ECONOMIC INEQUALITY: THE GREATEST IMPEDIMENT TO SDGs REALIZATION
Make a Little Heaven Down Here
The Goat Foundation interacts with widows from impoverished communities across Kenya on a regular basis. From our observations it is apparent that great economic disparities exist among members of the kenyan societies.
Looked at objectively, we realise that outcomes of economic disempowerment leads to loss of basic human rights, particularly for widows. It is for this reason that our efforts are focused on the provision and enablement of sustainable economic solutions for Kenyan widows.
It is a documented fact that historically, women faced social and economic disadvantages in African societies. It therefore portends a greater threat to their livelihood when women become widowed, especially as is common, while they ares till relatively young.
A moral conundrum facing the world today is the abject poverty surrounding the lavish display of opulent wealth. This was so much that the Chinese nation banned social media influencers from airing wasteful food sampling episodes.
Many a rich however feel justified to wallow in their excesses as was the case of Amazon founder Jeff Bezos who took a 90 minute flight to the edge of space at a cost of nearly $100 million while the world reeled in the midst of a pandemic and poor less than 5% of African populations had yet to afford the Covid 19 vaccine.
Eradicating poverty in all its forms and dimensions is an indispensable requirement for sustainable development. To this end, there must be the promotion of sustainable, inclusive and equitable economic growth, creating greater opportunities for all, reducing inequalities, raising basic standards of living, fostering equitable social development and inclusion, and promoting integrated and sustainable management of natural resources and ecosystems.
To be fair, most well-to-do families contribute to charitable causes and are participants in various philanthropic endeavours.
However, as much as individual effort goes towards donations and funding noble cases, very little progress was made towards raising the living standards of the majority of the world’s population.
There are two varieties of economic inequality, that is income inequality and wealth inequality. Besides economic inequality between countries or states, there are important types of economic inequality between different groups of people living in the same country.
History and Origins of Economic Inequality
In general, technological progress, commercialisation, and economic development are factors leading to rises in inequality.
Another major cause of economic inequality within modern market economies is the determination of wages by the market. Where competition is imperfect, information unevenly distributed. opportunities to acquire education and skills unequal, a market failure results. Since many such imperfect conditions exist in virtually every market, there is in fact little presumption that markets are in general efficient.
Variation in individuals’ access to education is key to income inequality. Education, especially in an area where there is a high demand for workers, creates high wages for those with this education.
Whereas globalization has reduced global inequality between nations, it has increased inequality within nations. Globalization increases inequality by putting downward pressure on wages (due to competition from low-wage countries) and also by making it more difficult to tax capital, which further increases inequality.
Effects of Economic Inequality
Inequality leads to higher rates of health and social problems such as obesity, mental illness, homicides, teenage births, incarceration, child conflict, drug use. Unequal societies experience lower rates of social goods such as life expectancy, educational performance, trust among strangers, women’s status, and social mobility.
An inverse link between income inequality and social cohesion. In more equal societies, people are much more likely to trust each other, and measures of social capital (the benefits of goodwill, fellowship, mutual sympathy and social connectedness among groups who make up social units) suggest greater community involvement.
Oxfam asserts that worsening inequality is impeding the fight against global poverty.
A 2013 report from the group stated that the $240 billion added to the fortunes of the world’s richest billionaires in 2012 was enough to end extreme poverty four times over. Oxfam Executive Director Jeremy Hobbs said that “We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true.”
Greater income inequality can lead to monopolization of the labour force, resulting in fewer employers requiring fewer workers. Remaining employers can consolidate and take advantage of the relative lack of competition, leading to less consumer choice, market abuses, and relatively higher real prices.
When inequality is associated with political instability and social unrest, rent-seeking and distortive policies, lower capacities for investment in human capital, and a stagnant domestic market, it is mostly expected to harm long-run economic performance, as suggested by many authors.
Accordingly, improving income distribution is expected to foster long-run economic growth, especially in low-income countries where the levels of inequality are usually very high.
Efforts to Reduce Inequality
The challenge for policymakers is to control structural inequality, which reduces the country’s capacities for economic development, while at the same time keeping in place those positive incentives that are also necessary for growth.
The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.
A study by OECD makes a number of suggestions to its member countries, including:
- Well-targeted income-support policies.
- Facilitation and encouragement of access to employment.
- Better job-related training and education for the low-skilled (on-the-job training) would help to boost their productivity potential and future earnings.
- Better access to formal education.
Progressive taxation reduces absolute income inequality when the higher rates on higher-income individuals are paid and not evaded, and transfer payments and social safety nets result in progressive government spending.
Wage ratio legislation has also been proposed as a means of reducing income inequality. The OECD asserts that public spending is vital in reducing the ever-expanding wealth gap.
Deferred investment programs that increase stock ownership amongst lower income levels can supplement income to compensate for wage stagnation.
Economic inequality leads to political inequality and the beneficiaries from the economic system that gave rise to this inequality are unlikely to implement correction mechanisms.
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