The Wealth Gap: A 21st Century Plague

Category: Life & Society Topics: Economy, Finance, Globalization, United Nations Views: 1544

The United Nations Development Program's (UNDP) 1999 Human Development Report, released July 12 in London, exposes the disastrous effects of increased globalization on worldwide wealth distribution. The report warns that the majority of the world's population is being left behind by the rapid growth of the world economy and that market concerns have blocked out humanitarian necessities for the world's poor and starving.

Technological advances and increased investment benefit the wealthy elite who drive the global market economy, says the report. The whims of the wealthy minority define the flow of economic resources, with new advances increasingly benefiting only the rich. The report says, "cosmetic drugs and slow-ripening tomatoes come higher on the list [of investment concerns] than a vaccine against malaria or drought-resistant crops for marginal land."

Contradicting previous claims of globalization's world-wide benefits for all -- from sources such as the U.S. State Department -- the UNDP report shows statistically that globalization is responsible for a growing disparity in wealth between rich and poor and a general marginalization of the lower strata of society. In a February 16 speech in Wisconsin, Assistant Secretary of State for Economic and Business Affairs, Alan Larson, stated clearly that the U.S. policy was to support globalization because "the dynamism of this global economy has brought great prosperity to us and also to other regions of the world." U.S. President Bill Clinton added support for that position when he told graduates of the University of Chicago on June 12 that "we embrace the idea that free societies and free markets can create enormous economic opportunity."

But the UNDP report questions whether this "great prosperity" and "economic opportunity" is a reality for the people that need it the most. A July 12 UNDP press release concerning the report says there is "a grotesque and dangerous polarization between people and countries benefiting from the system and those that are merely passive recipients of its effects." The actual report says that 200 of the world's richest people possess as much wealth as 41 percent -- two billion people -- of the world's population. The report also says that one fifth of the world's people, most whom live in industrialized countries, own 86 percent of the world gross domestic product (GDP), while the world's poorest fifth has only one percent of the world's total GDP, world export markets, foreign direct investment and telephone lines.

While both Larson and Clinton recognize what the UNDP report calls the need for "a more human face" to globalization, U.S. policy seems to target the failings of developing countries, whereas the UNDP report calls for a change in the very manner globalization is pursued. Larson says that a national economy can be likened to a house, which must have windows (transparency) and a strong frame (political institutions) in order to deal with the winds of the global economy. Larson speaks of the corruption and indebtedness in the developing world and says the economic and political structures must be strengthened. But this analysis seems an implicit support for the World Bank and IMF restructuring programs that have been so widely criticized in developing countries for causing greater poverty than they help to alleviate.

While Larson seems to see globalization as some sort of divine wind whose presence and force is beyond human capacity to change, the UNDP report implies that both the beneficiaries and the victims of globalization have it in their power to change the very nature of this wind. The report calls for individual countries to "coordinate policy on globalization." It also stresses the need for a faster pace debt of relief, increased aid to poor countries, the accountability of technology to the needs of the poor and a task force to "review global governance."

Several leaders from the developing world have recognized these needs. At a May 6 speech in Beijing, reported on by the BBC, then South African President Nelson Mandela decried the "marginalization of Africa" and said, "We must ensure that globalization benefits not only the powerful but also ... those whose lives are ravaged by poverty."

Given globalization's apparent benefit for the rich and marginalization of the poor, the UNDP report seems a better solution in humanizing globalization than the thinking that seems to underlie U.S. foreign policy. But a deeper question to be answered is whether it is possible to really humanize global capitalism.

Implicit in the globalization ideal is that all countries will be able to join in one big capitalist community such that all countries will be able to achieve the same standard of living as great industrial and technological powers such as the United States. But globalization and free trade often result in the worldwide dissemination and integration of many products possessed by the developed world that not all countries desire for themselves. While impoverished nations certainly could benefit from greater food production and communication systems, for example, they do not necessarily want Ninetendos and MTV. On this point, the UNDP report admits that globalization is often a "one-way flow" of goods from wealthy nations to poor ones. "The single largest export industry for the United States is not aircraft or cars, but entertainment," says the report. "Culturally, many people feel threatened..."

While globalization has yet to fulfill its promises to developing countries, it perhaps also is failing in its promises to richer nations. The 1998 annual Forbes Magazine report of the world richest people says that there are 400 billionaires in the world today, a large portion of them from the United States. But economic growth in the United States, largely attributed to globalization, has only benefited the very rich.

According to a July 12 BBC report, Microsoft founder Bill Gates is estimated to earn an unprecedented $4.5 million an hour. Yet average working people actually earn less in real wages than they did 20 years ago. Joel Blau, author of Illusions of Prosperity: America's Working Families in an Age of Economic Insecurity, was quoted in a June 3 Institute for Public Accuracy (IPA) news release as saying, "Below the rosy surface of economic exuberance lurk low-paying jobs, job insecurity, corporate downsizing and massive inequality. The average worker's pay (in real terms) actually declined 8 percent from 1973 to 1997." Blau adds that if worker salary had kept pace with CEO compensation, a factory worker would earn $90,000 a year while the minimum wage earner would get $39,000 a year.

But even this top-ended prosperity shows signs of weakness due to what Jane D'Arista, director of programs at the Financial Markets Center (also quoted in the IPA news release) calls "intolerable levels of debt" fueled by "inflows of foreign savings." D'Arista insists, "It's a very vulnerable situation and one that should not be considered sustainable for very long."

The optimism over globalization is undermined by severe inequalities both between countries and rich and poor individuals everywhere. While only time will tell if the world's wealthy elite can protect their fortunes, there are indications that their earnings are not based on sustainable development. The greater interaction between peoples of all economic classes and countries is unavoidable and possibly beneficial. But the wind that blows from the engines of the capitalist elite threatens to devastate rather than strengthen the houses of the poor in a global capitalist economy.

Zakariya Wright is a staff writer at

  Category: Life & Society
  Topics: Economy, Finance, Globalization, United Nations
Views: 1544

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