TLDR;
- This post seeks to present how I have made sense of the long term struggles against inequality, and why it is so difficult to crack.
- There are four pillars of inequality - International, Domestic, Absolute and Perceived
An absolutely critical theme that runs acrosses many of my posts - economic, education, political and sustainability - sees inequality as a focal point that must be addressed to unlock progress. In other words, if there is a single node that connects many of my posts together - inequality would be one of the largest by number of connections.
In my sense of the online chatter - many comment on the faults of the “system”, be it capitalist, globalist ; or the failures of the political / governing structures. With the constant barrage of commentary on this issue - I felt that this is a topic worth rationalising and making sense of. How does one frame and define inequality? Why does it continue to be an unsolved issue to this day?
For this post, I will discuss inequality primarily in its economic sense, but as mentioned, is tighly interdependent on a wide array of other themes.
The History of Inequality
Mankind has grappled with inequality for as long as it has existed.
Inequality has been observed in nature. From my rather Darwinian perspective, it may well be a necessity in order for social creatures to survive in complex environments. As sentient beings, . This has been observed in Chimp communities and the existence matriach elephants, Queens bees and alpha wolves are all “unequal” social structures although they have far less layers of heirachy. To me, it points towards teh necessity of centralised command to resolve the inevitable disputes that may arise from free-thinking animals.
Humans are certainly no different. There is much talk about how our modern societies are not truly free - I’ve read narratives that speak of an economic dependence on the rat race (link here), a conformity to social norms, and the actions of governments - democratic ones included - that impede on our freedom.
As with many things I’ve written about, inequality has persisted - though in different forms - since the dawn of civilsation. Religion and faith; Lords and serfs; Masters and slaves; the state and corvees have existed for most of mankind’s existence. As a root cause, inequality has also been the spark to many volatile revolutions, rebellions and dissent that have destroyed just as many civilisations as it has created them.
Can inequal systems thrive and survive?
History has taught us that, if anything, the current degree to which we are allowed to think and act so freely in today’s context is but a blip in mankind’s history.
As much as I enjoy my freedoms living in a democratic country, history points to the relative longevity of (very) unequal socio-economic structures.
Of course - one has to question - at what cost did these systems survive? These were periods wracked by terrible war and conflicts. Though some of these systems lasted for centuries - it is a stretch to me to call these truly sustainable models.
A Framework for Inequality
I look at inequality through two pairs of concepts (four conceptual pillars). These are:
- Local inequality (domestic)
- Global inequality
- Perceived inequality
- Absolute inequality
I don’t think these are terribly novel, but I believe these are all important building blocks to understand wyhy inequality persists.
Looking at the mainstream narrative, and the content churned out by International Institutions (world bank, etc) I get the sense that each pillar has been explored thoroughly as an individual topic, but lack a more nuanced understanding of the interactions between them.
That said, I am not terribly up to date with the latest academic view (though that might be as fun as it might be dry), and perhaps I ought to do a bit more research on this important piece.
So while I believe that the crux of the issues lie within the intersections of the four, let me first share my rather amateurish take on each of the concepts individually to define some terms.
Local Inequality
There is a lot of focus on Local inequality. This is often the most common concern of citizens and politicians, and comes up time and time again.
It is largely concerned with communities, cities and countries that are pockmarked by billionaires and paupers; and more recently, a growing or shrinking “middle-class”.
It defines identity as well - there are categorisations of who earns more and who earns less, and its correlation to a myriad of things from education, industry, skills, social situation and many more. These have been studied to death.
Further, one of the more emotive (but anecdotally feels-right) is the less tangible concept of how being born rich breeds even more richness. Capital breeds capital too - investors can capture a far larger amount of growth if they have more resources to invest in it. This already assumes that the individual has the capacity to invest, the vast majority do not.
A response to this, at least in Singapore (which I do trust to have analysed the issue comprehensively, to come up with the most reasonable (NB: not “best”) outcome.) the solutions have largely been to:
- Raise the floor (thus addressing absolute inequality, but not perceived inequality - more on this later)
- Redistribution - but is a long lasting problem in terms of effective and efficient distribution, and its impact
Global Inequality
Rich countries, poor countries; third world to first. Think US vs Zambia; India vs China, etc. There are marked differences between countries. I think this is rather self-explanatory.
Absolute Inequality
As defined by measures and metrics of wealth, income etc. It could be something along the lines of a GINI coefficient, or relative measures such as Purchasing Powe Parity, etc.
Percieved Inequality
Somewhat related to relative measures of equality, but this refers to the more emotive sense. It is in human nature to compare if given the freedom of thought - made much worse and more relevant by the advancements of social media. Perhaps such comparisons may have been tempered in the past thorugh religion or communist ideology, or deeply structured social systems. This is a consequential driver of breeding frictions in today’s societies.
The Glocal Paradox - Why Inequality Persists
I am of the view that proposed solutions to inequality are caught in a trade off between local and global inequality.
I presume that countries will strive to increase - firstly, its global position (eg making the world more unequal, through free market competition), and second, reduce domestic inequality. And so, I see one of “glocal paradox of inequality”. Yes I just coined that phrase #armchair expert.
- First, there is no concerted effort to reduce global inequality. It is important area, because it is inherent or ingrained that developed economies (and their companies) remain extractive towards other countries. One company creating higher value jobs in one country, will ultimately mean lower value jobs in another. E.g. Shoe design in Germany (20% of labour, 80% of profit), but shoes making in say Africa (80% of labour, 20% of profit). This could be politically popular domestically too - constituent consuemrs to procure goods cheaper than if things were wholly made domestically - this is how advanaced economies can benefit from globalisation, through inherent inequalities.
- Attempts to raise global positions may be also drive local inequality. High taxes practiced in the Nordic model or signfiicnatly raising minimum wages would not be tenable for underdeveloped / investment-hungry economies.
- Relatedly, more open (globalised) countires increase exposure competition and exacerbates local inequality. Only the top few % who can participates and thrive in global marketes win, while the rest are stagnant. This can may occur through the channels of education, attraction of foreign talent and skills, and the ever widening the spectrum of productive capabilities (e.g. an valued educated white collar worker and a undervalued, uneducated blue collar worker). This has led to anti-globalist sentiments from the many who are not able to benefit from this effect.
- Current practices of Redistribution do not offer any systemic changes. It is merely a band aid that needs to be freshened every few years, as the system will self-correct to its unequal form.
- Similarly, “raising the floor” or “growng the whole pie”, addresses Absolute global inequality, but does not addessed Perceived inequality locally. The former can be waffled about by economists and experts, but politicans will ultimately need to pander to Perceived inequality. A poor man in a rich country (who, objectively may still have more possesions than a middle class indiviudal in the poorest country), will still be left unsatisfied.
STUMPED FOR SOLUTIONS
If I were running a country, I would succintly say that a government should look to exploit global inequality to their advantage, and minimise local perceived inequality to breed a strong and socio-economically stable ecoomy. But how can this be done? There would probably be many challenges and wicked problems to be addressed along the way. Of course - this is in the interest of the own country and hardly the position of the UN or those aspiring for a wholly global structure for peace and prosperity.
But i was somewhat inspired by an epsiode on the Economic Update podcast by Dr. Richard D Wolff. His answer to address inequality by democratising production and earning capability. Maybe tech (process) and education can help this? I have no idea, but seems to be worth a shot.
This is a fundamental issue that has plagued humanity for its entire existence. But I ponder… How can we collectively enjoy the immense benefits of capital agglomeration* (absolute / economic) whilst promoting a more equitable society (perceived / social) for both the world (global) and countries (local)?
*having been responsible for cheap food, housing and numerous critical human necessities.