Tuesday January 30,
2017 / 02:54PM / Proshare Research
Introduction: Growing Inequality
The recent oxford committee for famine (OXFAM) report stated that 82% of the global wealth earned in 2017 went to 1% of the population while the bottom half of humanity had no increase in their income. Intriguingly, forty two (42) individuals own as much wealth as 3.7 billion people.
Therefore, the richest 1% is richer than the whole rest of humanity. The present scenario rewards wealth ahead of hard work, thus making it more of a “billionaire bonanza”.
Nigeria: A Lot More of The Same
Back home in Nigeria the report stated that the richest man earns enough wealth on its income to lift 2.3 million people out of poverty. The study went further to state that regardless of a decade of economic growth, poverty has blistered on.
The Nigerian Bureau of Statistics aligned in bit with such position in its recent inequality report as the bureau stated that the income generated by the lower class has fallen. The OXFAM report pointed out that 93% of respondent in Nigeria, emphasized on the urgency to address the income inequality in Nigeria.
Body: Davos, Income Inequality
Therefore, it was not surprising to see the world economic forum (WEF), which is traditionally held in Davos Switzerland admit the world was fractured as inequality has kept growing. Apart from the world been fractured by extreme poverty, the recent treat to globalization has only fuelled the fire further.
Such treat to globalization stream from the perception that certain economies are gradually shutting themselves up and withdrawing from already signed accords. The fading lure in globalization is deeply rooted in growing inequality. As many believe globalization has reinforced wealth concentration.
For many it has bolstered the feathers of multinational enterprises but has left workers worse off.
Globally, social economic mobility is weaning. Well in a society where human capital become less rewarded, inevitably social economic mobility must tilt downwards, just like what is experienced in Nigeria presently.
As most human index are on a downward trajectory, the WEF found itself trying to reassure the world that globalization remains the only option to reversing the existing economic fracture. Thereby, urging global leaders and corporation to invest more in human capital, improve gender equality in work place and provide a reward base system that support hard work better off. ‘’Evidently there is a need to save capitalism from itself not by running after equality but by working towards more equity’’.
One which is not self-absorbed in rewarding dependency by dishing out hand outs as a way out of poverty, rather increasing independency through more job creation and investment in places regarded has been forgotten like the Sub-Saharan Africa.
At the same time eliminating tax’s policies that have become predatory to low income countries, also encourage high base pay for middle class and choke off measures that are self-injurious to productivity. Certainly, we strongly believe that poverty cannot be addressed without taking such elements into consideration.
Trade Debate: Where Were We?
The climax of 2018 Davos was the trade debate, obviously the American first policy have generated glitters among global leaders. Therefore, the need for clarity on such was needed. Thus, person best fit for such responsibility was president Trump himself. In simple terms the ex-business man turned politician stated. Though America lauds free trade, it is also entitled to a fair deal.
Market economist will argue that structural balances of the economy will largely dictated the end product of trade, thus countries should improve on efficiencies rather than use taxes as smoothening agent.
Though tax is a friction to free trade but in a circumstance where subsidy is not recognised as an overt protectionism, it tilts the balance. Many will resort to Tax as a rebalancing agent, thereby capturing president Trump position.
Free trade might not be completely free as touted nor is it casted in stone. Individual nations provide support to industries that fall within their global supply chain to retain their competitive advantage.
They either tweak the expenditure side or the revenue end to provide the support or create a fence as a firewall. Certainly, the referred Ronald Regan, the great pundit of free markets used such measures to reverse trade deficits and protect the automobile sector in America.
However, one must agree with Macri of Argentina, such measures are not self- organic. A prolonged use of such policy could trigger backwardation and spur fiscal deficits on. It gradually becomes opium that the recipient cannot do without, eventually limiting its output capacity.
It could further worsen the woes of the nation due to the emergence of skewed distribution of resource; Evidently Nigeria is an example of such. Sadly Africa lost its tongue while the debate raged on, given the nature and high concentration of its exports. At the same time reflective of a continent with no coordinated trade policy!!!
Therefore, African countries, especially Nigeria must re-assess their position on the globally supply chain, identify their competitive advantage, invest more in human capital, improve their individual degree of efficiency and eliminate structural flaws. The continent must address its fast vanishing social economic mobility to have any real chance at rising.