Global poverty and inequality has been a topic of debate for decades. Commentators note the devastating effects of extreme poverty on health, human development, life expectancy, and more. The United Nations set “eradicate extreme poverty and hunger” as a Millennium Development Goal with the intent to:

  1. Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day*
  2. Achieve full and productive employment and decent work for all, including women and young people
  3. Halve, between 1990 and 2015, the proportion of people who suffer from hunger

MDG-infographic-Poverty-1

Img source: http://www.un.org/millenniumgoals/mdgmomentum.shtml

As of 2015, the UN reported:

  • The proportion of people living in extreme poverty declined by half at the global level.
  • In developing regions, the proportion of people living on less than $1.25 a day fell from 47 per cent in 1990 to 22 per cent in 2010, five years ahead of schedule.
  • While the proportion of undernourished people globally decreased from 23.2 per cent in 1990-1992 to 14.9 per cent in 2010-2012, this still leaves 870 million people—one in eight worldwide—going hungry.

Despite significant progress towards these goals, we are still a long way from ending global poverty and some argue that absolute poverty – not having enough income to regularly and predictably obtain life’s basic necessities (food, water, housing) – is not as damaging as relative poverty – the minimum income necessary to achieve the average standard of living in a particular time and place.

Relative Poverty and Social Inequality

International inequality (income or wealth differences across countries) is often measured by the Gini Index. This measure, usually of household income, calculates the distribution of wealth or income within a country. A score of 0 means everyone in the country has exactly the same income, perfect equality. A score of 1 represents perfect inequality: one person has all the income and everyone else has none.

 

gini map large

Img source: https://www.theatlantic.com/international/archive/2011/09/map-us-ranks-near-bottom-on-income-inequality/245315/

South Africa is one of the most unequal societies, with a Gini coefficient of 0.65. Sweden is among the most equal, with a Gini coefficient of 0.26. The U.S. is one of the least equal of industrialized nations, with a Gini coefficient of 0.45.

Industrialization, globalization, and the legacy of colonialism help explain the skewed  global distribution of wealth.

Colonialism

The productivity and economic development of colonies was directed toward the colonizers. The flow of wealth, skills, and resources from the colonies to the colonizers meant that colonized nations did not retain their development and establish the foundation for an industrialized economy. Instead, those resources and labor in colonized countries benefited the colonizers, helping to establish the foundation for global inequality. The trans-Atlantic slave trade hit Africa particularly hard in this regard. In addition to having resources extracted, many of the most productive laborers were enslaved and sent to wealthy nations to further contribute to wealthy nations’ accumulation of wealth.

Even once colonies achieved independence, the specter of colonialism held on. Those who had benefited from colonial rule, the elites who accumulated wealth and power under a system of exporting extracted resources, became the ruling parties. These elites did not invest in the infrastructure and human resource development necessary for developing nations to compete on a global scale. Instead, they kept in place the system that put them in power, which relied on cheap mining and agricultural labor to prepare exports for the global marketplace.

Some have argued that developing nations that did not follow this pattern, for example in Asia, reflect powerful cultural differences. From this perspective, cultural values, such as the Confucian belief in the value of education, social order and harmony, and self-discipline encouraged a more equal distribution of wealth and income.

Industrialization and Globalization

Industrialization allowed developed nations to produce much more, much faster and colonization allowed for a steady stream of natural resources to flow back from the colonies. Increasing productivity and specialized skill acquisition allowed for continued technological innovation in industrialized nations, while lowering the value of manual labor within industrialized nations and globally. The devaluation of manual labor encouraged more and more individuals to migrate to urban areas or, if they were skilled enough, to industrialized nations, further concentrating highly skilled workers in particular areas around the world. Further, technology continues to play an increasingly important role, displacing workers with machines and further depressing the value of labor.

Neoliberalism

After World War II, many countries intentionally invested in anti-inequality measures, including emphasizing and providing opportunities for widespread education, progressive taxation where the tax rate increased as income increased, creation of social safety nets, and a variety of other social welfare policies designed to redistribute income more equitably and provide more opportunities for human development overall.

However, much of that began to change in the 1970s, as global capitalism really expanded. In many developed countries, most notably the U.S. and the U.K., political leaders created policies and spread ideologies that promoted the market as the solution for the world’s problems. Policies that emphasized privatization and the individual accumulation of wealth, deregulation, free trade, and minimal government involvement were proposed as a way to increase motivation, innovation, and the quality of life around the world. Neoliberalism emphasizes self-sufficiency and actively rejects the role of governments or other authority structures to provide a social safety net or other redistributive efforts. It encourages competition and encourages a mindset of scarcity – of anxiety that one never has enough, even in very wealthy nations. The end result is antagonistic relationships among individuals and nation-states.

What next?

The United Nations and many non-governmental organizations are emphasizing education as the key solution for global poverty and inequality. And, at the level of absolute poverty, this is effective. Programs that teach individuals how to farm, produce clean water, and build housing will allow individuals below the absolute poverty line with the ability to support and sustain themselves.

However, education has been promoted as a solution for relative inequality around the world. Developed and developing nations are increasing their educational attainment, providing a glut of highly educated individuals competing for a diminishing number of jobs. The emphasis on higher education not only creates more competition for highly skilled jobs, it also diminishes the value of manual labor.

Other solutions are also linked to the market, such as micro-lending efforts, which give local entrepreneurs small amounts of capital to build business relevant to their local markets.

The most radical proposition is not likely to happen any time soon: global redistribution. What would life look like if the world society enacted processes and policies like those nation-states instituted after World War II? What would it mean for developed nations to reduce their wealth accumulation to invest in the infrastructure and human development of developing nations?

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