Call for Action
A group of leading economists has emphasized that neglecting to address the growing disparity between the wealthy and impoverished worldwide will reinforce poverty. Here is information about the letter they wrote that is acting as a call to action.

A Letter Demands Action

More than 200 senior economists have issued a call for action on rampant global inequality. In a letter directed to the UN Secretary-General, António Guterres, and the World Bank president, Ajay Banga, the signatories from 67 countries urged these two bodies to take more substantial measures to reverse the most significant increase in global inequality since World War II Those supporting the appeal for action include New Zealand’s former prime minister Helen Clark, former UN Secretary-General Ban Ki-moon and economists Jayati Ghosh, Thomas Piketty and Joseph Stiglitz.

The letter emphasizes that extreme poverty and extreme wealth have simultaneously surged for the first time in 25 years. Currently, the richest 10% of the global population takes 52% of global income, while the poorest half of the population earns merely 8.5% of it. The letter insists on improving the measurement of inequality and setting more ambitious targets to narrow income and wealth gaps.

With sharply rising food prices, billions of people face struggles against poverty and hunger. At the same time, the number of billionaires has doubled in the last decade.

Global Setbacks

The economists’ call for action arose on the same day Russia withdrew from a critical UN-brokered deal, which permitted the export of grain from Ukraine via the Black Sea. The collapse of this agreement poses a severe threat of increasing food prices worldwide, plunging millions more into hunger.

In 2015, almost all governments in the world adopted the 17 UN Sustainable Development Goals (SDGs), which include the goal of reducing inequality by 2030, known as “SDG 10.” However, five years later, the World Bank reported that the COVID-19 pandemic drove the largest annual rise in global inequality in three decades. SDG 10, based on the World Bank’s Shared Prosperity goal, does not adequately measure or monitor key aspects of inequality. Household surveys provide evidence that one in five countries with a positive trend in Shared Prosperity also experienced an increase in inequality according to other measures like the Palma Ratio. These countries include Chile, Mongolia and Vietnam. ​​ 

Looking Forward

The World Bank is currently reviewing its Shared Prosperity goal. The World Bank has the opportunity to actively strengthen this goal of assessing inequalities across the whole spectrum of income and wealth distribution.

Significant advances in inequality data, including more accurate estimates of top incomes, have facilitated a new generation of policy-making based on a clear distributional analysis of the impact of policy changes. Pushing these advancements further can allow every government to conduct high-level inequality analysis. 

The World Bank and the UN are in a special position to urgently offer a rallying call for reducing inequality in today’s divided world. The World Bank and the UN SDGs can make better metrics for wealth, income and wage shares of national income with a focus on the global level.

The economists’ call for action has the potential to motivate the World Bank, the UN and governments worldwide to work toward reducing global poverty by addressing the vast economic inequality between the wealthy and the poor. 

– Marisa Del Vecchio
Photo: Flickr