Posts Tagged ‘income disparity’

Inequality in the post-MDG framework

March 19th, 2013 | by

There is big debate going about what should happen when the Millennium Development Goals (MDGs) expire in 2015.

I spent a day in New York recently talking about how the successors to MDGs could incorporate goals around inequality.  Other people are following the post-2015 debate closer than I am.  And others know more about inequality.  But I’m interested in how reducing inequality can be included in the next round of “post-2015” goals, and thereby be established as one of the goals of humanity.

When the current MDGs expire, most people assume that the world – via the UN – will embrace a new set of goals, and that they will look something like the existing MDGs.  For inequality, there are a few options, including:

(1) a stand-alone goal on inequality;
(2) integrating inequality indicators in other goals; or
(3) finding a more symbolic or aspirational way to support reducing inequality, without making it a measurable commitment.

It’s worth noting that some goals, like ending extreme poverty or ensuring 100% of children are enrolled in quality schools, are universal and inherently support greater equality.  To some extent, the more ambitious the goals, the more likely they are to help reduce inequality.

But there’s an argument for including a goal (or goals) on inequality in their own right, not as a secondary or incidental benefit of other goals.  For one thing, a stand-alone goal makes clear what the value-statement is and would be a powerful driver for action.

There are serious technical questions about how you could do this.  The standard GINI indicator is widely used, but has flaws that can obscure important aspects of inequality.  Other methods have also been proposed.

While I’m focused on inequality of income, or perhaps wealth, other dimensions of inequality are also important and could make alternative or complementary goals, e.g. inequality of geography, gender, or ethnicity are important and salient in different contexts.

Technical questions have technical answers.  The bigger challenges lie in the politics.  There’s a presumption that a stand-alone inequality goal is a non-starter and would be blocked by the powers that be.  Indeed, the gossip mill reports that when inequality has been proposed in the High Level Panel discussions, the UK Prime Minister has flatly refused to consider it.  But he isn’t the decider.  Or is he?

It’s depressing that the High Level Panel may neglect inequality, but there are plenty of other stakeholders and intervention points.  For example, you can have a say in the U.N. global survey for citizens. (Consider writing in “inequality” as a priority.)

The resistance of some key leaders doesn’t square with the reality that inequality rates very high as a public concern, in countries north and south, rich and poor.

It’s easy to understand why the one percent might not like all this attention to inequality,  and also why they might oppose setting an objective to reduce it.  But why would everyone else?  And why would political leaders like Cameron oppose it?

Unless they cared more about the super-rich than everyone else?

Poverty, Inequality, and the Post 2015 Agenda

February 4th, 2013 | by

Nick Galasso is a research and policy advisor on inequality and economic growth at Oxfam America.

Is it better to gain absolutely or relatively?

For example, free trade agreements promise all members economic benefits (absolute gains); although some members will benefit more than others (relative gains).

In terms of poverty, the Millennium Development Goals (MDGs) are a lesson in absolute gains. In sheer numbers, we’ve halved the world’s population living below the $1.25/day poverty line, and millions more joined the ranks of an emerging global middle class.

Yet, the victory of absolute poverty gains masks the pernicious relative inequalities that have grown alongside poverty reductions.

In many countries, poverty reduction and economic growth were unequal. In China, for example, the urban poor along the industrial coast made much greater gains than those in the vast, rural interior. In other places, prejudices and discrimination excluded groups from the benefits of growth and social services because of gender, race, ethnicity, and religion. Globalization and growth accelerated the creation of new, exclusive classes of upper middle and high income earners. Yet, the impact escalated prices on food and essentials, leaving the near poor vulnerable to slipping back below the poverty threshold.

To the right of the tennis courts and swimming pools, is Paraisópolis, a favela or shanty town, outside of São Paulo, Brazil. Translated, its name is Paradise City. Source: Google Maps http://bit.ly/11tbM3X. You can see another view of the area by photographer Tuca Vieira here: http://bit.ly/W7TODA

As we gear up for a post 2015 agenda, our generation is in a unique historical position. Eradicating global poverty is no longer a fantasy. It’s within our reach. However, the next challenge is reducing chronic inequalities between those subsisting just above the poverty line, and those securely apart of the middle class, or higher.

As the UN’s High Level Panel meets in Monrovia this week to discuss the post 2015 agenda, let’s laud the MDGs for helping to deliver the absolute gains made eradicating poverty.

But, let’s not allow world leaders to shy from the difficult challenge of creating relative gains for those heretofore excluded from economic and social opportunities.

Is inequality killing us?

January 23rd, 2013 | by

Andrew L. Yarrow is a senior research advisor at Oxfam America who studies inequality and low-wage work in the US.

What do high Gini coefficients and diabetes, regressive taxation and cardiovascular disease, and low minimum wages and respiratory ailments have to do with each other? More than most people—even physicians and economists—may think.

It’s not news that economic inequality in the United States has sharply increased during the last 30 years. It’s also not news that super-sized soft drinks, the easy availability of assault weapons, and the lack of health insurance for 49 million people are tragically cutting many American lives short.

What could be big news is that inequality in the United States may be a factor contributing to Americans’ poorer health, especially compared to Western Europeans, Japanese, Canadians, and Australians.  According to a massive new report by the National Research Council and the Institute of Medicine, “U.S. Health in International Perspective: Shorter Lives, Poorer Health,” the United States ranks dead last among 17 rich countries in life expectancy and at or near the bottom in nine key health indicators, ranging from infant mortality, obesity, and heart disease to homicides, chronic lung diseases, and sexually transmitted diseases (STDs).

Table courtesy the paper's authors.

These international health rankings look remarkably similar to inequality rankings by the Organization for Economic Cooperation and Development (OECD). Denmark, Norway, and Sweden hover near the top with the best health outcomes and the least social inequality; France, Germany, the Netherlands, and Canada are in the middle of both rankings. The US and Portugal are at the bottom.

Among the 17 countries studied, the United States now has the greatest disparity in wealth between the richest 1 percent of households, whose $16.4 million average net worth is 288 times that of the median household. The US also has the lowest male life expectancy and the lowest probability of its citizens surviving to age 50. Likewise, average incomes of the top 1 percent are more than 70 times higher than those of the poorest fifth of Americans—much greater than in Western Europe or Japan. And finally, the US has the dubious distinction of having the highest rates of infant mortality, STDs, and deaths from car crashes and gun violence.

Table courtesy the paper's authors.

Even fatal illnesses that our state-of-the-art medicine might be controlling, such as heart and lung diseases, are more likely to kill Americans than they are to kill citizens of all but one other country in the study. And the gaps have been widening, as America has been slipping farther behind other developed countries in health outcomes during the last 30 years.

Some might chalk this up to the fact that, prior to Obamacare, the US has had the highest proportion of people without health insurance. Others, pointing to the fact that the poor tend to be less healthy, would be right to note that the US has the highest poverty rate of the countries studied.

Yet, neither lack of health insurance nor poverty fully accounts for America’s miserable health ratings. Even well-to-do, white, college-educated Americans with health insurance fare less well than their counterparts in almost every other rich country.

While the report devotes only a paragraph to the role of high economic inequality, other researchers—notably Richard Wilkinson and Kate Pickett, authors of The Spirit Level: Why More Equal Societies Almost Always Do Better—argue that highly unequal income distribution harms all members of society. They posit that social stress, status anxiety, social competition, and lack of trust born of inequality lead to poorer health.

“Shorter lives and poorer health will ultimately harm the nation’s economy as health care costs rise and the workforce remains less healthy than that of other high-income countries,” concludes the authors of the National Research Council and the Institute of Medicine report.

Moral arguments against excessive inequality have recently been supplemented by macroeconomic evidence that inequality hinders economic growth and contributes to greater economic volatility. Now, we may add that inequality is medically harmful. This, in turn, brings the argument full circle.

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