Why are some people rich and others poor? In this article, we discuss the pros, cons, and causes of inequality in society. How does the economy affect poverty?
“The economy is too important a side of our life to be left to professional economists,” says Ha-Joon Chang, an economist from Cambridge. In his book How the Economy Works, he explains how the economy affects poverty and poverty affects the economy. In this article, we discuss the pros, cons, and causes of inequality in society.
Inequality is the driving force of history
The pursuit of equality has become a powerful driving force in human history. Equality was one of the ideals of the French Revolution. Liberte, egalite, fraternite ou la mort, remember? In the Russian Revolution and other socialist revolutions that followed it, the idea of equality was also a driving force. Many industrial strikes, demonstrations, revolutions and countless other human conflicts would not have happened without the pursuit of equality.
How to measure inequality
Inequality can be easily measured in terms of income and wealth. To do this, the Gini coefficient is used, named after the Italian statistician of the early twentieth century, Corrado Gini. The more the value of the coefficient deviates from zero and approaches one, the more income is concentrated in the hands of certain groups of the population.
No society that is maximally equal in terms of ideology and politics is capable of providing its members with complete equality (Gini coefficient = 0). In a society where the Gini coefficient is 1, everyone is absolutely equal, except for one person, who is likely to die soon. Thus, reducing the Gini coefficient to 0, since it will be a completely equal society - without a single person. In the real world, there is no country with a Gini coefficient below 0.2 and above 0.75.
The most equal societies are mainly concentrated in Europe, their Gini coefficients are between 0, 2 and 0, 3. Many of them are developed capitalist countries with a good social security system, for example (in alphabetical order): Austria, Belgium, Denmark, Germany, The Netherlands, Norway (the country with the most even income distribution in the world), Finland, France and Sweden.
At the other extreme are the countries with Gini coefficients greater than 0.6: Botswana, Madagascar, Namibia and South Africa (in alphabetical order). They are all located in South Africa.
Any country with a Gini coefficient above 0.5 can be considered very unequal. There are many of these in Latin America: Bolivia, Brazil, Chile, Colombia, Costa Rica, Honduras, Panama and Paraguay. But some of them are located in Africa (Cote d'Ivoire, Mauritania and Rwanda) and Asia (Cambodia, Philippines and Thailand). This group also includes one country on the territory of the former socialist bloc - Georgia.
Gini coefficients in most other countries are distributed between 0, 3 and 0, 5. The USA and China are located on the extreme pole of this distribution, where the inequality is stronger, - 0, 45-0, 5. Countries such as Uganda, Poland, New Zealand and Italy, - on the other side (about 0, 3). Roughly speaking, the Gini coefficient of 0.35 serves as the border between relatively equal countries and those that are not.
Global Gini coefficient
According to the widely used estimate of Bourguignon and Morrison, the global Gini was about 0.5 in 1820 and rose to 0.61 in 1910, 0.64 in 1950, and 0.66 in 1992. Thus, if the world were one country, two centuries ago it would have started out as a very unequal state like Panama or Rwanda and would have outgrown highly unequal, like South Africa, although it might have become a little, quite a bit less unequal. since 1990, thanks in large part to China, which is rapidly emerging as a prosperous country.
But these numbers are less reliable than the national Gini coefficient. The global Gini is not really very relevant because the world is not a true community.
To better understand this idea, do a little thought experiment. Suppose you were told that scientists have found 55 planets with intelligent beings within our galaxy, which are much richer than earthlings, and also have a huge income gap between themselves, the Gini coefficient of which is simply cosmically huge. Would you be very upset about this? Probably not, because in fact you do not know that there are any creatures there, and you can not even imagine how they live.
What's wrong with poor people? Causes of poverty
From early childhood, starting with Disney cartoons, where it is said that we can achieve anything we want if we believe in ourselves, we are bombarded with messages that people, and only they, are responsible for what they receive in their lives. … We are urged to accept what is called the L'Oreal principle: if some people are paid tens of millions of pounds a year, it is because they are "worthy."
The implication is that if people are poor, it is because they are not good enough or put in enough effort. After all, people are responsible for what they do with their lives. Even if in general people come from the same environment, they end up in different positions, as they have different talents in different areas and put in different types of efforts.
Some causes of poverty are “structural” in the sense that they are independent of the individual. Malnutrition in childhood, lack of incentives to learn and schools that provide knowledge below the average level (often found in poor areas) limit the development of poor children, reducing their prospects for the future.
Parents have some control over how much learning incentives and how much food their children receive. And some poor parents, to their credit, put a lot of effort into giving their children the most of this, unlike other parents in similar conditions - but there is still a limit to their capabilities.
Even on the way to overcome the hardships of childhood and the desire to climb the social ladder, people from poor families are likely to encounter more obstacles. Lack of personal ties and cultural breaks with the elite often mean that people from disadvantaged backgrounds are unfairly discriminated against when hiring and moving up the career ladder. If they are “lucky” to have other inappropriate characteristics - in terms of gender, race, caste, religion, sexual orientation - it will be even more difficult for them to get a fair chance to demonstrate their abilities.
It was often said in pre-industrial Korea that "even an almighty ruler can do nothing about poverty." This statement is no longer true, if ever true. The modern world produces enough material goods to overcome absolute poverty. Even without a worldwide redistribution of income, all but the poorest countries produce enough to do so.
Inequality will always exist, but with appropriate policies, we will be able to live in equal societies in terms of income and opportunities, as many Norwegians, Finns, Swedes and Danes will gladly tell you about.
Well-being to you!