By Donald Kaberuka
A
street family. The poor cannot sleep, because they are hungry,”
Nigerian economist Sam Aluko famously said in 1999, “and the rich cannot
sleep, because the poor are awake and hungry.” PHOTO | JOSEPH KIHERI |
FILE
The
poor cannot sleep, because they are hungry,” Nigerian economist Sam
Aluko famously said in 1999, “and the rich cannot sleep, because the
poor are awake and hungry.”
We are all affected by deep
disparities of income and wealth, because the political and economic
system on which our prosperity depends cannot continue enriching some
while it impoverishes others.
During hard times, the
poor lose faith in their leaders and the economic system; and when times
are good, too few enjoy the benefits. The GINI coefficient, a measure
of economic inequality, has been rising for many years in developing as
well as developed countries.
In Europe, inequalities
have intensified as a result of rapidly rising unemployment, especially
among young people. Some have reacted by rioting; others have backed
far-right xenophobic political parties; many more seethe quietly,
growing ever more resentful of politicians and the system they
represent.
The problem is starkest in the world’s
megacities, which account for around 80 per cent of global GDP. But even
in the most developed cities, disparities can be marked.
For
example, as you travel on the London Underground just six miles east
from the heart of government at Westminster to Canning Town, the life
expectancy of the inhabitants at each successive stop falls by six
months.
But inequality is most acute in emerging
economies where urbanisation has been fastest. By 2030, an estimated 2.7
billion more people will have migrated to cities, almost entirely in
developing countries. Many will encounter hopelessness there, rather
than the good jobs and better life for which they came.
Megacities
like Mumbai, Nairobi and Kinshasa are essentially small cities
surrounded by huge slums — pockets of wealth in a sea of despair. None
resembles the likes of Tokyo, New York, or London, which, despite areas
of deprivation, are notable for a more equitable distribution of wealth.
Such
disparities are equally apparent at the national level, especially in
some of Africa’s resource-rich countries. While demand for private jets
is booming, 60 per cent of the population lives on less than $1.25 a
day. As the world overall grows richer, the benefits continue to flow
overwhelmingly to a tiny elite.
As a result, efforts to
promote more inclusive growth have become crucial, not only for moral
reasons, but also to ensure the survival of the global economic system.
This
involves more than wealth distribution. It means bringing people — or
representatives of specific ethnic, religious, or regional groups — into
public-policy decision-making, to allay their sense of marginalisation
or perpetual failure.
It means creating real jobs to
draw workers away from the informal economy, so they can benefit from
workplace protections (and pay taxes). And it means framing policies
that are appropriate to conditions on the ground.
But
two overriding sets of policies appear to apply in almost all cases. The
first seeks to ensure that poor children have access to a reasonably
good education as a means to reduce inter-generational poverty. The
second set of policies, which are particularly relevant in resource-rich
countries, aims at guaranteeing all citizens a share of revenues from
national assets.
Such policies have been shown to work
in places like Brazil, whose pioneering Bolsa Familia (or family
allowance) policy provides cash transfers to poor families on the
condition that their children attend school, eat properly, and fulfill
other criteria to improve well-being.
Mexico’s
“Opportunity” programme performs a similar function. Oil-rich Alaska
pays dividends from its resource revenues to all of its citizens, a
model many developing countries want to emulate. Although economists
continue to debate the advantages and disadvantages of such schemes,
they are not too complicated to set up.
Governments,
businesses, NGOs, and individual citizens, rich or poor, all have a role
to play. If we ignore the dangers of wealth disparities for much
longer, the consequences will be far more distressing than a few
sleepless nights.
Dr Kaberuka is president of the
African Development Bank. (c): Project Syndicate/World Economic Forum,
2014. www.project-syndicate.org
Yeah right No one will sleep soundly
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