The 10th United Nations report on Human Development issued yesterday reveals some interesting trends and makes some misguided suggestions as to how the world might be made better.
The report shows that globalisation is creating more inequality. The average income in the five richest countries is 74 times the level in the poorest five, the widest inequality gap recorded. The 20 per cent of population that lives in the developed world enjoy 86 per cent of the consumption; the bottom 20 per cent has just 1 per cent of it. Thirty years ago, the gap between the richest fifth and the poorest was only 30 to 1.
So the report calls for a rewriting of the rules of globalisation. It wants a new global bank in addition to the IMF and a world investment trust that could redistribute incomes globally. It said the challenge for the new millennium was to find rules and institutions to make global markets and competition work for the people and not just for profits. It also calls for a “”bit” tax on internet use to generate finance for the spread of new technology. It condemned the fact that only the rich in the rich countries were benefiting from the internet.
There are several flaws in the report, however. The report assumes inequality is a bad thing; that any moves against equality will be successful; that moves against equality will be for the betterment on average of the people of the world.
Much was made in the report of the internet. It was a poor example for the UN agenda of institutional mechanisms for change. The UN complains about the internet being accessible only to the rich in rich countries and that the poor have been left out. But the poor are not worse off because of the internet. To the contrary, non-users are probably slightly better off because the benefits of the technology and the savings it brings are spread beyond immediate users. Further, internet use will inevitably spread and become cheaper as it does so.
But what is the UN’s proposed “”remedy” to inequality of internet access? A small tax to finance the spread of technology. In all likelihood, however, more of the money would go to bureaucratic structures than technology. If anything such a tax would curtail the spread of the internet rather than help it.
On globalisation, the UN may well decry growing inequality, but the absolute wealth of most poorest countries is still going up. It is likely that without the efficiencies of globalisation, incomes in poorer countries would be less than they are now – not a good result, even if their incomes were not as far behind the richest.
In some poorer countries, incomes have fallen over the past 10 years. Most of these are in Africa and the former Soviet Union. Their greater poverty, however, seems not to be a result of globalisation or inequality. Rather it seems to be internal failure, especially a failure by their leaders to refrain from corruption.
The question is whether equality is more important than total absolute wealth. Probably not. But even if it is not, there is no guarantee that any of the United Nations’ proposals will achieve it. Also, it may well be that inequality creates incentive and the urge to discovery that have helped humans improve.
But the report addressed other issues. There are social and environmental consequences of globalisation, and market-dominated thinking. The easy movement of capital has meant that some companies can move operations with consequence social dislocation. On the environmental front, some multi-nationals can exploit resources in poorer countries without proper environmental safeguards – national laws are either not in place or an unenforceable in the face of corruption. As national regimes fail on the environment, all the world’s people suffer. That is perhaps more worthy of attention than worrying about inequality.