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The recent G20 summit in Brisbane seems to have chiefly focused on the provisions for global economic growth and on pressurizing Vladimir Putin to cease military operations in Eastern Ukraine. I can't say that there's much certainty that either goal will be accomplished by them or their meeting as their summits have seldom produced a clear and universal directive on most global issues. But they seemed dis-concerned with numerous other issues which various protesters sought to bring to light on the streets (and the beaches) of the Australian city. Climate Change and environmental degradation, human rights and global economic inequality did not make up the G20's itinerary but significant attention was given to these challenges right outside the world leader's windows.
The inequality conundrum
Inequality is somewhat consequential of the loosely regulated and liberalized free market mechanisms which govern most of the world's economies but while there is a general trade off between economic growth and equality in income distribution, factors such as demographics and government management of public funds play a crucial role in determining the extent of the imbalances which liberalization can produce. (These will be discussed in greater detail in future posts). The recent global recession has illuminated the drawbacks of an economic model which has been the principle arrangement in most OECD countries since the late 1970s and early 1980s. Prior to the introduction of the neo-liberal philosophies, the Keynesian model was in use since the end of the Second World War.
Keynes accepted that capitalism could produce prosperity for the masses but was keen to stress that inequality is subject to the manner in which capitalism is controlled. Keynes is often praised for having saved capitalism from the capitalists due to his conviction that government policy can be an instrument for increasing the overall productive capacity of the economy to the benefit of the overwhelming majority of citizens. His 20th Century contemporaries Friedman and Hayek of the Chicago and Austrian schools respectively, have argued that there can be little or nothing government policies can do to combat income inequality without impeding on individual liberty and freedom and consequently restricting the overall productive capacity of the majority of citizens in an economy. In these circumstances, inequality is viewed as a natural occurrence and is conditioned by the crude differences in each citizen's capabilities. Contemporary economists, politicians and other social sciences personnel have conflicting views on the means in which the post-recession economies should be managed but the notion that high levels of income and wealth inequality is generally a negative stain on a state is becoming more greatly accepted. Economics as a discipline bares both traits of the sciences and the arts, but like politicians, whichever economic model is enforced will not please everyone, everywhere.
Economy, Society and Culture
Capitalism is very much a cultural as well as an economic program. It is deep-rooted in the philosophies of liberalism and democracy and is likely to be the most ideal and inherently logical system for the human species to operate within. It does come in many forms nevertheless and the regulated, controlled model which Keynes developed and later championed incorporates other strands of subsistence which are also considered to be a part of the human philosophical creed which there is general consensus. Ethical and moral teachings form the much of the basis of modern social studies in school's curriculum and are deeply emphasized in most of the world's religions. Countries often develop a code of ethics which citizens are brought up to practice as they go about their business and this is increasingly embedded into economics. The humanizing doctrine found in religious texts and often in national identity can form a very strong counterbalance to the excesses of free market capitalism. A fairer society is not just one where government policy regulates economic activity but also where the people are mindful of their place in society. An individual in a world of billions should not want more that he or she deserves if equality is to feel not just like an arbitrary idealism but like concrete doctrine. Equality too can be taken to excess as symbolized by communism in its purest form which distorts the reality of humanity and assumes an absolute uniform standard for all. Attaining prosperity without forgetting our humanity is to find a very important balance in our world. As it was that the culture of capitalism was developed over the past two centuries, it is now imperative that the following decades and centuries see the evolution of a philosophic/economic ideal which has more emphasis on the individual being conscious of their place in the world among the billions of other individuals as well as having a great deal of autonomy in their economic endeavors. Following the Great Depression and the Second World War, the countries of Europe re-defined their economic principles to build a future based on strong, widespread and co-operative prosperity. The Social Market Economy was one of the most potent and acclaimed evolutions in the economic history.
Keynes: The Rouge Capitalist
Excesses can create a sense of entitlement and poverty can create a sense of resentment. These can both develop into disdain and divisions between peoples. A rising trend of global inequality is straining relationships between people within states (e.g - Brazil) as well as between states themselves (e.g Europe). The issue is subsequently coming into the political realms and with the start in dialogue and discussion, there can be a solid platform for action as long as the importance of developing a better means for income redistribution is not overridden by creating raw economic growth.
Example of PERFECT EQUALITY.
In 2010, the world’s GPD at approximately $60 trillion. If this $60 trillion sum was distributed amongst the entire global population (approximately 6.8 Billion), then everyone would have almost $9000 a year, to most people on Earth, it’s a fortune, but to people in developed countries, it’s a small modest annual income.
Gini Coefficient & Lorenz Curve
Milton Friedman on Equality and Freedom
Who's economic doctrine are you most supportive of?
Oxfam on Inequality at the G20
- Left Behind by the G20? | Oxfam International
The charity's report titled 'left behind by the G20' reveals that world leader's have not succeeded in reducing inequality in 14 out of 20 countries of the G20.