Global Income InequalityTracking the Global inequality both in income and wealth wasa really challenge to me but the results are shocking.
This Project shows us the evolution of global incomeinequality over the past years. Global income inequality—the total ofinequality within and between nations—is massive today, the birth of unevengrowth in the world’s regions since the beginning of the Industrial Revolution.The Economy of the West was booming while Middle east and Africa were busyfighting their wars over most of the period, which led to the dramatical growof the Global inequality. The economical growth remained uneven, now most ofthe wealth world wide lies between few Nations and with a very few percentageof the population.
Today around 2.7 Billion people live without proper access toa good public health, and more than 800 million are undernourished according toUNDP. The average life expectancy between a low-income and high-income countryis around 19 years which is a very serious issue to be addressed. More than 70% of the worlds adults own under10,000$ in wealth while less than 1% of the worlds population owns almost 50%of the worlds total wealth. The other 40% is distributed among 8% of the worldspopulation. The graph below illustrates the Global wealth shares by population percantage.Western and European countries host the majority share of theworld’s millionaires.
More than 70 percent of the world’s millionaires are inEurope or North America, with 43 percent of this millionaires are from UnitedStates. The only nonWestern nations with a significant share are Japan, China,and Korea. I would like to talk about some of the causes that leads toinequality, common factors to impact inequality include:· Labor Market outcomes.· Providing more opportunities for wealthy people toinvestment.· Increase international and decrease domesticinfluences.
· Extra-legal property ownership of real estate andbusinesses.· The CEO’s very highly paid salaries is growing inacceptance; while, skilled workers are being paid low wages.· suppressing wages in low-skill jobs due to a surplusof low-skill labor in developing countries NeoClassical EconomicsNeoclassical economics views the rising of inequality due toarising in value by labor, capital and land. The labor wages inequality inincome distribution is due to different classification of labors.
In a marketeconomy, inequality is caused because of the productivity gap betweenhighly-paid professions and skilled workers.Sometimes the wages equilibrium is lower than the minimumwages that leads to labors are being paid and many which want to work for alower wage are not being hired which leads:· Unemployment rate to rise.· Uneducated or freshly educated labors won’t find a jobdue to high minimum wages.· Skilled labors will find it very difficult to find ajob due to the standards of wages. TaxA major cause of inequality is the rate of the income Taxedwith the progressivity of the tax system. Almost every third world countrieswont relay on tax revenues form progressive taxation but rather relay on valueadded tax- The tax that is from consumable goods. For example in Lebanon theValue added tax is 11% which is a very high rate in relation to Europe or USA,the average tax world wide is 7%. The Lebanese tax system on income isprogressive and will reach to a maximum of 21%; while, the corporate tax is aflat tax of 17%.
Comparing to Lebanon USA’s progressive tax on wages is up to55%, and the corporate tax is progressive as well to a maximum of 35%.EducationEducation plays a very high role is creating inequality ofdiminishing the inequality among the population. The access of individuals toeducation varies some are getting very good education while others are beingignored regardless of their hard working or brilliant mind. The demand foreducation by population is very high but due to increasing in private schoolsare universities is leading to inequality because of their high tuitions to enrollin certain teaching institutions.Those who can not afford to go to private sector are going topublic sectors to pursue their education, and the rising demand of companiesfor good education is leading to increase in Inequality.
A very recent study conducted by Oxfam’s shows that therichest 1% now have more wealth than the rest of the world as combinedpopulation. The Global inequality that we fear is worse than we imagined. Weknow this much but what we don’t know is that those rich 1% hide so much oftheir wealth In Tax Havens-A tax haven is a country that offers foreignindividuals and businesses a minimal tax liability in a politically andeconomically stable environment, with little or no financial information sharedwith foreign tax authorities.
It is impossible to know how much wealth theyhave. Recent estimation is made that up to 32Tn$ is hidden in tax havens whichis around 1/6 of the world’s total private wealth. If we add this to theiralready wealth it would look much worse than we know.Over the past few decades inequality has been so bad that, in2000, Americans were 9 times richer than Latin Americans, seventy-two timesricher than subSaharan Africans, and a mind-popping eighty times richer thansouth Asians.
These numbers give us a sense for how unfairly the global economydistributes our planet’s wealth.