Wednesday 01 August, 2001
Is global inequality becoming a genuine business issue?
Riots at the Genoa Summit and elsewhere have targeted many aspects of capitalism.
But most of those who turn up are indignant about what they see as increasing inequality between rich and poor, both at the global and national level.
Professor Robert Wade of the London School of Economics back in April argues that global inequality has increased sharply over the past few decades - so globalisation has been, in one important sense, a failure and maybe even a crime.
In response, the editor of London’s right of centre weekly paper, The Economist, asked many questions about the extent to which inequality actually mattered. He attacked the implicit recommendation in Wade’s article, that there should be measures to make the rich poorer.
It said that if the poor are getting richer, that is good, regardless of what is happening to the rich.
But The Economist also went further - there was a bigger question - why are some countries poor?
Partly it said because they are victims of anti-globalisation - they hadn’t taken advantage of the opportunities offered.
Another economist, Kevin O’Rourke of Trinity College Dublin, takes a longer look at the problem.
He says global inequality has been increasing since 1820, but there may have been a turning point around 1980 with a move towards greater convergence.
That surprising view is based on some findings associated with the use of purchasing power parities. If you look at how much a Chinese can buy with 100 yuan, it will be far more than the equivalent amount of dollars buys.
It is here that there is much argument. What should the parity be for example? And then again, many people in poor countries get many supplies free, from the forest come fuel and food for example - that represents real income.
O’Rourke seems to sympathise with the economist newspaper.
He argues that the widening inequality of the 19th century between countries, arose from the unequal spread of the industrial revolution - another version of the theory that some places just don’t have access to the right technology.
But that of course, in the 19th century, was largely the fault of the system rather than the victims.
So we turn to the argument of the rioters at all these recent summits.
Globalisation, by its very nature, makes the rich richer and the poor poorer. So how do you make the world a more equal place? If that is to say you want to.
Greater equality has sometimes emerged from a war among the rich nations - but that is not a good idea.
And of course the world was more equal when everybody was really poor.
Foreign aid doesn’t seem to have helped, so it does seem that the old adage ‘don’t give a poor man a fish to eat but a rod so he can catch a fish himself’ is probably right.
But what seems to be happening today is that the rich nations catch, if not all the fish in the lake, then certainly the biggest and the best!
| "Globalisation, by its very nature, makes the rich richer and the poor poorer. So how do you make the world a more equal place?" James Morgan | |
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