There exists a highly unequal distribution of incomes and assets within countries and between countries. While billions of people enjoy longevity and good health, more than one billion people live in abject poverty, struggling for mere survival every day. The poorest of the poor face the daily life-and-death challenges of insufficient nutrition, lack of healthcare, unsafe shelter, lack of safe drinking water and sanitation. A grotesquely unequal distribution of income means millions of children run the risk of dying from easily treatable diseases. Economic inequality has always been a subject of discourse.
As far back as 1971, Jan Pen, a Dutch economist, came up with a graphical representation of income inequality within the British economy. To draw his famous graph, the heights of all adults was imagined as proportionate to their income and they were made to take part in an hour-long parade in the ascending order of their income. Pen then described what observers of average height would see.  It would be a parade of dwarfs and at the very end some giants would appear. The first marchers, the owners of loss-making businesses, the jobless, the working poor will not be visible at all. Their heads are below the ground. By even halfway through the parade, the marchers are still quite short. It takes about 45 minutes before the marchers are as tall as the observer. In the final stage, the giants will dominate. With six minutes to go they are 12 feet tall; when the highest earners walk by, right at the end, each is more than two miles tall.
A Pen’s Parade graph is true in every economy. It can be useful in showing how incomes, and income distribution, change over time. Growth in output hardly guarantees growth in equality. Global inequality is worse than at any time since the 19th century. The latest annual report of Oxfam, entitled ‘An Economy for the 99 per cent’ states that the bottom 50 per cent of the world’s population has just 0.2 per cent of the world’s wealth, and since 2015 the leading billionaires, six of whom are from the US, together have more wealth (net wealth of $426 billion) than what the bottom 50 per cent of the world’s population owns. There are 18 billionaires in sub-Saharan Africa living alongside the 358 million people living in extreme poverty. In India today 57 bilionaires control 70 per cent of its wealth. More precisely, the top one per cent has gained more income than the bottom 50 per cent put together. The 2016 list of Indian billionaires published by the US business magazine Forbes  reveals that India has a total of 84 billionaires.
Contrary to popular belief, many of the super-rich are not ‘self-made’. Over half the world’s 62 richest billionaires were as wealthy as half of the world’s population. However, the number has dropped to eight this year (2017) because of the revelation that poverty in China and India is worse than previously imagined, making the bottom 50 per cent even worse off and widening the gap between rich and poor. Indeed, global inequality has reached levels not witnessed for over a century.
To summarize a country’s current status of economic developmet and to classify countries in their respective levels of such development, the World Bank and other international organisations heavily rely on a single measurement called the gross domestic product (GDP) per capita. This indicator is not a comprehensive measure of economic development, because there are many other important indicators of well-being. In view of sustainable development’s commitment to social inclusion and broad-based prosperity, it is imperative to take into account not just a country’s average levels of income, but the variation of incomes across households and individuals within a country.
On the face of it, the average income can be fine. But it is ‘just fine’ because a few people are rich and the rest of the country is poor, then the state of affairs is not so fine after all. The popular measure of inequality of income within the country is the Gini coefficient (also known as Gini index), which ranges from zero to one. A score of zero means perfect equality: everyone earns the same. A score of one means that one person gets everything. Real societies are of course somewhere in between. Individual income inequality measured by the Gini coefficient has consistently risen. The Indian growth-inequality paradox is easy to pin down ~ the wealth that India creates is not evenly distributed.  According to the International Monetary Fund, India’s Gini coeffieient rose to 0.51 by 2013 from 0.45 in 1990, mainly on account of rising inequality between urban and rural areas as well as within urban areas. As of November 2016, India is the second most unequal economy in the world. Far from trickling down, income and wealth are being sucked upwards at an alarming rate. The IMF has recently warned that India faces the social risk of growing inequality.
The data, that has emerged from a decade of empirical research on growth, reveal that at the global level income and wealth are increasingly concentrated among the small number of countries in the world, leaving the rest to deteriorate in deprivation. Concentrations of wealth and poverty have an ethnic and geographic dimension. Inequality must be reckoned in terms of the global North and the global South, and the reality of imperialism, multinational corporations, class, race, caste and patriarchy. The low-income countries are heavily concentrated in two regions: tropical Africa and South Asia, with a few other low-income countries scattered in other parts of the world. ‘The 99 per cent’ is predominantly represented by hundreds of millions of the dispossessed suffering under varying conditions all over the world, but mainly concentrated in the global South.
To quote Kofi Annan, former UN Secretary-General and Nobel Laureate: ‘The widening gap between rich and poor is at a tipping point. It can either take deeper root, jeopardizing our efforts to reduce poverty, or we can make concrete changes now to reverse it’. The rapid rise of extreme inequality in incomes and assets has been the greatest threat to world peace, and to the survival fo the human species. In their book, The Spirit Level: We More Equal Societies Almost Always Do Better, Kate Pickett and Richard Wilkinson demonstrate that countries with higher levels of income inequality experience higher rates of health and social problems compared to more equal countries.
Inequality has damaged our ability to live within the planet’s resources and succeed in the fight against climate change. It makes the struggle for equality between the sexes far harder. While money is power, the holders of huge capital influence the government’s policies more than the voters can ever do. Inequality gives birth to a dominant political form that resembles a plutocracy rather than a democracy. The growing threat of left extremists and terrorism has its roots in economic deprivation and inequality in access to resources. Rising inequality is also a factor that promotes a divisive agenda of sectarianism, xenophobia and nationalism.

Advertisement