Thursday, 3 January 2019

Essay on The Gap between Rich and Poor

Essay on The Gap between Rich and Poor

The rich are getting richer day by day and the poor are getting poorer. This disparity between the rich and poor is growing at a very fast pace. The two ends are at wide extremes and there is no common point where they stand equal. This inequality is basically a difference in the economic state which includes the income, wealth and assets. But the underlining problem is the income difference. This difference is prevalent since ages- one has always been a king and the other the pauper. This economic inequality varies considerably between historical period, societies, countries and population. However, with growing industrialization and globalization, this gap is increasing at a fast pace and has become quite substantial. One does not need to be a complete egalitarian, since some degree of inequality is good for an economy, which creates incentives to work hard and take risks. There are many reasons for this economic inequality - increasing inequality in wages, gender discrimination, ethnic discrimination, globalization, technology changes, taxes, education, culture policy reforms, nepotism etc.

Economic inequality can be measured using various numerical indices, but the most commonly used is Gini coefficient. It is a statistical measure of wealth dispersion. It is a number valued between 0 and 1, wherein the value of 0 means perfect equality and the value of 1 corresponds to absolute inequality. It is a scale that defines whether everyone has the same income or only one person has all the wealth, and every other person has zero income. The 0 and 1 of this index is two extremes of the poles that show the truth prevailing in the countries. Using this coefficient, it has been found that though Africa and Latin America have some of the greatest inequality in the world, the much developed countries like China and US also have significant inequality. This concludes that national prosperity and individual prosperity are two different aspects that are not related to each other directly. The internal wealth distribution within any country is what that matters. Most of the countries of the world fall between the range of O and 1 of the Gini coefficient. Where Iceland is the most egalitarian country, Finland, Germany and Sweden have low coefficient. Israel and USA have relatively high Gini coefficients.

The gap varies significantly between the rich and poor in the developed and the developing countries. The economic interdependence that is growing at a fast rate is very asymmetrical. The benefits and costs of linking and de-linking are unequally distributed. Industrialized nations like Japan, USA and Europe are very interdependent in their relations with each other. On the other side, the developing countries are highly dependent on industrialized nations but independent from one another with respect to economic relations. Thus, the globalization creates two segments of winners and losers, and also inevitable includes both risks and opportunities. A January 2014 report by Oxfam claims that the 85 wealthiest individuals in the world have a combined wealth equal to that of the bottom 50% of the world's population, or about 3.5 billion people. According to a Los Angeles Times analysis of the report, the wealthiest 1% owns 46% of the world's wealth; the 85 richest people, a small part of the wealthiest 1% own about 0.7% of the human population's wealth, which is the same as the bottom half of the population. More recently, Oxfam's 2017 report says the top eight billionaires have as much wealth as the bottom half of the global population, and that rising inequality is suppressing wages, as businesses are focused on delivering higher returns to wealthy owners and executives. This data clearly speaks for the dark disparity between the rich and the poor. Some also feel that education and inequality goes hand in hand, but the relationship between them is not clearly defined. While the countries with low wealth inequality have educated workforce, the opposite is not always true. This can be seen from the fact that the largest spenders on education as a percent of GDP were the two most unequal nations- Israel and USA in 2011.

This evil of inequality has been here for centuries and will persist for years because its roots are still very deep rooted and not all countries and people are acceptable to change. With the growing technology industrialization and globalization, soon the population across the globe will be divided into two groups-technology friendly and technologically replaced. Those who are able to cope with the technology will persist while the others will get replaced by it.

The governments also play an important role in the presence or absence of this disparity. The interventions from both the government and the capitalist market can increase or decrease the inequality in our society.



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