Research Paper on Global Economic Recovery: 30 Years of Progress

Introduction

Until the 1980s, the Industrial Revolution's sanctions looked were restricted to several nations, including Canada, East Asia, Australia, the United States, and Western Europe. In the last thirty years, there have been significant changes, and the developing nations initiated necessary steps for economic recovery. Even though wealth disparity has increased for some countries, it is reducing at its worldwide level. The poor counties have become more productive, according to the World Gini co-efficient. The less developed countries such as Indonesia and India productivity have enhanced their emerging economies. Globalization cannot become successful when some of the broad middle-class standards of living have remained a privilege for some states, as most of them were the colonial powers (Brueckner, & Lederman, 2015). Multinational corporations play a significant role in heightening the inequality gap as they suck the resources of less developed countries. Most rich countries have developed strategies that improve the efficiency of production and effective infrastructure to transform raw materials into finished products, which are, in turn shipped to developing countries. The wealth gap between rich and emerging countries emanates from inadequate government policies, increased borrowing by developing countries, and augmented concentration in the market, which diminishes the productivity power of the latter nations.

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Research Question: Why is there a wide gap in wealth inequality among countries globally?

Literature Review

In the recent past, many countries outside the developed nations have proved the doubters wrong. The newly industrialized nations have not yet accomplished high living standards. Growth in these nations does not look like they are leveling off. Even though economists have warned about the middle-income trap, many of the newly industrialized countries look like they are gaining on the rich universe since the Great Recession (Bowles, Durlauf, & Hoff, 2016). Currently, statistics have demonstrated the wealth disparity between the richer and poorer countries is wider. In 1912, Italian statistician and sociologist Corrado Gini formulated a method of assessing the distribution of wealth within communities, otherwise known as the Gini coefficient or Gini Index. Alcott & Rose (2016) claims that the index has values ranging from zero to one percent. 0% represents perfect equality where wealth is distributed evenly, while 1% represents perfect inequality where wealth is held in a few hands.

The extreme inequalities in personal wealth are linked to the increasing concentration in the market. Most sectors in the global economy are dominated by a few transnational organizations, providing them with more powers over these markets. Oligopolistic markets benefit much from these structures. Policies that have led to global inequality are the same regulatory and physical strategies resulting in a weak public sector and promote an extraordinary accumulation of corporate and individual wealth (Scheve & Stasavage, 2017). Some states have promoted these policies actively, while powerful private and public creditors and the International Monetary Fund (IMF) have imposed others. Cutbacks in public services are some of the measures that governments have considered best after the financial crisis that caused privatization. The worldwide financial crisis increased the current labor rights erosion that has been a major issue in the rising wealth and income inequality (Scheve & Stasavage, 2017). In the past, unions played crucial roles in protecting social and economic rights, and have helped in closing the racial and gender wage disparities. Currently, there is strong proof that reduced unionization has been linked with increased shares in income in the highly developed economies.

The inequality in countries is also increasing because of the financialization of sectors, including housing. For example, in Spain, the housing issue has been recognized as the major cause of the rise in national income and personal wealth ration. In Argentina, there are over 750,000 speculative and unoccupied housing units, while increased speculation in real estates has increased the prices to the point where most people cannot enjoy their rights of secure and safe housing (Davies, & Shorrocks, 2018). In addition, the current anti-trust and competition laws at international and national levels have been weak and cannot prevent mergers. At the same time, they cannot prevent the wide growth of the business to stop harming the global economy. In the late 2000s financial crisis, stimulus and bailout programs saved the baking systems. However, they failed to prevent the growth of large insurance companies and banks. Still, the most important factor that has led to disparities in wealth among countries is the regressive tax policies in most world regions. There is increased dependence on indirect taxes such as value-added tax (VAT) for raising revenue. Expenditures on social protection and public service that represent important forms of redistribution of wealth are cut in most nations. More progressive options, including raising the rates of taxes on higher earners, cutting off tax incentives for big companies, or better enforcement of collection of property taxes, have been dismissed or ignored as unfeasible by most countries.

The 21st century is largely a capitalistic world. In essence, there is a need for international treaties that form a wealth tax. Through this approach, nations would reach an agreement for taxing personal assets of every kind at steadily increasing rates. While this plan is not overly practical, it is an idea that people and nations should explore. Wealth has tendencies of accumulating over generations. Zucman (2019) states that the well and fairly-designed taxes on wealth go long ways into handling the sever inequality. More so, negotiation of international trade treaties with only corporate lobbyists and bureaucrats must end. The old-type of trade agreements are not democratic and place profits of companies above the employees, health, public interest, and the environment. There is a need for a transparent and new trade policy that is accountable and open to the populace.

Arguments

Nations need to focus on establishing and enforcing a national living wage. At the same time, companies must prioritize the best salaries for their workers and the right relationships among buyers, dealers, and others whom they carry out businesses. The unlivable and low wages are because of the demotivation of employees and concentrating salaries for top officials, which leads to different societies. All employees must strive towards earning enough to support their families and themselves. Alvaredo, Chancel, Piketty, Saez, & Zucman (2017) claim that corporations and governments need to act responsibly in safeguarding living wage rights. On the same note, companies need to focus on ethically responsible behavior and corporate social responsibility that respects workers' dignity. It is also advisable for workers to embrace their right to organize which has always been the pillar of more equitable communities. Extreme inequality leads to workers' disempowerment. Thus, workers have a right to shaping and bargaining together to increase their working conditions and salaries. These are significant priorities of global human rights. Article 23 of the Universal Declaration of Human Rights declares the right of workers to organize as an essential human right. However, workers globally still encounter fear, retribution, and intimidation when they try consolidating collectively. Where unions are strong, there are higher wages, which reduces inequality rates.

Excessive debt is bad for the USA's economy. Large amounts of debt cause sharp declines in economic growth through lost years of a stagnating economy or debt crisis. Increased debt that does not lead to extra debt-servicing capacity cannot be sustained. Nonetheless, while these debts do not lead to the creation of real wealth, it leads to economic activity and the illusion of creating wealth. Given the restrictions to the debt capacity of a country, once an economy attains these limits, the creation of debt and linked economic activity reduce. They decline to extents that a nation depends on the acceleration of debt burden for the generation of GDP growth and economic activity (Davies, Lluberas, & Shorrocks, 2017). Once it attains limits of debt capacity and slows the creation of credits, the GDP of a country and productivity reduce. An economy that has excess debt burdens leads to uncertainty over the costs of debt services and their future allocations.

Consequentially, all economic agents are forced into changing their behaviors in ways of undermining economic activity while increasing the fragility of the balance sheet. China is a leading example that lends to developing countries. China has higher debt burdens because of the systematic investment of its resources to projects that are not productive or do not show any potential. In these emerging countries, it is difficult for the associated debts or misallocation of resources to be written off. If china correctly writes the bad debt, it cannot report the high numbers in the growth of GDP that it does (Davies, Lluberas, & Shorrocks, 2017). Failures of writing down bad debt overstate wealth. Excess debt is domestic, considering its costs of servicing that represent actual resources transfers from sectors of the economy that could use these resources for investment and consumption to industries that could use these resources less. In these situations, transferring funds from one country to another through debt-servicing reduces the economy's aggregate demand and slows economic activity.

Evidence

The serious financial disparity is harmful to communities. The economic disparities frustrate efforts aimed at reducing poverty, making them even harder to achieve, hurts economies, and leads to violence and conflict. Reversal of this trend is also another challenge, but there is some progress at the same time. These are some of the ways of moving the world forward towards reducing global inequality existing in countries. In the developing states, insufficient outsourcing for education, investment, hygiene, and health among the poor leads to serious disparity issues. This trend is explained through the avoidance of tax payments and related illicit cash outflows. The Global Finance Integrity estimated that in the developing nations, around $6.6 trillion was lost from unlawful monetary movements from 2003 to 2012 (Davies & Shorrocks, 2018). The $6.6 trillion that was lost could be used in reducing inequality and poverty by making significant investments in infrastructure, economic growth, and human capital.

After declining for the better part of the last century, inequality is becoming even worse in the rich nations currently. The top 1% does capture not only the larger national income shares but also the tax rates in the maximum profits that are also dropping. This brings into question the highest taxable amount for the highest income earners. For example, Tony Addison, an economist, suggested a standard rate of 65% for the top 1% of nations (Davies & Shorrocks, 2018). Concerning gender inequality, the rights of women are undermined systematically by the same systems that have created and perpetuated monopolies of wealth and power. According to Zucman, G. (2019), at its simplest level, 90% of the richest billionaires in the world are men, with the gender gaps in payments increasing daily. Davies & Shorrocks (2018) also argue that In the United States of America, white women (32%) earn fewer wags.

Governments need to focus on...