I recently viewed the video “How Economic Inequality Harms Societies“. Here Richard Wilkinson, author of The Spirit Level, explains how gaps in income distribution hurt societies.
The bigger the gap between the rich and the poor, the bigger society’s problems. Conversely, the more homogeneous a people are, in terms of income, the greater the well-being and happiness in the society.
And, according to Wilkinson, the determining factor for social well-being is not how rich or poor a given society is overall. Rather, it’s how similar the individuals in the population are to one another in terms of the distribution of wealth.
It would stand to reason, by this argument, that what we need to increase well-being is not more money per se. We need to close the gap between the rich and the poor.
Now that is fascinating. I’ve reflected often on what income inequality means for official development assistance (ODA). ODA is when developed countries like the U.S. or Spain give money and/or technical assistance to lesser developed countries for social investment.
Some of the richest countries in the world demonstrate some of the worst income distribution. Brazil , for example, is the sixth largest economy in the world.
At the same time, Brazil has extreme income inequality. The richest 20% of the population gets 30 times more income than the poorest fifth of society does. It could also be said that 1 in 5 Brazilian’s live below the World Bank Poverty Line. See this paper by Simon Schwartzman, a well-recognized Brazilian economist, on “Globalization, poverty and social inequality in Brazil” for more on this topic.
What does this mean for poverty and development? It affects not only where geographically we invest money, but also how we spend the money (what kinds of programs) and how we define the desired outcomes.
What sometimes happens when development assistance is given is that our attention and dollars are drawn to gross statistics, like the Gross Domestic Product of a entire country. ODA often goes to the poorest (but possibly more egalitarian) countries. Such is the case with the Millennium Development Goals.
The Millennium Development Goals were devised to halve extreme poverty by 2015 and, to this end, they prioritize assistance to the world’s poorest countries. However, it should also be recognized that a richer developing country with worse income distribution may, in fact, have greater “critical mass” when it comes to the number of people living in poverty and subject to its ill effects.
What do you think? Do the poorest countries need more money? Or do the world’s poorest need a more equal share of the pie?
the global good language services 
Posted by 1abo on February 21, 2012 at 4:27 AM
I think everyone should have an ethics committee…then maybe the rich would appreciate their jobs and their employees more.