8.6C Growing Global Inequalities & Economic Sustainability

• • 10 of the richest men in the world owned more than the combined wealth of the bottom 3.1 billion people, almost half of the entire world population
• Consequences of inequality:

  • Economic instability 
  • Poor health 
  • Crime and violence 
  • Low social mobility and education 
  • Trust, participation, and happiness 
  • Political instability
• Economic instability - less equal societies have fewer stable economies and are more prone to financial crisis, debt and inflation.

  Higher inequality is also associated with low-pay, low-skilled jobs with no prospects
• Poor health - living in an unequal society causes stress and anxiety, leading to mental health issues, shorter life expectancy, and higher rates of infant mortality
• Crime and violence - inequality increases property and violent crime
• Low social mobility and education inequality - leads to lower social mobility and education. Those born into poverty often find it very difficult to escape from it - a cycle of poverty
• Trust, participation, and happiness - people in less equal societies are less likely to trust each other, less likely to engage in social or civic participation, and less likely to say they're happy
• Political instability - inequality increases rejection of the established political classes who are seen as the rich elite. This further threatens economic stability of the country
• Gini coefficient:

  • The Gini coefficient is a statistical measure in analysing income distribution within a nation or a social group
  • It is measured on a scale of 0 - 100, with 100 being the highest inequality
  • The Gini index uses the same data, but the scale is 0 - 1, where 0 reflects perfect equality, while 1 (or 100%) reflects maximum inequality
  • Usually, higher wealth inequality is seen within HDEs because of the range of wages available

  
• Alternatives - Bolivia

  • Bolivia introduced a number of policies to reduce inequalities within its borders
  • Bolivia has a mixed economic system that include private companies along with a centralised economic planning and government policy
• Bolivian Policies have included:

  • Nationalisation of oil and resources - this ensures that revenues go to the government and not private owners, TNCs and shareholders
  • Low-energy promotion - through advocating a reduction in the use of resources, economic growth has been consistent rather than rapid
  • Subsidies - ensures the poorer citizens of Bolivia can afford to buy food
  • Imports - reduction in overseas imports through promotion of Bolivian production
• Impact of Bolivian policies

  • Inequality has reduced from 61.6 in 2000 to 40.9 in 2021 
  • Millions of Bolivians have been lifted out of poverty
  • Import substitution has boosted the economy - growth is 3.1%
  • Since 2006, Bolivia's GDP has grown at double the rate for Latin America
• Impact of Bolivian policies:

  • However, its per person GDP remains one of the lowest in South America at $3800 compared to Uruguay at $21,677
  • Whilst Bolivia has rejected a western economic model, the nation's budgets rely on global oil and gas prices