Why trickle-down economics won’t eliminate poverty November 23, 2015
Posted by OromianEconomist in Uncategorized.Tags: Africa, economics, Poverty and Inequality, Trickle down
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When it comes to eliminating poverty, the degree to which the benefits of growth are shared can have a significant impact on outcomes. According to Martin Ravallion, the former head of research at the World Bank, as cited in The Economist, a 1% increase in incomes in the most unequal countries produces a mere 0.6% reduction in poverty; however in the most equal countries, it yields a 4.3% cut. In other words, societies can get much more ‘bang from a boom’ if they ensure benefits are more widely shared.This brings us to the point at which trickle-down theory ends and inclusive growth begins. According to the Organisation for Economic Cooperation and Development (OECD), inclusive growth is “a new approach to economic growth that aims to improve living standards and share the benefits of increased prosperity more evenly across social groups”.Inclusive growth refers to both the pace and pattern of growth, which are considered interlinked and therefore need to be addressed together. Inclusiveness represents equality of opportunity in terms of access to markets, resources and an unbiased regulatory environment for businesses and individuals. In a nutshell, it is not just about the quantity of growth within our economies and societies, but also about its quality.
Reinventing the current growth model: The need to rework the current economic system to serve all of humanity rather than an elite few August 4, 2015
Posted by OromianEconomist in Economics, Economics: Development Theory and Policy applications, Growth and Inequqlity.Tags: Africa is not rising, Economic growth, economics, poverty, Poverty and Inequality
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Although the grievances voiced differed from country to country and from region to region, the belief that the incumbent economic and political system was characterised by inequity and injustice was common to all.
If we are to avoid large-scale societal upheavals in this ultra-connected world, government, business and civil society must come together to rework the current economic system to serve all of humanity rather than just an elite few.
– Fergus Simpson, The Guardian
We need to rework the current economic system to serve all of humanity rather than an elite few, writes Xyntéo’s Fergus Simpson
January saw leading figures from business, government and civil society gather at the World Economic Forum in Davos. A broad spectrum of subjects were debated, including the prospect of a legally binding climate change agreement in Paris this December, Ebola and the nefarious advance of the Islamic State in Mesopotamia. I was particularly encouraged to see one topic keep cropping up – the crisis of burgeoning disparities in wealth.
In a report released in the runup to Davos, Oxfam predicted that within two years the richest 1% of people will have accumulated more wealth than the remaining 99%. The same study found that the wealth of the richest 80 billionaires has continued to increase since 2010, while the wealth of the poorest half has decreased over the same time period. The gap between the haves and the have-nots is growing.
History has taught us that there are moments when people rise up to make a point and say that enough is enough and times must change.
On 25 January 2011, the world witnessed one such moment – pro-democracy protesters occupied Tahrir square in Egypt’s capital, Cairo, demanding self-determination, equality of opportunity and freedom from the shackles of tyranny and oppression. Some 17 long days of demonstrations and civil disobedience followed, bringing the moribund autocracy of longtime Egyptian president Hosni Mubarak to an end.
This event formed part of a much broader social movement that swept across North Africa and the Middle East, toppling sclerotic regimes and corrupt dictators. Before long people in Spain, Greece, the UK and US took to the streets as well. Although the grievances voiced differed from country to country and from region to region, the belief that the incumbent economic and political system was characterised by inequity and injustice was common to all.
And it isn’t just the poor who have been affected – the middle classes have also borne the burden of mushrooming inequalities. Companies have tended to become more productive since the 1970s, but the incomes of middle class workers have remained largely static. Returns from higher productivity have tended to go to owners and investors, not to the workers.
In many ways, inequality has become the defining issue of our time. The popular uprisings that shook the Arab world at the start of this decade were just symptoms of this most elemental of societal ills.
Fortunately, there is no reason to suppose this state of affairs is inevitable.
A promising step forward was announced at Davos, when Ajay Banga, CEO of GLTE partner MasterCard, and Donald Kaberuka, president of the African Development Bank, revealed that they intend to collaborate to foster inclusive growth in Africa.
The MasterCard Labs for Financial Inclusion, funded by an $11m (£7.24m) grant from the Bill and Melinda Gates Foundation, aims to enable more people to access banking services – generating greater equality of opportunity across the world, in developed and developing countries alike. The initiative will soon begin operations in Nairobi, Kenya, and aims to reach over 100 million people globally.
Technological advancements can support the implementation of projects designed to promote inclusive growth, such as the MasterCard Labs for Financial Inclusion. Digital innovations in payment systems and social media, for example, have enabled people to access markets, ideas and information to an extent that is unprecedented in human history.
Indeed, it has been said that the Egyptian revolution started when Whael Ghonim, a marketing executive at Google, saw the bloodied remains of Khaled Mohamed Said – a young man bludgeoned to death by the Egyptian police – pictured on Facebook. Incensed by the injustice that confronted him, Whael created the Facebook page “Kullena Khaled Said” – “We Are All Khaled Said”. Three months later 250,000 people had joined the page. Just one year later the Mubarak regime was no more.
If we are to avoid large-scale societal upheavals in this ultra-connected world, government, business and civil society must come together to rework the current economic system to serve all of humanity rather than just an elite few.
At Xyntéo, we are convinced that the current growth model has become out of date – incapable of meeting the demographic, climate and resource demands of today. Together with our partners, we believe that global business, with its clout, resources and energy, is uniquely placed to overcome this challenge. To us this means reinventing the current growth model so it brings prosperity to much larger numbers of people.
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The increased concentration of wealth: 80 rich people now have as much as 50% of the rest of humanity combined January 19, 2015
Posted by OromianEconomist in Economics.Tags: economics, Poverty and Inequality, The increased concentration of wealth
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WIDENING GAP:80 rich people now have as much as 50% of the rest of humanity combined
http://qz.com/329099/80-rich-people-now-have-as-much-as-50-of-the-rest-of-humanity-combined/
Billionaires are getting richer, according to a new study from Oxfam. Gather together the wealth of the world’s richest people, and you now only need 80 of them before there’s enough in the pot to equal everything owned by the poorest 50% of the rest of the world combined. Back in 2010, you’d have needed 388 of the world’s richest to balance those scales.
The richest of the top 1%, the top billionaires on Forbes’ rich list, have seen their wealth accumulate faster over the last five years than even the rest of the super-rich, Oxfam said. In 2010, the richest 80 people in the world had a net wealth of $1.3 trillion. By last year, that was up to 1.9 trillion, an increase of $600 billion.
Together with the rest of the 1%, that group owned 48% of global wealth in 2014. That’s more uneven than in 2010, when they owned a little over 44%.
However, according to Oxfam’s data, we’ve been here before. Back in 2000, the 1% owned a higher percentage of global wealth than they do today. For a few years, the trend seemed to show that number falling, as the world’s poorest clawed some of it back. But in the past five years, that’s reversed.
Part of the problem, as identified by Oxfam, is that the rate of increase for the rich has speeded up, and it’s now so much higher than that for everyone else that it’s increasing the gap.
The 1% has entered parlance, but who’s included? And do they constitute a problem or an asset?
Who are these people?
With a world population of 7.2 billion, there are around 72 million people in the top 1%—not all of whom are billionaires. In 2014, there were 1,645 people listed by Forbes as being billionaires, with Bill Gates back at the top after a year off. Of these, 90% are male, and 30% are American. And there’s evidence they’ve been running the show for a long, long time.
Is rising inequality inevitable?
Oxfam says not. In a campaign, the charity focuses on changes that could be made to the way global society is organized, including the eradication of extreme poverty and economic empowerment of women.
Why does it matter?
Economists like Dan Altman and Thomas Piketty argue that wealth inequality hampers growth and will only get worse in the future. Somehave argued that it could be a good thing. And many have blamed it for misery, hopelessness and, ultimately, violence.
http://qz.com/329099/80-rich-people-now-have-as-much-as-50-of-the-rest-of-humanity-combined/
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