Why the World Must Tackle Inequality

In an opinion piece in the Boston Globe, former U.S. Secretary of State Madeleine K. Albright makes the case for why reducing global wealth inequality is one of the most crucial goals of the 21st century. Whatever you think about her record on the job, I think she makes a reasonable case.

First, reducing poverty and inequality is not only a moral imperative, it is also an economic necessity. I remember a time when some touted the benefits of “trickle-down” economics. Well, it turned out the trickle never reached the bottom. In fact, evidence shows that economies where only the rich do better witness more frequent slowdowns, while countries where the poor do better generally experience higher GDP growth. Income distribution matters for sustainable economic growth.

Second, smart policies focused on the poor and middle class can reduce inequality. We need not accept extreme poverty as inevitable. Improving educational quality, ensuring that the poor have the same legal protections as others, and increasing access to health care can all help promote an economic system that is equitable, efficient, and capable of sustained growth.

These elements are also consistent with the idea that strong economies do not come from the ripples created by the rich, nor from handouts provided by government; a healthy economy is like a house — it must be built from the ground up.

Indeed, what better way to ensure a strong, sustainable economy than to have the majority of the population employed in well paying and stable work, which in turn supports a market of consumers who can continue driving the demand for goods and services.

(Moreover, as even early 20th century entrepreneurs like Henry Ford understood, better pay meant lower turnover and less labor costs, something that should be obvious to anyone that ever takes a moment to see what an unmotivated and unhappy working environment looks like.)

Third, tackling income inequality and tackling gender inequality must go hand in hand. Although significant progress has been made in closing the gender gap over the last 20 years, a new report by the World Economic Forum suggests that the annual pay for women still only equals the amount men were earning 10 years ago. Moreover, the report suggests that if current trends continue, it will take another 118 years before the pay gap between men and women is closed. We simply must apply more urgency to this problem, which is why we should all support the ambitious target set by the U.N. to achieve gender parity by 2030 as part of the new sustainable development goals. The involvement of the U.N. is also a clear sign that the broader challenge of inequality needs both national and international attention.

Note that much of this global pay gap has to do with the sorts of work that are available — or I should say, made unavailable — to women around the world, as well as the lack of flexibility in requiring women to bring in more income to cash-strapped households while still expecting them to handle the bulk of child raising. Women need access to educational and employment opportunities that will offer more prosperity, and be allowed to more easily balance their familial obligations with their economic ones (giving fathers such flexibility would also help mitigate these issues).

A fourth principle is that while technology is a cause of rising inequality, it can also be a part of the solution. Consider that within a decade, more than two-thirds of people living across the Middle East and North Africa will have a smart mobile device with the computer power equivalent to what all of NASA had in 1969 when it put a man on the moon. These devices could open up unprecedented entrepreneurial and educational opportunities, including through virtual exchanges.

Granted, there will only be so many jobs remaining once technology has rendered most of them obsolete or less labor intensive. There will most likely need to be some sort of dramatic restructuring of the economy, up to and including some sort of guaranteed basic income for those unable to find any of the comparatively few jobs that remain. (Technology would certainly help to facilitate such a scheme.)

This leads to the next point: the consequences of globalization and technological innovation, for all their benefits, must be acknowledged and addressed.

Still, we must also recognize that the dislocations caused by globalization have contributed to the problem of inequality, and technology affords new avenues for the venting of this frustration. And while one cannot draw a direct link between poverty and terrorism, it is not hard to see how stark inequality breeds instability and the conditions where extremism takes root. So we must find an antidote to the feelings of selfishness and social helplessness that risk defining this era.

One important way leaders can help is by encouraging public service. That’s because service is transformative, making people more aware of needs around them. It bridges races and classes, diminishing differences in the pursuit of common goals. And it demonstrates that difficult national and international problems can be addressed and overcome by citizen action.

With infrastructure to maintain, a growing elderly population to care for, and other socially necessary projects, there is no shortage of valuable services to be done both at home and abroad. What is needed are more programs and companies, both public and private, that can train, mobilize, inspire, and support citizens in these ventures. As we reach the point in which constant growth is unattainable or even unnecessary, we must shift to an economic arrangement that focuses on the maintenance of civilization.

In recent years, the world has grown more and more aware of the fact that it cannot prosper if it is too sharply divided between rich and poor. We have learned that it is not enough to raise national income or increase national rates of economic growth, for even then, the majority of the population is often excluded. The key instead is to look for inclusive ways to promote growth so that even those who have very little will be able to climb the ladder of opportunity.

None of this will be easy, and the problem of inequality cannot be solved overnight. But it is important to try — not only because it is right, but because a more inclusive world will also be more peaceful than one where many people starve, while others buy diet books.

Never before has humanity had access to so much capital and technology — to the means of eliminating suffering on a mass scale — yet fallen well short of its potential. While poverty and deprivation has always been the condition for the vast majority of humans that ever lived, only over the last few decades have we developed the logistical capacity and resources to address these problems.

There is no reason why less than a hundred individuals should have more wealth than literally half the world, the vast majority of whom are mired in poverty. There is no reason why tens of millions of people who are working hard and meeting the market demand for laborers are nonetheless poor despite all that. It is harder and harder to justify these gaps and inequities, and at the very least, we need to start re-thinking the way we structure our economies and allocate our resources. Otherwise, the world is going to be harder and more miserable place for all its denizens.

What are your thoughts?

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