Income Inequalities: Enough is Enough

While working on income inequalities, one is often asked why should she/he cares about it, and why should we go against nature as we cannot be all equal! Some would dare to say that the secret of the wealth is hard work! (I know, right!)

While fighting inequalities is not about eradicating them, but rather reducing the gap and its negative impact, here below are some reasons that might make the fight relevant:

First of all, every inequality of treatment (including income) requires explanation and understanding. In terms of fundamental needs, we are more or less the same. That does not mean we should all have the same incomes because our effort and luck may vary. Inequality between people and countries grew substantially from the early 1800s to the middle of the 20th century.  Two hundred years ago, Western countries were roughly 90% richer than the rest. This may sound like a lot; however, by 2000 this gap skyrocketed 750%*. While I am happy to discuss any luck involvement, this rather sounds like finding the hidden gold pot of a Leprechaun and the Genie in the lamp on the same day.

Second, economically speaking– inequalities not only have an impact on the growth of the mean, like the Human Development Index (HDI) and the GDP per capita but along the entire income distribution. Add to that the social division that is likely to occur drawing a line between the wealthy and the poor, which will on the long term link quality services to money – slowly expelling the poor from this bubble we call life, preventing them from having access to the basic needs such as health and education. Needless to say that this retards economic development and progress.

Empirical evidence and decent common sense suggest that neither of the extremes – that all incomes are the same, or that inequality is extremely high – are desirable. Even if the former might be, in some cases, an incentive to work hard, study or take risks. The latter might imply perpetuation of inequality across generations, where people who do not work or study still remain on the top of the pyramid thanks to the wealth of their parents, while those with talents are stuck at the bottom because they cannot pay for school, for example. Most African and Latin American countries, broadly speaking, are a good example of this extreme.

Finally, and most importantly is the relationship between inequality and politics. In every political system, even a democracy, the rich tend to hold more political power, putting money ahead of human lives and leaving the poor at the mercy of the state.  The danger is when that specific political power will be used to promote policies that empowers the rich further, as it is the case of Front de Liberation Nationale (FLN) in Algeria, Zimbabwe African National Union – Patriotic Front (ZANU-PF) in Zimbabwe, People Democratic Party (PDP) of Nigeria, and the Conservatives Party in the UK, which all proved that rich involvement in politics increase inequalities massively both on economic and social levels. 

The implicit theme in all three reasons is that nuance is important. In each case, we are dealing with a continuum: justification of inequality is as hard to identify as shades of gray, and so are the conclusions about its effect on growth or democracy. There is also some sort of a spillover from one sphere to another: suppose that more equality is good for democracy but bad for the economic growth of the poor. How do we work around these trade-offs?

Such issues can be discussed through millions of working papers, thousands of books and hundred of conferences, but at the end of the day, none of them will matter as the theoretical assessment is hardly applicable in most cases. So yes, everyone should care, and no income inequalities are not nature’s will, but rather a human doing, which in fact is rarely related to hard work and effort.

*Data gathered from Oxfam Statistical files.

Written By: Nawal Allal

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