When Helping Hurts: Inequality

Wednesday, 3 October 2018

Between 1990 and 2015, the Millennium Development Goal of halving extreme poverty (less than USD$1.90 per day) was achieved. Extreme poverty went from 1,926 million to 836 million people – amazing! Over a similar period (1981-2010) poverty in China reduced dramatically (835 million to 156 million people) and in India significantly (429 million to 361 million). These are fantastic results, but they are not the whole story.

While poverty went down overall, it did not go down evenly. In fact, over the same period inequality increased significantly. This includes inequality between countries, within countries, and between individuals globally.

While poverty decreased in China and India, in sub-Saharan Africa it doubled (205 million to 414 million people between 1981-2010).
In Vietnam, the country’s richest man earns more in a day than the poorest person earns in 10 years. This sort of statistic is not uncommon in many countries.
A FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh. Six people hold as much wealth as the bottom 3.5 billion people.

Unfortunately, these gaps are getting bigger not smaller. In the US, new research by economist Thomas Piketty shows that over the last 30 years the growth in the incomes of the bottom 50% has been zero, whereas the incomes of the top 1% have grown 300%.

Now at some level we are a bit accustomed to inequality. Not everyone has the same resources or skills, so not everyone will have the same sized mansion right? There is also the idea that some level of inequality is needed to drive our economy. The reality, however, is that inequality destabilises our society. In countries and communities where inequality is high, every negative social indicator (such as crime, drug use, mental illness or early pregnancy) is also correspondingly high.

Why is this so?

Since such a small percentage of people control the bulk of the resources, it is a small percentage of people who decide how those resources are distributed. Inevitably, they distribute wealth to favour themselves. Over the last 25 years, the top 1% have gained more income than the bottom 50% put together. This is good old biblical greed (Prov 29:4). The World Economic Forum and the World Bank have recognised the biblical imperative that prosperity doesn’t just need to be generated, it needs to be shared equitably (Amos 8:4-6). Modern economics haven’t done that very well. We need a biblical way of sharing the wealth of God’s good earth!