Control acute and growing inequalities in income and wealth

0

“The battle for equality is not over. It must be pursued by pushing to its logical conclusion the movement towards the welfare state, progressive taxation, real equality and the fight against all forms of discrimination. This battle also and above all involves a structural transformation of the global economic system. – An excerpt from the recently published book A brief history of equality‘ by world-renowned economist Thomas Piketty

The World Inequality Lab published the “World Inequality Report 2022” a few months ago. In the foreword to the report by two Nobel laureates in economics, Abhijit Banerjee and Esther Duflo, they highlighted the predicament in terms of income and wealth inequality according to the report’s findings as follows: “In all major regions of the world except Europe, the share of the poorest 50% in total income is less than 15% (less than 10% in Latin America, sub-Saharan Africa and the MENA region), while the share of the top 10% exceeds 40% and in many regions, closer to 60%.But perhaps even more striking is what happens to wealth. share of the world’s poorest 50% in total global wealth is 2% according to their estimates, while the share of the richest 10% is 76%, since wealth is a major source of future economic gains and, growing, power and influence, it portends a new the increase in inequalities. Indeed, at the heart of this explosion is the extreme concentration of economic power in the hands of a tiny minority of the super-rich.

Discussing the Global Inequalities Report 2022, an article published by the IMF titled “Global Inequalities” in March, painted a very bleak picture in terms of global wealth and income inequalities, which have been exacerbated during the pandemic. , as follows: “Global inequality is in bad shape and most of the time does not seem to be improving. Disparities today are about the same as at the beginning of the 20th century, and the pandemic continues to worsen The recently released World Inequality Report 2022 sheds light on this problem.With two traditional measures and two new ones, the study adds a lot to our knowledge of inequality.

Here, regarding the results seen in the report, in terms of two traditional measures, the same article pointed out that “the poorest half of the world’s population owns only €2,900 (in purchasing power parity ) per adult, while the richest 10% owns about 190 times more. Income inequality is not much better. Today, the richest 10% capture 52% of all income. The poorer half gets only 8.5 percent.

In addition, the same article pointed out that the report also reflected inequalities in terms of ecological and gender perspective, by employing two new measures, and the article pointed out in this regard that “the first is reported through carbon dioxide emissions carbon by income category”. It is not just a question of rich nations versus poor nations; there are large disparities within all countries between the wealthiest and the others. The report examines gender inequality through a breakdown of labor income. Over the past 30 years, women’s income share has improved only slightly.

Moreover, according to the report, it is only in China as such that women’s labor income share has declined – from almost 40% in the early 1990s to around 33% towards the end of the 1990s. 2010. This is quite alarming, given that China has otherwise performed extremely well in terms of economic growth and poverty reduction, and therefore requires special attention from the country’s policymakers to increase income disparity. between the sexes, which one hopes they grant.

While there are large inequalities in income and wealth globally according to the report, at the same time, in terms of the gender pay gap – defined in the report as “measured by the average gap between wages and salaries of men and women, before or after controlling for type of work, level of qualification or other factors” – the report highlighted the inequality in relation to women’s share of labor income, that “in practice, we find that women’s labor income share is consistently below 50%, with significant variations across countries,” ranging from below 10% to 45%.

With regard to Pakistan, the report’s findings regarding women’s labor income share is that it is lower, compared to the global scale, with the report noting that “Asian countries have lower shares than Europe and North America, with an average of 27 percent. There seems to be a strong east-west distinction, with East Asian countries showing much higher shares. Eleven countries have values ​​above 30% while two (Pakistan and Afghanistan) have shares below 10%. The two most populous countries (China and India) show respective shares of 33% and 18%.

Moreover, according to the report, it is only in China as such that women’s labor income share has declined – from almost 40% in the early 1990s to around 33% towards the end of the 1990s. 2010. This is quite alarming, given that China has otherwise performed extremely well in terms of economic growth and poverty reduction, and therefore requires special attention from the country’s policymakers to increase income disparity. between the sexes, which one hopes they grant.

Among a number of remedial measures to reduce income and wealth inequality that the report points to, one points to the redistribution of wealth by taking the next step: ‘…income gains that would come from a modest progressive tax on the wealth of global multi-millionaires. Given the large volume of wealth concentration, modest progressive taxes can generate significant revenues for governments. In our scenario, we find that 1.6% of global income could be generated and reinvested in education, health and ecological transition. The report is accompanied by an online simulator so that anyone can design their preferred wealth tax globally or in their region.

In terms of controlling inequality, an article published in March by the IMF entitled “Tackling inequality on all fronts” pointed out for example “To fight inequality, policies must focus on both market income – income before taxes and transfer payments, or pre-distribution – and disposable income after redistribution through taxes and transfers Pre-distributive public policies aimed at reducing market income gaps at their source, for example through public education, help to ensure a level playing field Although necessary, these policies are not enough to limit inequalities Public intervention through social transfers and taxes is necessary to help people cope with the various life events related to unemployment, aging, family, disability or illness To effectively combat inequalities, i A combination of policy instruments is needed to level the playing field before people enter the labor market, to ensure that labor market conditions remain fair and socially acceptable, and to make the necessary corrections to inequalities through redistribution.

Share.

Comments are closed.