugs.

All the trillions wasted that could have been better employed, just as profitably for nearly all concerned, to allow perhaps billions of "others" access to something feebly approximating the sort of comfortable dignified and meaningful lives we demand so stridently for ourselves.

The real postscript to these articles and the largely enlightened explications in an earlier thread, concerning them- apart from the usual few obdurate obscurantists- comes with the belated George W. Bush admission of the West's oil "addiction”. This comes conveniently AFTER the fact of the last decade, when the people were gulled by the likes of Murdoch into going along with Republican profiteering brigand opportunism in the middle-east ( Iraq, Cheney, Halliburton, Bechtel, Carlyle, etc), which saw the global common wealth squandered on wars and poverty, for the benefit of the few above and their clients.

As with in the wake of Vietnam, the kitty has been squandered. All the infrastructure that could have been developed, including alternative transportations systems (to freeways, trucks, ostentatious 4-wheel-drive conceits) in the West never eventuated because the politicians and corporations were too gutless to explain to the People. Elsewhere, as in the Middle East, necessary infrastructure for the masses' was destroyed and lives needlessly sacrificed to uphold a lie.

And then, on the same day that Bush finally admits the US petrol "addiction", he turns around and in a much quieter voice, arrogantly nonetheless asserts that yet more tax cuts for the rich to continue the consumer spending binge, will go ahead anyway.

Fiona: Hi Paul, good to hear from you again!

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