Rich-poor gap has become a concern in the world. No doubt, it frequently appears in newspapers, television channels, UN reports, academic journals and the reports of non-government organizations and other organizations that the gap between rich and poor is increasing around the world. As expected, there is a hue and cry on this among political leaders, researchers, policy makers and others and many policy-based, programmatic and other efforts have been taken across countries on how to reduce the gap between the groups. But, according to available sources, there are no promising outcomes, despite some notable effects of gap-reducing efforts. Also, on many occasions, reports predict that the gap will increase in the future in many countries.
No doubt, the rich-poor gap is notable among subgroups and individuals. According to the 2021 World Inequality Report, the richest ten percent of the global population currently earn fifty two percent of the income but the poorest half earns only eight percent. At the individual level, an individual from the top ten percent earns $122,100 but it is only $3,920 for an individual from the bottom half. In terms of wealth, the richest ten percent owns seventy six percent of all wealth, while the poorest half owns only two percent of the global total. The rich-poor gap is increasing not only in rich countries but also in developing and less developed countries, though the per capita income is notably higher for developed countries compared to less developed countries.
But the inequality between rich and poor can lead to economic instability, financial crisis, debt burdens and inflation at the national level. At the individual level, it results in enormous negative consequences and reduces the chance of realizing potentials. But it is difficult to reduce the gap between rich and poor significantly. Notably, there are economic, social, political, policy based and other causes behind the rich-poor gap in the world. Some causes are directly responsible while others are indirectly related. Some important causes are globalization, technological progress, economic policies (such as redistributive fiscal policies and labor and produce market policies), unemployment and low levels of education and skills. Moreover, underlying political and social causes including political oppression and racial discrimination lead to inequality.
It is pertinent to note that the rich-poor gap is reduced in two ways such as decreasing the income of the rich and increasing the income of the poor. Governments across countries employ the tax and benefits system to do so. While they tax the rich, they redistribute the taxed money to the poor in many ways. But it remains unclear whether it is possible to reduce the income of the rich significantly. This is because rich people have more resources and options to use and earn money while poor people have limited resources. Moreover, it is not clear how much reduction is the desired reduction in the gap between the groups or will ensure the desired conditions for the poor.
Even if a few criteria are set by different organizations and countries including the United Nations for the ‘Basic Living’, ‘Basic Need’ or ‘Minimum Standard of Living’, these do not provide the desirable conditions, though such targets help to make policies and take programmatic measures to improve conditions in a step by step manner. Moreover, it is not convincing to excessively put emphasis on reducing the income of the rich. Everyone has the right to earn and own wealth as much as possible without harming the reasoned interests of others. Thus, the prime target for the reduction of the rich-poor gap should be raising the income and improving the economic, social and other conditions of the poor, not decreasing the income of the rich.
No doubt, improved conditions will make poor people able to improve further in economic, social and other terms, no matter whether the rich-poor gap is remarkably reduced or not. In this respect, raising the minimum wage level and providing money to the poor to utilize for income generation are undeniable. Thus, tax imposition on rich people at a reasonable rate is needed to redistribute wealth and improve the economic and other conditions of the poor. But making and implementing well-planned and well-targeted policies are very important here. Besides, addressing the underlying political and social causes and providing better access to education, health care and other services is also important. But a strong political will is imperative.
