Global income inequality creates tremendous social and economic instability almost everywhere in the world. In 2010, less than two percent of the world’s population earned more income than the bottom 77 percent. And with the current pace of change, it would take more than 800 years for the bottom billion to achieve a mere ten percent of global income. Though wealth and income inequality has been an issue for the entirety of human history, the widening gap between the haves and the have-nots is attracting more attention these days.
While it’s hard to convey the enormity of the problem with facts and figures, available information presents a compelling need for creative solutions. Many people have accepted the mistaken belief that the situation is getting better— that the world’s poorest people are being pulled out of poverty as a result of globalization, philanthropy, and foreign aid.
But that is not the real story. Between 1990 and 2007, the world’s poorest 40 percent increased their portion of total income by less than one percent. In 2003, nearly 186 million people were unemployed, up from 140 million a decade earlier.
The 2005 United Nations Report on the World Social Situation, “The Inequality Predicament,” explains: “Failure to address this inequality predicament will ensure that social justice and better living conditions for all people remain elusive, and that communities, countries and regions remain vulnerable to social, political and economic upheaval.” For many, this has long been a reality. Across the Middle East, Southeast Asia, and many parts of Africa and South America, economic inequality is partly responsible for today’s violent social and political upheavals.
Redressing wealth and income inequality is essential to creating stable and sustainable societies and is also good for the general economy. In developing countries, there is a direct correlation between income inequality and slow economic growth. Because purchasing power is concentrated in the wealthier classes, there are smaller markets for goods and services. When the wealth gap shrinks, economies expand as more consumers enter the market.
This issue is not one that can be solved with short-term measures. To address the inequality predicament, advocates and lawmakers must balance a variety of complex socio-economic factors. These include education, healthcare, civil rights, civic participation, employment, infrastructure and most likely some form of wealth redistribution.
Without innovative and aggressive policies that focus on long-term, sustainable solutions, the gap between the very rich and very poor will continue to widen. As it does, our world will certainly become more volatile.
– Daniel Bonasso