Concerns over Rising Levels Of Inequality in the Global Economy - Research Paper Example

Concerns over rising levels of inequality in the global economy Introduction Economic inequality is the gap between the rich and the poor. It also comprises of wealth disparities, income inequality, the wealth gap and the income differences. It is the state of affairs of the wealth; assets and income experience on equal distribution amongst groups, individuals, population or even countries. Economic inequality can also have direct implication of equity of outcome, the normal equity notion and the opportunity equality. There are different opinions on the effects and importance of global economic inequality. Some studies reveal and emphasize on equality as a state of a growing social problem. On contrary, some inequalities are known to promote investments but excessive implication of this global economic inequality results to destructive options. The income inequality can easily obstruct long-term growth and development. It is also famous for increasing the country’s economic growth duration and has a more complicated spell than low government corruption, free trade, foreign investment and any outstanding foreign debt. Concerns over the rising global economic inequality In a global perspective, the focus on opportunity and income disparities comes as Europe and United States struggle with the increasing economic downfall, which widens the gap between the poor and the rich. This situation has dominated the prime reason on the Americans choice of the presidential election and spurred common European street protests. At the same instance, economic inequality is taking a profound position in developing countries such as India and China. Despite the unscathed escape of global economic recession in these developing nations, a comprehensive study points out that decrease and growth of poverty levels in these nations coincides with inequality rise leading to imperative social tension. The global inequality shrinks in the presence of emerging markets and power shifts. Many nations greatly oppose the widening gap trend hence making the issue of global economic inequality a focal point (Ferreira and Walton 67). Global economic inequality has a tendency to vary in regard to historical periods, societies, economic systems and structures. The term has a direct reference to the cross-sectional distribution of wealth and income at a particular period. There are several numerical indices for economic inequality measurement, but a commonly used one is the Gini coefficient. Many are also the reasons for the emergence of economic inequality within the society. A recent development on the overall income inequality amongst OECD countries has been commonly under the verge of salaries and wage inequality. Global economic specialists argue that the ever-widening global economic disparity is certainly an inevitable phenomenon in a free capitalist market where the capital return rate surpasses the rate of economic growth (Kanbur and Spence 78). The common factors, which are believed to have a direct impact on global economic inequality, comprises of globalization, labour market outcomes and the ongoing technological changes. Regressive taxation, policy reforms amongst the nations and plutocracy also account for a given percentage. The increase in the technology and computerization, general ethnic and gender discrimination, nepotism, neoliberalism and the natural ability variation are also inclusive as paramount contributing factors (Taylor and Weerapana 416). The wake of global economic inequality initiates a vigorous debate on whether the increment of global economic inequality matters or not. The big question is that; is there any rising concern on income distribution and other factorial changes? Is there a succinct reason to raise concerns over economic and financial instability, which emanates from the widening of global economic inequality? These and many other questions need a prompt answer to satisfy the great concerns on the overall economic inequality concerns and remunerations. In a normal sense, inequality matters a lot more so in the society. Despite the maturity in democratic institutions around the globe, the rich people have the behaviour of spending a fortune of income in order to shape the rule of the financial game in their favor. In the countries that suffer from nonexistent and immature democratic institutions, a big problem encroaches. In such a situation, the rich people pursue the anti-competitive policies in both politics and market balancing. The result is a big reservation of the firms and institutions in the market, vote manipulations, and ultimate fraud to discourage any potential reformation in the society. This problem impounds general economic growth in the country with perfect examples like Russia, Latin America, Ukraine and China. There are various reasons why the society needs to raise concern over inequality case. A great percentage of the population well-being may directly depend on inequality for instance, unequal unfairness in the society and the eminent utility loss as a result of unavailability of resources can have a greater utility gain due to the presence of the rich people. The opportunity equality may also be a difficult task to achieve in any unequal community. Many economists have had a great focus on poverty hence forgetting the issue of inequality. The both cases results to low living standards and poor health which damages the individuals and the society at large by simple prevention of the poor and middle class from realizing their potentials to compete in the market. Poverty creates a non-level field. Inequality in this case is a nontrivial factor since the rich in the society have a great focus to make unbalanced society (Kanbur and Spence 64). Inequality has a substantial influences politics. In this aspect, the economic power assumes the responsibility of begetting the political bureaucracy in both pluralistic and democratic societies. In United States for instance, economic power directly affects the political campaigns and strategies for power ascension. The ultimate political channel follows a more distortionary and powerful link between the non-level grounds and inequality. Dangerous paths are prone to advance from inequality to instability since both political and economic implications of inequality create various backlashes (Van der Hoeven 108). There are various kinds of documented and undocumented economic inequality. Capital versus labour income, good education and the gap in the struggle to get health care among others tops the group. In such a scenario, income inequality takes a less chance to signify economic inequality. Longer lifespan and longer periods in school result to income inequality with no consequential increment in economic inequality. Another perfect example concerns the immigration as an effective anti-poverty programme. This programme helps in reduction of the global reduction of economic inequality but backfires with a substantial increment in income inequality with a perfect measure of the resources available for individual consumption. The consistent rise in the individual inequality emerges from a potential increase in globalization. In the event of the rise in local business, the wealth creation has a perfect limitation by the geographical range. The event of globalization has made it easy for the local integration to have a perfect rise to a multination level. This applies the same principle when it comes to the rise in economic inequality hence a need to worry (Taylor and Weerapana 422). Inequality is ever rising eve to levels close to the gilded age. The continuity in growth indicates the probability to reach an intolerable position. Social ills also increase exponentially with the widening of inequality, which at last affects the economy. Unfortunately, a society with perfect equality does not develop at the expected pace since many people tend to lose more resources as they try to be ahead of others same case applies to extreme unequal society where one individual possess everything as the rest of the society struggles (Kanbur and Spence 91). In this aspect, the perfect inequality rate must lie between the two extremes. In most cases, people will perceive the negative implications of global economic inequality but on the contrary, the same aspect function as a stepping board for the super-rich individuals in the society. The rich people are not in a position to consume all their wealth in their expenditure. They have a great tendency to reinvest back to the economy. They create jobs and start new businesses in the process with are responsive and substantial increase in income and productivity levels. These rich people also inject their wealth in public affairs through foundations and media hence directly influencing the societal developments. High inequality shifts taxation focus to the rich that directly affect the growth rates and investments hence a reason to care about global economic inequality. The social fabric and stability undergo a powerful disintegration in the presence of great inequality cases. This aspect discourages economic activities and substantially reduces the rate of investment. In Europe, for example, there is large social programs cuts with high unemployment rates amongst the youth. There is also an illegitimate high income in the financial sector, which serves a strong negativity in overall economic development. The same situation applies in United States of America, which undergoes great struggles on economic balancing to avoid extremes of recession and inflation (Ferreira and Walton 102). Conclusion As far as global inequality is concerned, there is no concrete course of action for nations and individuals to follow as mitigation process due to lack of global governance. The main decision lies in the hand of rich people in the respective societies. Policies on global economic gaps can effectively serve to address valuable factors like immigration and unemployment, which serve the purpose of reducing the predicted gap. Another government initiative like progressive taxation, public education and spending propensity serves a great role in mitigating the ever-increasing global economic inequality. Works Cited Ferreira, Francisco H. G, and Michael Walton. Equity And Development. Washington, D.C.: World Bank, 2005. Print. Kanbur, S. M. Ravi, and Michael Spence. Equity And Growth In A Globalizing World. Washington, DC: Commission on Growth and Development/World Bank, 2010. Print. Taylor, John B, and Akila Weerapana. Economics. Boston: Houghton Mifflin, 2009. Print. Van der Hoeven, Rolph. Employment, Inequality And Globalization. Hoboken: Taylor and Francis, 2013. Print. Read More