Essay Sample on The Cause of Global Economic Inequality

Introduction

Inequality is the difference in the financial security of various population groups and how financial resources are unevenly distributed across the population. Income inequality is a global matter that affects most nations of the world. A small percentage of people around 1% control and own about 40% of the total wealth in the world. Income inequality in the world is not just a new phenomenon since in the 1970s the developed nations were ten times richer than the third world countries which include the least developed countries and developing countries.

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There are two major causes of global income inequality. The first is that the investment returns from companies are taken back by private shareholders in an amount which is greater than the overall economic growth. Secondly, the decrease in the population of a nation contributes to income inequality. For instance, in the 1980s the economic growth of first world countries declined due to a drop in the population. The combination of both factors i.e. the decline in population and slow economic growth are the major contributor to the concentration of resources among the rich, ultimately resulting in disparity in the levels of income. Population growth is significant to the economic growth of any country (Freeman 350). From the period of 1700 and the year 2012, the population growth accounted for nearly half of the total GDP of that period. Numeration in America has been adversely affected as a result of cheap imports from China. The exports only benefit the rich and thereby add to the disparity in income in America. Before 1800, international trade was very low and never exceeded 10 percent. In today's economy, international trade accounts for most of the world trade.

This is driven by several factors including businesses trying to reduce its overall cost. The impact of this is that the native workers end up losing jobs. With the increase in international trade, the gross domestic products of countries have ended up relying on the amount of trade. The result of this is that income inequality increases and ends up profiting a small percentage of the population. Jared Diamond in the book guns germs and steel stated that the cause of income inequality in the world was due to differences that exist in the environment which are amplified by certain things like favorable farming conditions (Diamond 25).

Diamond further state that this factor results in different populations being more powerful and technology endowed than other societies. (Diamond 30) For instance, in the region of Eurasian, they were favored by having good genetics and superior culture which influenced their success in the world. The people of Eurasia had gained immunity over some diseases which would wipe out an entire population and their culture propelled them to have a written language which helps to facilitate trade in the region. In the book guns, germs and steel Yali asks diamond why they produce so many goods from their countries and bring them to the new lands. (Hardin, and Diamond 889) The reason for this was very simple this is to dominate the global economic power.

Another reason for global inequity advanced by diamond is that people have not yet moved away from hunting and gathering towards a more sustainable way of living (Diamond 65). The population should strive to move towards agriculture and becoming an agrarian community. In order for this to happen there certain conditions that have to exist as the same conditions in existence in Eurasia. They had dry land which supposed storage of food and access to vegetation and animals. These conditions never existed in other regions thereby Eurasia was the only superior region.

Human capital is strongly interlinked with the economic growth of a country. It helps the economy to progress to greater heights by maximizing on the knowledge and skills of the people. Human capital recognizes that not all employees have the same knowledge and skills and thereby investment in education helps to improve this. For instance, an enterprise may invest in human capital and this will have the effect of increasing the economic growth as well. It will improve the overall economy if the worker decides to stay and uses ideas and expertise on the company or later leave the company and start a business with the use of those skills and expertise. Companies may decide to do this by giving their employees training while they are still on the job. In today's world, a government may decide to offer higher education for free. Though the government is using the money it tends to benefit from this act since the people will develop the economy there increase the economy.

In addition, the remuneration of educated workers automatically increases due to the qualifications they have and what they bring to the business. Investing in human capital in developing countries is crucial to their economic growth. Investment in this section will result in increased job opportunities and earnings in those nations. This is because people will now be equipped with the necessary skills for a certain work. In additional investment in human capital will lead to people taking an active part in the political arena and social sphere because they feel that their voice will be heard. In most societies, adults will low levels of skills do not participate in their communities and often have poor health. Investments in human capital will help in tackling the global income inequity and level the playing field. This is because it promotes financial growth and encourages social morbidity (Ward 45).

Work cited

Diamond, Jared. Guns, Germs, and Steel. W.W. Norton & Co, 1999.

Freeman, Dena. "De-Democratization and Rising Inequality: The Underlying Cause of a Worrying Trend". Global Society, vol 32, no. 3, 2018, pp. 344-364. Informa UK Limited, doi:10.1080/13600826.2018.1459506.

Hardin, Garrett, and Jared Diamond. "Guns, Germs, and Steel: The Fates of Human Societies." Population and Development Review, vol 23, no. 4, 1997, p. 889. JSTOR, doi:10.2307/2137390.

Ward, Tony. "Inequality and Growth: Reviewing the Economic and Social Impacts". Australian Economic Review, vol 50, no. 1, 2017, pp. 32-51. Wiley, doi:10.1111/1467-8462.12196.