Countries usually look at their GDP to make a case for their economic growth. But impressive statistics do not necessarily show the true picture of economies. Different surveys and reports have...
Countries usually look at their GDP to make a case for their economic growth. But impressive statistics do not necessarily show the true picture of economies. Different surveys and reports have already highlighted the deep divisions that exist across the world. The recently released World Inequality Report 2022 has once again drawn the attention of policymakers to widespread equalities: income inequality, gender inequality, carbon inequality and wealth inequality. The report shows that 50 per cent of the world’s population controls only 2.0 per cent of its wealth, while the top 10 per cent controls 76 per cent. The same situation is true of income, with 50 per cent taking in 8.5 per cent of income and 10 per cent taking in 2.0 per cent. As far as gender goes, women make up 35 per cent of the global labour force, while men make up 55 per cent. And in terms of carbon emissions, 48 per cent is produced by the 10 per cent wealthiest persons on the planet. The report suggests that colonialism contributed to the beginning of this inequality with greater social spending. Between 1910 and 1980, the levels of inequality came down as the world introduced progressive taxation and other measures aimed at reducing inequality. But it seems that all the progress has been reversed.
The report also says that in 2020 – the year of the Covid-19 pandemic – the world reverted to where it stood in 1910. This, it points out, is largely as a result of policies enforced by neo-liberal organizations such as the IMF and the World Bank which force their own policies on poorer nations. The Pakistan case shows how financial institutions put pressure on developing countries. When it is about low-income countries, the IMF suggests they go towards privatization to pay back loans and increase interest rates to slow down the economy. But when it comes to developed countries, the policies are just the opposite. Even in the US, alarm bells are raised when policymakers talk about cancelling student debts. But when it comes to bailing out banks, authorities rush to their aid. The situation is then one which should make us all think. The report states that the so-called ‘trickle down’ effect that we hear so much about does not really exist in the real world. Poverty is deeply entrenched and wealth goes into the hands of a few who capture the bulk of it.
Only more progressive taxation, which focuses on taxing the wealthy, instead of indirect taxes can bring some positive changes. Policymakers across the world should take measures aimed at rescuing the world from the situation it finds itself in now, such as increasing spending on social welfare and closing gaps that exist. Through these steps governments across the world can alter the situation and make the world a better place for the entire population.