Rebecca Schiel

The Economist published a special report on inequality and the new progressivism and it highlighted some very interesting and counterintuitive trends in inequity in the global environment.

The report claims that while the largest inequality gaps have occurred in emerging states, the sharpest declines in inequality have also taken place there. This reversed pattern of growth in the past few decades (from richer countries to poorer ones) has narrowed global inequality while at the same time increasing inequality within individual states.  Aside from the market forces at work in emerging economies, governments have taken notice of growing social unrest and attention paid to gross inequality.

From the Arab Spring to the banking bailouts in the US the evidence of popular unrest over inequality is mounting. Governments are forced to take notice not only because inequality can cause wastefulness, but also because the poor masses will not stay dispossessed for long. And while different parts of the world view and measure inequality differently, the primary objective is to raise all boats. The report provides case studies of states/regions and their specific efforts within education and government sponsored programs aimed at eliminating inequality. Asia (China and India) and Latin America (Brazil) and their varying degrees of success and the areas of their failures are reported on below.

China experienced growth at break-neck speeds over the last 30 years and with that came unprecedented levels of inequality. Part of this trend toward unparalleled inequality has had to do with the urbanization of the workforce and the ensuing prosperity that has come to those leaving agriculture. China has taken notice that the focus of globalization on technology and innovation will primarily benefit the skilled and educated workforce and as such they have chosen to educate their urban populations. However, China is still experiencing inequality at higher levels than most other places. One of the main reasons for this inequity is the rampant cronyism in the Chinese government.  The other problem adding to inequality in China is the outdated Hokou system. Those registered as rural rather than urban are at a huge disadvantage in education, housing, and employment opportunities.

In the case of India, one is able to see not just the rampant inequality but also the great strides made in bridging the gap. The juxtaposition of these descriptions makes clear the relative quality of iniquity; sometimes the difference between a mud house and a brick house makes all the difference. The Indian government has taken up a program of rural employment whereby a wage floor is guaranteed and unemployment is being tackled. While incomes for average Indians have doubled in the last two decades, inequality has also grown. Additionally, India has experienced increased social mobility that has come from government sponsored education and infrastructure, two areas that are notoriously lacking in the slums of India. Not only has absolute mobility increased in India but so has relative mobility. In other words, parents’ economic standing has a lesser effect on the opportunities of their children. However, there are still stumbling blocks for India; among them are a lack of infrastructure, lack of basic education and attendance, and government programs that are effectively working against the poor (such as resource subsidies).

Brazil paints a much more positive picture. As the report points out Latin America traditionally had the most unequal societies but recently that trend has changed. Over the last 10 years, incomes in Latin America have exploded which has helped the poor to catch up with the rich thus bridging the inequality gap somewhat. And even though Latin America did not experience the same rapid growth of Asia (Latin America experienced growth at about ½ the rate of Asia) its poverty rate fell by almost 1/3 in the same time span. The success is largely due to government programs aimed at lessening the wage gaps for the poorest and a focus on education has created more literate and mid-skilled workers. Furthermore, an emphasis on rule of law in formerly lawless slums has created growth and prosperity where some never thought possible.

Looking at these case studies in a more general way one can discern very obvious patterns leading to both the successes and failures in facilitating growth and either widening or narrowing the inequality gaps. China and India have both focused on education thus creating a skilled workforce capable of meeting the demands of global workplace. Government programs in China, India, and Brazil have focused on the inequality problem at hand and created programs designed to spread the wealth through social spending. Brazil targeted crime in the slums and created an environment where both employment and education were possible. However, government intervention can often create negative effects. Energy subsidies in both India and China benefit only the most well-connected and effectively further impoverishes the already vulnerable. Furthermore, government wealth redistribution may be having the adverse effects on competition and the entrepreneurial spirit. While the effects of globalization may be working to undermine some of the social gains of the 20th century it may also be working to bridge the gap between the richest and poorest by way of education, increased social spending due, and an interconnected global workforce.

 Rebecca Schiel is a graduate student in the International Relations Program at the University of Massachusetts Boston.

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