The Evil of Inequality and Wrong Prescriptions

By N. GUNASEKARAN

In its “World Economic Outlook, April 2024,” the International Monetary Fund (IMF) has indicated the growing gulf between the economic North and South. The report said:“A troubling development is the widening divergence between many low-income developing countries and the rest of the world. For these economies, growth is revised downward, whereas inflation is revised up.”

The COVID-19 pandemic had already affected these poorest countries, in Africa, Latin America, Pacific island and Asia. They suffered due to severe drop in output relative to pre-pandemic projections, and even now, they are struggling to recover. Added to their woes, the  mounting debt service burden was  severely obstructing their capacity to spend on vital needs of the people like better education, health care and improving food security.

The World Bank’s report said that half of the world’s 75 poorest countries were experiencing a widening income gap with the wealthiest economies. The World Bank Group’s Chief Economist Indermit Gill explained it: “[the 75 poorest countries] are home to a quarter of humanity — 1.9 billion people ... and are home to 90% of people facing hunger or malnutrition.” Half of these economies were also hit by debt distress. Indermit Gill also demanded the world’s richer countries to support the poorest nations financially and warned that they could not afford to turn its back on a quarter of its people. He stressed that  tapping every reserve of economic potential is required to achieve universal peace and prosperity.

As far as the prevailing situation in the South countries is concerned, nobody can disagree with the observations of the World Bank Group’s Chief. The question, however, is this: Will the richer countries be generous enough to support the poor nations? The richer countries, including the United States, have all along been following policies of economic plunder and domination over the developing nations. These policies have resulted in accelerating the huge capital accumulation for big corporations and billionaires. It is estimated that the richest 1% will possess two-thirds of all global wealth by 2030. These richest 1% are mainly from advanced countries, although some billionaires are from Asia.

The very idea of the rich supporting the poor in a charitable manner is not feasible to solve the problem of inequality. Further, it recognizes the status quo of immoral and unethical inequality. It will not help the poor to come out of their precarious poverty-stricken living conditions. Depending upon the individual billionaire for his/her support for the poor will not lead to any marked progress in the lives of the poor.

For example, it may be recalled that, in 2022, the United Nations asked Elon Musk to utilize $6 billion — 3% of his fortune — to overcome world hunger, since 11 people around the world were dying from starvation every minute. But Musk diverted the money to his own charity foundation. Moreover, in 2022, Musk’s foundation for charity spent only 2% while it is mandatory for the charities to allocate at least 5% of their assets annually for philanthropic purposes. 

The IMF was notorious for lending loans with strings attached. They have always forced vulnerable countries to open markets, liberalize exchange rates, privatize state companies, and reduce public spending. The IMF’s  own statements in the past confirmed that their prescriptions for the low-income countries including many Asian nations further worsened poverty and inequality in these nations.  

Oxfam, a charity and advocacy group, noted that, during the pandemic period (from 2020 to 2022), 87% of lending from the IMF came with many strings, including severe austerity measures. Both the IMF and World Bank could not absolve their own responsibility for the creation of the current unequal, unjust world order. 

An Oxfam study had noted that the 26 richest individuals combined have the same amount of money as the poorest half of the human race, i.e 3.9 billion people, who are mostly living on less than $5.50 per day. It is obvious that the labor of these poor people contribute to the national wealth which is being swindled by big corporates with the patronage of the governments. The new liberal economic policies that include the  tax cuts for the rich, the cuts in people welfare schemes in the name of austerity, privatization of government-run public sectors ,etc., have created a conducive atmosphere for such looting of public wealth by the big corporates.

While the income gap between poor and wealthy countries is increasing globally, each nation in Asia is suffering from acute inequality. Across South and Southeast Asian countries, various levels of inequality and income gaps are developing .According to the World Inequality Database 2023, the richest 10% in the countries such as India, Maldives, and Thailand, are earning more than half of the national income. In Bangladesh, Nepal, Singapore, the richest 10% earn about 35% of the national income. In Indonesia, Pakistan, Vietnam, the richest 10% of the population are earning about 40 to 50 percent of the national income. The neoliberal regimes across the globe have been acting at the behest of the elites and it logically leads to intensification of the gap between rich and poor .

The basic shift in policies is required to eradicate the evil of growing inequality. Alternative policies oriented towards the well-being of the toiling poor and working people in each country are vital for the achievement of socio-economic justice and equality, and also for national development and progress.

N. Gunasekaran is a political activist and writer based in Chennai, India.

From The Progressive Populist, June 1, 2024

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