REDUCTION OF GLOBAL ECONOMIC INEQUALITY

 

“India is taking millions of its people out of extreme poverty now-this will help to reduce global economic inequality”

Key knowledgeable points derived from the conversation happen between Justin Wolfers (being professor of public policy and economics at the University of Michigan) and news reported Srijana Mitra Das

Discussions was focussed on discussing forms of Inequality and their redressal.

According to Professor Justin Wolfers,

Economists have found the world made great progress in the reduction of poverty and economic inequality from the 1950s onwards - but this trend saw a reversal with the pandemic which impacted the poorest groups most. Not only did these communities face greater  mortality, they also suffered losses by not being internet-enabled. Many in low-income economies also saw their children lose out on schooling during this period, deepening learning loss and further inequality.

The most immediate one encam passes the tremendous disruptions of global warming and trying to transition to a greener economy These have huge Implications over the next couple of decades. Also, too often in developed economies like the United States, when we say we care about inequality, we are thinking about the problems of the middle class. But if you want to raise total human well-being, the real challenges we face are of economic development or empowering those who simply have too little.

The optimist point is that the world's greatest anti-poverty program being China's adoption of markets which took millions out of poverty today, India's emerging economy is doing something very similar. Figuring out how to adapt economic models to regions which have seen the most suffering is a key challenge.

Nations with greater economic development seem to foster more happiness as they offer better healthcare systems, more educational opportunities, the rule of law, the absence of hunger, a social welfare net, etc. If poorer countries could adopt these features, it would likely make their populations happier.

 In my view, economists can often focus too little on good news. That applies to this area as well. It is very difficult to obtain statistics on the distribution of income around the world. But to the extent that we can make educated guesses, it actually appears global income inequality is declining.

Many of the world's very poor were in China- its growth lifted hundreds of millions to better living circumstances. We are now seeing the same happen with India. The biggest low-income nations have moved closer to becoming middle-income- that itself helps to reduce global income inequality, Regarding inequality within countries, consider the US. Inequality fell and it has continued to decline in the US. Importantly, this progress has not involved bringing the extreme rich down for the first time in decades, economic growth lifted the wages of lower income workers as well and reduced unemployment too.

Income Inequality grew over four decades in the US-you could put that on Reagan, globalisation or automation. But enormous government assistance was made during the pandemic which really helped people at the bottom. Inequality fell-that has continued

Equity increases efficiency. An economy which insists only men can work, not women, wastes half its population's abilities. Fixing that misallocation makes it more equitable and efficient.