Study of Economic Inequality - Literature review Example

Unit Introduction Almost half of the global population survive on less than a dollar a day. Grusky and Sen (2006)claim that the Gross Domestic Product(GDP) of the indebted poor countries is less than the wealth of the 7 richest poor people in the world combined. There are one billion people in the 21st century who are unable to read books or sign their names. Jenkins (2007) adds that less than one percent of what the world spends every year on weapons can give a child education. One billion children live in poverty, 400 million have no access to safe water, 640 live without shelter and 270 million have no access to health services and approximately 10.6 million children die before they reach the age of 5 years. Bishop and Amiel (2007) assert that there is poverty in the majority of the world nations and its people. However, it is not enough to blame people for such predicaments, claiming that they are lazy or made poor decisions which are responsible for their plight. The government has pursued some policies which hamper successful development. Causes of inequality and poverty are in doubt but are more and deeper causes of poverty which are less discussed. Behind the increased interconnectedness which is promised by globalization are practices, policies and global decisions. Such are influenced, formulated, or driven by the powerful and the rich, or rather can be leaders from rich countries and other global actors like institutions, influential people and multinational corporations. However, in the face of such external influences, the government of the poor nations and their people are powerless and as a result, few get wealthy, while the majority struggle with their poor lives. Most of the people live on just a few dollars a day, and it does not matter if one lives in the wealthiest nations or poorest, one will still notice the high levels of inequality. The poor people have less access to health, education and other basic services that are important in their lives. Problems of disease, malnutrition, and hunger afflict the poor people in the society. Additionally, the poor people are also marginalized from the society and have little representation or voice in political and public debates, which makes it harder for them to escape from poverty. In contrast, the richer you are, the more likely you benefit from political and economic policies. The amount of money the world spends on financial and military bailouts and other areas which benefits the richer is compared to the amount that is spent to address the daily crisis of poverty and other related problems (Jenkins, 2007). The Cutbacks in education, social services and health around the world results for the adjustment structural policies by the World Bank and International Monetary Fund as conditions for repayment and loans. To add to this, developing governments are required to open their economies in order to compete with more established and powerful industrialized nations. To attract poor countries and investment, they have entered into a competition to find out who can provide cheaper resources, reduced wages, and attract investment. This has increased inequality and poverty for most people. To add to this, it also forms a backbone of what is we call globalization and as a result, it maintains the unequal historic rules of trade (Bishop & Amiel, 2007). Around the world, in poor or rich nations, poverty has always been present. In all most all nations, the inequality, meaning the gap between the poor and the rich is widening and quite high. The causes are also numerous, including bad government policy, exploitation by businesses and people with influence and power, lack of responsibility or a combination of such factors. Many individuals feel that the high levels of inequality affects the social cohesion, which leads to problems like violence and crime. Bishop and Amiel (2007) assert that inequality is often a measure of poverty that is usually relative. However, absolute poverty is also a matter of concern, where the World Bank figures for the world poverty reveals that there a high number of individuals who live in poverty than one may think of. For example, the poverty line is nowadays defined as living on $1.25 a day or less, with the same measure based on the 1.4 million of people who live below that line. Alternatively, almost half the world lives on less that $ 2.50 a day while at least 80% of the people live on $ 10 a day. 21,000 children are said to die everyday around the world everyday, the silent killer is said to be poverty, and other easy preventable illnesses and diseases, plus other related causes. Long-term alleviation of hunger is rooted in poverty alleviation, since poverty is said to lead to hunger. Jenkins (2007) explains that World hunger is a terrible indication of the world poverty. However, if efforts were only directed to improving food production or its distribution as well as providing food, then the root causes of hunger creation, dependency, and poverty would still be there. While energies and resources deployed in order to relieve hunger through measures like agriculture, important as other inter-related issues like poverty, means that other solutions like political are required for alleviation of hunger. Jenkins (2007) contends that food aid when not in the emergency relief is usually destructive on the recipient nation, economy as well as contribute to more poverty and hunger in the long term. Subsidized, cheap, or free food, below the market prices normally undercuts the local farmers, those of whom cannot compete and are driven out of poverty and jobs. Further slanting of the market also shares large produced from Europe and US. Many poor nations are also said to be dependent on farming and therefore, these food aids normally amount to dumping. Nevertheless, inequality and poverty is also caused by corrupt leaders in every country. Leaders from rich countries often tell the poor countries that loans and aids will be given to them if only they stamped out corruption. While this is happening, the rich countries are often in the largest forms of corruption, from those poor countries and the many economic policies they suggest exacerbates the problem. Corruption in developing countries is high and on the priority list, which is becoming awake in the global scene. The richest countries often give 0.7% of the national gross income as development aid internationally. The U.S is said to be the largest donor but is ranked the lowest when it comes to meeting the 0.7% aid. However, the food aid does not necessarily go to the poor countries (Grusky & Sen, 2006). The many inter-related issues which cause hunger and related to economics, which cause poverty, includes diversion of land use, lands ownership and rights, war, famine, over-fishing, poor crop yields among others (Bishop & Amiel, 2007). The UN proposes enormous changes on all accounts, including the mention of Millennium goals that aim at halving world hunger and poverty. This has led to concerns that the document outcome will be weakened. In order to complement the public protests, the purpose of the demonstrations was to protest against the form of globalization in order to show the link between various policies and poverty. It was found out that the income inequality is increasing and extreme, where the Americans control a quarter of the country’s income and the highest share controlled by 1%. Additionally, the U.S is exceptionally unequal where it is ranked among the economies, which are advanced in terms of income inequality. The U.S. rate of poverty is high, and according to the new poverty measure, it is estimated that 15.7 percent and the official rate stands at 15. 1 percent. Grusky and Sen (2006) claim that almost all households were insecure in the year 2010, meaning that some of the families did not have access to enough and active health life. The rate of unemployment being high also causes extreme poverty. Furthermore, the study of inequality and poverty has some of its objectives; for example, it monitors the trends in inequality and poverty, helps support the scientific analysis of inequality and poverty, train the next generation of policy and scholars analysts, as well as disseminate research and data. The distribution of income has also been unequal in the past twenty years. A common reaction in the popular press, political debate, and in academic discussions regards the problem of inequality which demands for redistributive policies. The debate has been what policies should be addressed to stop poverty and inequality (Grusky & Sen, 2006). Moreover, when professional economists think about the economic policies, they often start thinking about change which is good in making people better off without making anyone else worse off. This means that they should look at ways of eradicating poverty and inequality without making anything change or making others worse off. However, not all policies are evaluated (Jenkins, 2007). There are those which make people better off while other make them worse off. The desirability of such policies depends on how much losers lose, at the same time how much the gainers gain, and the initial circumstances and income of the people involved. This is good because, it makes people better off without making others worse off, and therefore, a change would be regarded as good though it increases inequality. Bishop and Amiel (2007) texplain that inequalities are intolerable as well as regard increasing the income of the wealthy as an evil thing, even if the increased income does not come from other people’s expenses. The richer continue getting richer while the poor continue getting worse off. The poor person claims that they have extra pain of living in the unequal world. The material well being of some people, increases with a decrease in the wealth of others, which explains the increase in inequality. The social value of income also is seen to decline as income raises meaning that $ 100 of extra income means less to a millionaire than to a person whose income is $10,000. Many economists reject the above explained comparisons on grounds that, one cannot compare how much pleasure two different people can get from the goods or money that the money itself buys. However, analysts conclude that the increase in inequality is bad implying that something is much stronger, and the social incremental value of income to a rich person is also negative. The unequal distribution of income is what contributes to poverty and the general economic growth and as a result; there are poor standards of living which increases the saving rate nationally (Bishop & Amiel, 2007). According to Grusky & Sen (2006), the real problem on what the national policy should focus on is not inequality but poverty. This is because inequality contributes to extreme poverty in many countries. The unequal distribution of income causes poverty, individual choice, lack of earning ability and unemployment. Measuring the lowest income of the group is not a simple task, the income cash of the poor overestimate the number of poor individuals. There is also a problem in classifying poor people in term of his low income. Poverty today is a serious problem and real in the United States and in other countries as well. The existence of long-term unemployment in United States creates hardship and as a result causes poverty. Its extent also goes beyond the amount of long-term unemployment and since most of the individuals are unemployed, it becomes a source of poverty. To add to this, Lack of earning ability is also a major cause of poverty in many countries (Jenkins, 2007). Most of the individuals earn low wages, which is attributed to inadequate training or schooling. It is clear how inadequate schooling limits the individual earning ability. Many educators and economists are studying how to improve the educational system and conclude that competition and decentralization are essential. Low human capital is also a source of poverty, and not just a matter of training and schooling, but low cognitive ability. Those individuals from the low earnings ability often reflects the dysfunctional and pathological life of alcohol, drug abuse as well ads mental illness. However, policies which deal with such problems can only be successful in reducing inequality and poverty. Conclusion In summary, Over 3 billion people in the world live on less than a dollar a day. Poverty and inequality exists everywhere in the world. Causes of inequality and poverty are in doubt but are more and deeper causes of poverty which are less discussed. Most of the people live on just a few dollars a day, and it does not matter if one lives in the wealthiest nations or poorest, one will still notice the high levels of inequality. The poor people have less access to education, health and other services that are important in their lives. Problems of disease, malnutrition and hunger afflict the poor people in the society. The economic policies often think about change which is good in improving peoples’ lives without making anyone else worse off. This means that they should look at ways of eradicating poverty and inequality without making anything change or making others worse off. References Bishop, J. A., & Amiel, Y. (2007). Society for the Study of Economic Inequality., Inequality and poverty: Papers from the Society for the Study of Economic Inequalitys inaugural meeting. Amsterdam: Elsevier JAI. Grusky, D. B., & Sen, A. K. (2006). Poverty and inequality. Stanford, Calif: Stanford Univ. Press. Jenkins, S. P. (2007). Inequality and poverty re-examined. Oxford [u.a.: Oxford University Press. Read More