Despite significant progress in poverty reduction in the
past decades, inequality within countries has risen. Today, 75 percent of the populations
in the Global live in countries in which inequality has increased since the
1990s.
Global inequalities are massive and present one of the
biggest obstacles to sustainable development and the fight against poverty.
Inequality within many countries has been rising in recent years. Inequalities
limit the opportunities for social groups to participate in and make
significant contributions to social, cultural, political and economic life.
Therefore, Goal 10 focuses on reducing inequality within and among countries.
In concrete terms, Goal 10 advocates delivering sustained
income growth to the poorest 40% of the global population and achieving
empowerment and social, economic and political inclusion for all by 2030. Goal
10 aims to ensure equal opportunities through the elimination of discriminatory
laws, policies and practices, while facilitating orderly and safe human
migration and mobility via the implementation of sound migration policies for
example. It also envisages enhanced representation and a greater voice for
developing countries in decision-making within international economic and
financial institutions.
The Impact of
Inequality
Social and economic inequality increases the power and
importance of social hierarchy, status and class.1 As a result, a long
list of problems more common further down the social ladder – in poorer neighborhoods
for instance – are much more common in societies with larger income differences
between rich and poor.
Although the impact of inequality tends to be most severe
lower down the social ladder, outcomes are worse even among the better off,
because inequality damages the whole social fabric of a society – increasing
social divisions, status insecurity and status competition. Indeed, it is
because a large majority of the population – not just the poor – are affected
by inequality that the differences in the performance of more and less equal
societies are so large. The scale of the differences varies from one health
or social problem to another, but they are all between twice as common and ten
times as common in more unequal societies compared to more equal ones.
Although in the rich, developed countries, income inequality
is related to indicators of health and social wellbeing, levels of average
income (GDP per capita) are not. Reducing inequality is the most
important step these countries can take to increase population
well-being. In the developing and emerging economies, both greater
equality and improvements in standards of living are needed for populations to
flourish.
A large and well-established body of evidence shows that
very large income differences within countries are damaging. Analyses
include both cross-sectional research and studies of changes in income
distribution over time. There is a particularly large body of evidence
linking greater inequality to worse population health; hundreds of studies show
us that life expectancy is longer, and mortality lower, in more equal
societies 3 5-9, rates of infant mortality, mental illness and obesity are
two to four times higher 4 10-13 and, in both developing and
developed countries, HIV infection prevalence rises with inequality.
There is also substantial evidence linking greater equality
to better social relationships within societies –levels of social cohesion,
including trust and social capital, are higher in more equal countries.
Indicators of women’s status and equality are generally better and rates
of both property, crime and violence, especially homicides, increase as income
differences widen.
Inequality wastes human capital and human potential.
The UNICEF Index of Child Wellbeing is significantly higher in more equal
societies, educational attainment is higher, and fewer young people drop out of
education, employment and training, and fewer teenage girls become mothers.
Notably, social mobility is restricted in very unequal societies – equality of
opportunity is shaped by equality of outcomes.
In addition to its impact on health and social outcomes,
greater equality is also linked to economic progress and stability.
Poverty reduction, and hence development, is compromised by income inequality.
In rich and poor countries, inequality is strongly correlated with shorter
spells of economic expansion and less growth over time and with more
frequent and more severe boom-and-bust cycles that make economies more volatile
and vulnerable to crisis. As an International Monetary Fund report put it
– reducing inequality and bolstering longer-term economic growth may be ‘two
sides of the same coin.
Greater equality has an important role to play in the
necessary worldwide transition to sustainable economies. Inequality
drives status competition, which drives personal debt and consumerism and,
of course, consumerism is a major threat to sustainability. Stronger
community life in more equal societies also means that people are more willing
to act for the common good – they recycle more, spend more on foreign aid,
score higher on the Global Peace Index , and business leaders in more
equal countries rate international environmental agreements more highly.
Reducing Inequality
Income differences can be reduced via redistribution through
taxes and benefits, or by reducing differences in pre-tax incomes. The
international evidence suggests that greater equality confers the same benefits
on a society whether it is achieved through one of these approaches or the
other.
In general, top tax rates, which in many countries –
including the USA – were over 80% in the 1970s, have been reduced dramatically
and there is room for more progressive tax to be restored. Dealing with
tax havens and other methods used by rich individuals and large companies to avoid
tax is crucial; the amount of money lost by developing countries to tax havens
exceeds all international development aid.
This not only increases global inequality but also means
that a higher proportion of public expenditure has to be funded by tax payers
in lower income groups. In many countries taxation has ceased to be
significantly redistributive.
Forms of economic democracy, such as employee ownership,
employee representation on boards, employee share ownership, mutual’s and
cooperatives tend to reduce the scale of income inequality and help equality to
become more embedded in a society – these are more long-lasting cultural
changes than can be achieved through tweaks to the tax code. These forms of
business institutions also provide a more stable basis for community life and
perform well in ethical terms.
Marking Progress
Given all that we now know about the effects of inequality,
it seems clear that we should both monitor inequality and commit to realistic
but courageous targets to reduce it. A core objective of the post-2015
development framework and the sustainable development goals should be to reduce
inequality within countries.
The frameworks should include a top-level goal to reduce
inequalities, including income inequalities in particular. This should be in
addition to disaggregated indicators and targets in every other goal to ensure
equitable progress across different social groups towards agreed development
objectives.
An inequality target could be based on Palma’s ratio of the
income share of the top 10% of a population to the bottom 40%. In more equal
societies this ratio will be one or below, meaning that the top 10% does not
receive a larger share of national income than the bottom 40%. In very unequal
societies, the ratio may be as high as seven. A potential target could be
to halve national Palma ratios by 2030, compared to 2010, and dramatically
reduce the global Palma ratio, which is currently 32.
Furthermore, even where inequality has been successfully
reduced, it remains on a considerably high level. This global trend threatens
sustainable development in all its dimensions and the successful implementation
of the 2030 Agenda. The heads of states that passed the 2030 Agenda were aware
of the negative impacts of high and rising inequality, and included the topic
as a cross-cutting issue which permeates at least 12 if not all of the 17
Sustainable Development Goals (SDGs). To highlight the importance of reducing inequalities
even further, a stand-alone goal – SDG 10: Reducing Inequalities – was included
in the 2030 Agenda.
Finally, the difference between the richest and poorest
people on our planet is as high as ever. The 26 richest people on the planet
own more than the poorest half of humanity. Economic growth is not the
cure-all answer for limiting poverty - wealth accumulates for a small number of
people but not for everyone. Goal 10 is all about redistributing wealth and
stopping financial and social discrimination. Together we can empower people so
that everyone enjoys a good standard of living. #ReduceInqualities #SDG10
#SustainableEconomies #SustainableSocieties #RedistributingWealth
#EconomicGrowth #PovertyReduction #PeopleEmpowerment #SDGS #HumanityandInclusion
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