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Forum Post: Spotlight on Worldwide Inequality

Posted 4 years ago on Jan. 19, 2014, 3:16 p.m. EST by LeoYo (5909)
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Spotlight on Worldwide Inequality

Sunday, 19 January 2014 09:59 By Graham Peebles, Redress Online | News Analysis


For many people around the world, where and to whom one is born is the single most important factor in deciding the trajectory of one’s life. If you are born to middle class parents in one of the developed wealthy nations of the world, you will be blessed with comfort, opportunity, good healthcare and education, and a life of profitable possibilities. On the other hand, find yourself in a slum in Nairobi in Kenya or if you are the daughter of tea pickers in Assam in India, then all a life of poverty, uncertainty, suffering and the threat of extreme exploitation awaits you.

Shocking statistics

We live in a world rife with inequality of wealth, income, power and influence. It is the underlying cause of deep-seated social tensions, community divisions and a range of poisons that cause terrible suffering to millions of people.

The disparity between the wealthy minority and the billions living in suffocating poverty is greater than it has ever been.

Worldwide it is estimated that the wealthiest 10 per cent owns 85 per cent of global household wealth. According to Wikipedia, “As of May 2005, the three richest people in the world have assets that exceed the combined gross domestic product of the 47 countries with the last GDP”, and “The richest 2 per cent of the world population own more than 51 per cent of the global assets”.

At the other, more densely populated, less perfumed end of the scale, Global Issues reports that: almost half the world’s people (over 3.5 billion) live on less than 2.50 US dollars a day; and 80 per cent live on less than 10 dollars a day. The largest proportion of those living in poverty are in India, rural China and sub-Saharan Africa, where despite the fact that some countries within the last decade or two have seen economic growth, poverty rates have remained unchanged and “some countries – Angola, the Democratic Republic of the Congo and Gabon – have actually seen an increase in the percentage of their population living in extreme poverty”. And there would seem to be no light at the end of the tunnel. According to UNICEF, “it would take more than 800 years for the bottom billion to achieve 10 per cent of global income under the current rate of change”.

The world of income and wealth inequality is awash with shocking statistics. Figures disclosed by World Bank economist Branko Milanovic, and reported by Nobel Prize winning economist Joseph Stieglitz, are shocking and revealing: “Eight per cent of humanity takes home 50 per cent of global income, the top 1 per cent alone takes home 15 percent.” America, he states, “provides a particularly grim example for the world.” It is where income and wealth inequality reach their zenith, and where one in four children live in poverty. The countrys wealthiest 1 per cent (incomes above 394,000 dollars) take “home 22 per cent of the nation’s income; the top 0.1 per cent, make do with a colossal 11 per cent. Stieglitz goes on to make the staggering point that an average American worker earns less today than he did 45 years ago (inflation adjusted), and that men without a university degree earn “almost 40 per cent less than they did four decades ago”.

The figures depicting poverty and hardship are many and varied. Over 20 per cent of the world’s population (that is 1.4 billion people) live on less than 1.25 dollars a day, 75 cents below the official World Bank poverty threshold. UNICEF states that 22,000 children (under the age of five; if it was six or seven the numbers would be even higher) die every day due to poverty-related issues. Of the two billion children in the world, half are currently living their lives in extreme poverty, with limited or no access to clean water or sanitation, healthcare and education worth the name. The greatest concentrations of people living below the 2-dollars-per-day poverty line are to be found in rural areas, where three in every four of those below the poverty line are to be found. Life is little better in the cities, where over half the world’s 7.2 billion population now live, one in three of whom are living in a slum.

The unequal are always with us

Income and wealth inequality have always existed. However, the worldwide gap between the “rich and the rest”, as Stieglitz puts it, “widened even more, right up through about World War II”. But it took the combined doctrinal political idealism of British Prime Minister Margaret Thatcher (in power during 1979-90) and US President Ronald Reagan (1981-89) to hyper-accelerate levels of inequality, and set the divisive competitive tone for the years that followed.

The Organization for Economic Cooperation and Development (OECD) states that income inequality “first started to rise in the late ‘70s and early ‘80s in America and Britain (and also in Israel)”. The ratio between the average incomes of the top 5 per cent to the bottom 5 per cent in the world increased from 78:1 in 1988, to 114:1 in 1993. During the Thatcher/Reagan reign, income tax was lowered for higher earners, trade unions were broken and the financial sector was deregulated with, we now know, devastating consequences. The inequality trend became more widespread starting in the late 1980s, and continues to poison the social fabric of countries throughout the world, including more egalitarian nations, like Sweden, Finland, Germany and Denmark.

Stieglitz relays that from 1988 to 2008 people in the world’s top 1 per cent saw their incomes increase by 60 per cent, while those in the bottom 5 per cent had no change in their income. In America, home to the 2008 recession, from 2009 to 2012, incomes of the top 1 per cent in America, many of which no doubt had a greedy hand in the causes of the meltdown, increased more than 31 per cent , while the incomes of the 99 per cent grew 0.4 per cent less than half a percentage point.

Flowing from wealth and income inequality (combining to create the powerful elite), is the inequitable use and distribution of water and food, minerals, information, technology and skills. The United States, for example, with a mere 5 per cent of the world’s population, uses 30 per cent of natural resources; the 25 per cent of people living in developed countries use 80 per cent of the world’s non-fuel minerals. Many of these are found in poor developing countries, which have little or no control over their resources and on the whole benefit little from their extraction and sale. Not only do the wealthy countries usurp and waste 80 per cent of the world’s resources but, according to a United Nations report, their “voracious consumption of resources cannot be sustained”.

Inequality, vulnerability, exploitation

The extreme dualities of poverty and wealth inevitably create the vulnerable and the powerful, the abuser and the abused. There are wide ranging consequences of such social division, foremost being the erosion or denial of democracy. With money comes power and with power comes political influence, making it inevitable that “inequality reinforces itself by corroding our political system and our democratic governance,” as Stieglitz says. Man-made climate change, though affecting everyone, impacts most acutely on the poorest people living in the poorest countries. As a recent World Bank report makes clear, “global warming will lead to a major food-crisis in the future. Sub-Saharan Africa and southeast Asia are expected to be the worst-hit.” That is, the regions with the largest concentrations of people living in utter poverty.

One of the gravest consequences of this social-economic imbalance is the worldwide movement of people, from impoverished communities with few employment opportunities, to a rich or richer region or nation. The International Organization for Migration (IOM) estimates there to be over “105 million persons [excluding children] working in a country other than their country of birth”. Women make up the lion’s share of this army of workers, many of whom are vulnerable to trafficking. The US State Department states that up to 800,000 persons are trafficked every year (although the figure is probably considerably higher): 80 per cent of victims are women, of which 80 per cent are sold into the commercial sex industry. Trafficking (which is the second most widespread and profitable worldwide criminal activity) often arises from debt bondage, resulting in forced labour. Trafficking is nothing less than modern day slavery, there are thought to be more people living as slaves (that is people held against their will, forced to work and paid nothing) now than at any time in history. For those with the means they are cheap: on average, 90 dollars will buy you a human being, according to Free the slaves.

Working within an economic system that disempowers the disadvantaged, migrant workers form an economic lifeline for millions of families. In 2012 they sent, “406 billion dollars in savings to their families in developing countries”, the World Bank reports. Such money is often earned through domestic servitude, with its inherent dangers of mistreatment, or construction work in appalling and often dangerous conditions.

It is poverty in its many manifestations – poor education and healthcare, poor sanitation and water supplies, poor living conditions, poor or low self-esteem and an absence of hope – which drives migration and creates the environment in which trafficking and extreme exploitation can flourish.

In a world of plenty why are hundreds of millions, perhaps billions of people vulnerable at all? The vulnerable and exploited exist because of an inherently unjust social-economic system, which has caused extreme global inequality and built a divided and fractured world society.



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[-] 5 points by LeoYo (5909) 4 years ago

Inequality, sharing, justice

The complacent party line of the wealthy is that there is no alternative to the present unhealthy, divisive economic model. The advocates of market fundamentalism have sought to close down totally the intellectual space for enquiry and discourse. As Stieglitz says, if indeed there is no alternative, inequality and poverty will continue to increase, building intensely

divided societies, [where] the rich will hunker in gated communities, almost completely separated from the poor, whose lives will be almost unfathomable to them, and vice versa. I’ve visited societies that seem to have chosen this path. They are not places in which most of us would want to live, whether in their cloistered enclaves or their desperate shantytowns.

The cherished economic model of choice, market fundamentalism, has, as UNICEF makes clear, failed and continues to fail both the people and the planet. It concentrates wealth in the hands of the wealth and leads us to question, as UNICEF does,

the current development model (development for whom?) which has accrued [growth] mostly to the wealthiest billion” people. Not only does inequality slow economic growth, but it results in health and social problems and generates political instability. Inequality is dysfunctional, and there is a grave need to place equity at the centre of the development agenda.

A more just and humane model of development, based on equitable distribution of the world’s resources, is a viable alternative whose time has come.

The idea of equitable distribution – of sharing the food and water, the resources knowledge, skills, ideas and technology of the world – as the guiding principle for development and economic life is supported by Frances Stewart, Professor Emeritus at Oxford Department of International Development. She believes that “poverty can be eliminated. Essentially, what is needed is a significant reduction in the quite obscene levels of inequality that prevail today”. The distribution of resources “from the privileged to the deprived, would be enough to eliminate poverty in high and middle income countries,” she asserts. Not simply the redistribution of wealth but resources more broadly, to, as she puts it, “improve the health, the education, the assets and the productivity of the poor so that the improving of their lives can become self sustaining”.

Expanded and imaginatively applied to address the needs of the poorest people in the poorest nations, such a simple common-sense model, based on social justice and equality, would meet basic rights and needs, reduce vulnerability and exploitation, ease social tensions and slowly establish trust and unity.

This piece was reprinted by Truthout with permission or license.

[-] 6 points by LeoYo (5909) 4 years ago

And So They Fall - Unions and Workers

Sunday, 19 January 2014 12:32 By Rowan Wolf, Cyrano's Journal Today | News Analysis


[-] 3 points by LeoYo (5909) 4 years ago

A Mexican State Armed to the Teeth

Sunday, 19 January 2014 09:12 By Daniela Pastrana, Inter Press Service | Report


Mexico City - “The army decided to open fire on the people,” Estanislao Beltrán, a spokesman for the self-defence forces of Michoacán, said in a radio interview after the government’s attempt to disarm the vigilante groups in the state of Mexico, in which at least two people were killed.

The confirmed casualties were Rodrigo Benítez Pérez, 25, and Mario Pérez, 56, both day labourers from the town of Antúnez. They were not armed.

Some sources say four people were killed when the military attempted to disarm the self-defence group on Monday Jan. 13. But only these two deaths have been confirmed.

Michoacán is caught up in something like a civil war for which no solution is in sight. In February 2013, people from several towns in a region known as Tierra Caliente took up arms to defend themselves from the Knights Templar drug cartel.

Tierra Caliente is a farming region that has become the world’s largest avocado-producing area in the world. It also has mines, as well as the Pacific Ocean port of Lázaro Cárdenas, Mexico’s third-most important.

The Knights Templar are a breakaway faction of another cartel, La Familia, that emerged during the government of former president Felipe Calderón (2006-2012), initially claiming to “protect” the people of Michoacán from the notoriously brutal Zetas drug cartel.

But the new cartel soon forgot that aim, and began to kidnap and extort businesspersons, ranchers and farmers. They were so powerful that not even the executives and managers of transnational companies like Mexico’s potato chip maker Sabritas, a subsidiary of U.S. food giant PepsiCo, were safe from their attacks and extortion.

The situation hit a low point when they began to commit sexual abuse.

“They would show up at your house and say: ‘I really like your woman, I’ll bring her back soon’,” said Dr. José Manuel Mireles, the founder and leader of the self-defence group, in an interview with the independent agency SubVersiones.

Mireles is convalescing in Mexico City, after the small plane in which he was flying home to his town, after a meeting with federal authorities, crashed on Jan. 4. The cause of the crash has not been clarified.

In the last few months, with the green light from the federal authorities according to the self-defence force’s leaders, the group gradually gained control of the towns in Tierra Caliente. And little by little, they hemmed in Apatzingán, a city of 100,000 people that is the main stronghold of the Knights Templar.

The cartel, cornered, began to set fire to town halls and buses around the region. But instead of moving to dismantle the cartel, the government of Enrique Peña Nieto sent in the army to disarm the self-defence groups, which it had allowed to grow for months.

The government’s argument is that they are illegal groups, because in Mexico civilians are not allowed to carry guns of a larger calibre than nine mm.

The government has leaked information about a possible link between the self-defence groups and the Jalisco New Generation cartel, which splintered from the Sinaloa cartel headed by Joaquín “El Chapo” Guzmán.

According to the federal government, the Jalisco New Generation cartel has been trying to take control of the production and trafficking routes for synthetic drugs in Michoacán.

The leaders of the self-defence forces deny any ties to criminal groups, and feel betrayed by the federal government, which used to back them.

“The government has changed its tune,” Alejandra Guillén, a reporter who has closely followed the phenomenon of the self-defence groups in indigenous areas of Michoacán, told IPS. “It used to clearly support them, and would accompany them. But something happened; now it is sending in the military to disarm them and kill civilians.”

Experts in security like Martín Barrón, a researcher at the National Institute of Penal Sciences, say that what is happening in the state is the result of a misguided strategy applied by the Calderón administration: “governing through fear.”

Interior minister Miguel Osorio acknowledged that the current situation in Michoacán is a consequence of a decade in which violence incubated.

Michoacán, in the southwest, is one of Mexico’s most lawless states, and decades ago the population learned to live with – and in many cases, live off – the drug trade.

“None of the categories of analysis help us understand Michoacán,” said Guillén. “There are no good or bad guys, just a society very closely linked to the phenomenon of the drug trade, which it didn’t see as a bad thing until the turf wars began. We can’t forget that the region has been a drug production area for many years.

“And another important thing is that it’s not just a question of taking up arms. They have a social base,” she added.

One of the founders of the Knights Templar, Servando Gómez, was a teacher in a primary school in the Michoacán town of Arteaga, where until 2009 he received his paycheck as a schoolteacher.

And until early 2013, when he swapped his stethoscope for an assault rifle, Mireles attended patients in the small public hospital in Tepalcatepec.

In mid-2009, the druglord Gómez, known as La Tuta, phoned a radio programme to call for a pact with then President Felipe Calderón, saying his organisation would be prepared to disappear if the authorities guaranteed security in his territory and defended them from rival cartels.

“We are a necessary evil,” he said. “Please understand that the day I die they will put someone else in my place, and someone else will replace him, and so on; this will never end.”

Calderón rejected the proposal, and in response sent the security forces into the state, with poor results, and with dozens of police and soldiers ambushed and killed.

The tension in Michoacán has spread to neighbouring states like Colima, Querétaro and Guerrero, which have their own self-defence forces. There are a total of 36 of these vigilante groups, in eight of Mexico’s 31 states.

In the past few days, people in the Tierra Caliente region have seen public services restricted, supplies reduced, roads cut off, city government buildings set on fire, and civilians killed by the army.

The federal government launched a special operation in Michoacán and said it would not allow the self-defence forces to continue to act.

The self-defence groups, meanwhile, say they won’t hand over their weapons unless the leaders of the Knights Templar are arrested or eliminated. They say that if they lay down their arms, the drug traffickers will kill them.

“We are not going to put down our weapons or sit down to negotiate, until the criminal leaders are detained,” Beltrán told listeners of the Radio Nacional station.

Visit IPS news for fresh perspectives on development and globalization.

[-] 5 points by LeoYo (5909) 4 years ago

The Greek "Success Story" of a Crushing Economy and a Failed State

Sunday, 19 January 2014 00:00 By CJ Polychroniou, Truthout | News Analysis


[-] 1 points by LeoYo (5909) 4 years ago

Dean Baker | The Trans-Pacific Partnership: Warnings From NAFTA

Monday, 20 January 2014 12:54 By Dean Baker, Truthout | News Analysis


With the New Year the corporate lobbyists and the Obama administration are stepping up their drive for passage of the Trans-Pacific Partnership (TPP), the new trade deal being negotiated in secret by the United States and eleven countries in the Pacific region. The key at the moment is Congressional approval of fast-track authority. This would give any agreement a straight up or down vote on an accelerated timetable.

Fast-track authority would virtually guarantee passage since members would face intense pressure from corporate contributors and the media, in both the news and opinion sections, to support the deal. Failure to support a deal would mean that a member would be labeled a protectionist Neanderthal (name-calling is standard fare in Washington when pushing for trade deals) in addition to being badly under-funded in their re-election campaign.

As has frequently been noted, the TPP is not really about trade. The tariff barriers and quotas between the TPP countries are already low in most cases. Rather the point of the deal is to put in place a structure of regulations that will be more friendly to the large corporations who are in many cases directly part of the negotiating process.

The provisions in the agreement will overrule measures passed by national, state, and local legislative bodies, in effect stripping democratically elected officials of much of their authority. Since most of the text is still secret we can only speculate on what the final agreement will include.

The leaked chapter on intellectual property indicated that it would likely mean sharply higher drug prices in many countries since the TPP would strengthen patents and related restrictions on selling drugs. The final agreement may limit the ability of governments to regulate fracking. In the United States, federal law prohibits state and local governments from requiring disclosure of the chemicals used in the fracking process. This makes it far more difficult to detect pollution of ground water and drinking water. The TPP may include a similar provision.

It may also include restrictions on the ability of governments to regulate the financial sector. This could allow banks to skirt rules in Dodd-Frank or comparable financial reform bills approved by other countries.

It is likely that many of the provisions in the final agreement would be highly unpopular if they were put up for a vote, but the whole point of getting the deal as a fast-tracked take it or leave it deal is to prevent individual provisions from ever being considered. And there will be enormous pressure to take it.

That is what we saw with the full court press used to pass NAFTA. And twenty years later the media and the economics profession are still covering up on the impact of NAFTA in order to avoid embarrassment to the deal’s supporters. For example the Washington Post recently wrote about Mexico’s growing middle class which it attributed in part to NAFTA. This is in spite of the fact that Mexico had the second slowest growth on any country in Latin America since the passage of NAFTA.

The Washington Post also bizarrely asserted in a 2007 editorial attacking presidential candidates for criticizing NAFTA that Mexico’s GDP had quadrupled since 1988. In fact, its growth was just 83 percent.

The economics profession, or at least pillars such as the World Bank, has also been prepared to make up numbers to make it appear NAFTA was a success. On the tenth anniversary of NAFTA the World Bank published a report touting the benefits of NAFTA to both the United States and Mexico.

One of the key claims in this report was that NAFTA had produced faster growth in Mexico, leading to a convergence in living standards between Mexico and the United States. It is easy to see that this was not true. According to IMF data, Mexico’s per capita GDP rose by 29.1 percent from 1993 to 2002, the last year in the study. By contrast, per capita GDP had risen by 44.2 percent in the United States over the same period.

Typically we would expect that a developing country would have more rapid growth than a rich country like the United States, so it would not be clear whether any convergence was due to NAFTA or would have happened regardless. However since growth in the U.S. outpaced growth in Mexico there was no convergence to argue over, the gap in incomes became larger.

Nonetheless, the World Bank’s report trumpeted the success of NAFTA, showing how it led to greater prosperity for Mexico. They used a mistaken analysis to get this result, which the Bank has refused to correct to this day.

This is what the opponents of the TPP can expect to encounter. All the rules of objectivity that the media claim to respect will be thrown in the dustbin. The same applies to any norms of professional integrity in economics.

Big money is at stake here and the big boys intend to get a win with TPP. Logic, numbers, and evidence face an uphill battle.

Copyright, Truthout.