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Justice And Inequality In The 21st Century Economics Essay

The world is unequal if not the length of my arms will be equal, Chinese proverb saying. We live in the appalling inequality world, where the aggregate of wealthy quintile of the population enjoy more than 70 percents of total world’s income comparing a meager 2 percents consumed by the poorest quintile, and where millions of poor people struggle to survive and die each year that most of deaths are treatable (Isabel and Matthew, 2011). Economic disparity and poverty problem have become the pressing concerns that need to properly address as the matter of social justice and human dignity giving with the rise of mass indignation manifested and protest: wave of Arab Spring. In this regard, this paper is an attempt to examine on rising of wealth and income inequality and their detrimental effect on the long-term economic growth, social value and political stability. This paper argues that the underlying causes of inequality could stem from the negative effect of globalization, technological progress associated with altering of social norm.

. Introduction

The world is facing the terrible issues related to the notion of justice and inequality in the 21st century. The gap of GDP between rich and poor is widening from the onset of 1980. Obviously, 6 % of the world population own 52 % of the global assets. The richest 2 % of the world population own more than 51 % of the global assets (Charles). It represents the global inequality. Thus, we live in the appalling inequality world, where the aggregate of wealthy quintile of the population enjoy more than 70 percents of total income comparing a meager 2 percents of the poorest quintile, and where millions of poor people struggle to survive and die each year that most of deaths are treatable (Isabel and Matthew, 2011). Moreover, within the country, when people realize about inequality of distribution resources from their government among them which could not fulfill the utilitarian equality will cause the disharmony of the interest. It also leads to social riot or uprising to change the government. Thus, government that did not immediately address this issue will facing legitimacy crisis as the matter of social justice with the rising of the mass indignation manifested: wave of Arab Spring.

According to Richard Hare, in order to have an egalitarian society, it needs to have “Universalizability” that “giving equal weight to the equal interests of all party”. However, the problems still exits. According to Jonh Haranyi argues that “Universalizability” could not avoid the unfair discrimination between one person’s and other person’s equally urgent human needs. In fact, state could not provide the resources equally to its own people. As in the totalitarian regime, government controls everything in the countries while they favor only its nepotism. For example, Syria under the controlled of Bashar al-Assad has characterized as both authoritarian and totalitarian state. Bashar al-Assad promoted his own family to importance posts in both the political and the security department in order to maintain its own power without caring about its people (Efrat, 2011). Furthermore, a theory of Social justice and equality could be traced from Rawls argument on the idea of ‘original position’, the hidden pre-birth place of ‘vile ignorance’ where no one know, what their own family trait will be whether they will be rich or poor, beautiful or simple, small or less, talented or not, and healthy or unwell. The ignorance of vile means in the sense that no one knows advance and it is destined to occupy in it. Rawls utilized original position as birth place has played a central role in life in the case of the pre-birth and post birth lotteries. Implicitly, this could generate on two basic principles to structure society. The first would be equality in the way basic right and duties are assigned. The second would be to arrange social and economic inequality. In fact, taking a child born in rich and poor family as an example, the rich child might obtains huge wealth, get good education, being healthy physically and mentally whereas the poor child possibly acquires nothing from their family. Consequently, in this case, it not the end as the rich child have not win the life competition to become a wealthy person and, at the same time, as the poor child put strong effort to equalize level playing field. Therefore, unequal outcome between these two children are acceptable (Rwals, 1871). Similarly, in the Syria case, they didn’t provide equal rights to ethic or minority. If children were born as Kurds, they were discrimination from Syrian’s society. In fact, Syria's Kurds, who number about 1 million out of a population of 21 million, were subjected to "systematic discrimination," including refusal to give citizenship to an estimated 300,000 Kurds born in Syria (Dobbie, 2011). Therefore, it caused the social uprising in order to change the regime to promote social justice and equality to Syrian Countries.

Additionally, the disparity in wealth could hang on the distribution aspect as it is purely problematic in the light of utilitarianism and basic capability idea in the case of cripple and worst off people, who necessitate acquiring the ratio of scare resources base on moral views. The distribution proportionately of the pie of economic growth cake will be desirable for the cripple and worst off people as they lack capability to obtain and unable to fulfill the basic need and it is ethically right by treating people at the same ground and weight to the interest of all parties. Therefore, the social egalitarian ideal value in the functional democratic state by making the judgment of all value itself in term of fairly distribution and sharing of good things (Sens, 1979). On the one hand, according to Nozick, he proposed the privatization and self-ownership of the world resources which seemed irrational in distributing scare resources within community. On the other hand, for Sens, the notion of equality rested on the capability to perform certain tasks and attained happiness, in contrast to, the Dorwin argument on nature of unjust distribution of resources lied on the preference of choice and responsibility and he also questioned on the happiness, said from rural Indian women. Obviously, in the modern sense, a political system could be a determinant factor of the human being fate not only because of the circumstances they are born, but also the government policy may plays a intertwining role associate with the efforts for equalizing the level of playing field and caught up the opportunity. For example, Syrian government declared and used state of emergencies from 1963 to 2011 as a tool to control the country (Q&A: Syrian activist Suhair Atassi , 2011). Under the emergencies law, Syrian government could suspend some normal functions of the executive, legislative and judicial powers especially limited the freedom and rights of the citizens and denied the other parties and election. Hence, birthplace could be a determinant factor of people but not all is applicable. Political regime play the important roles to determine the way to distribute the resource that could lead to whether equality or inequality.

Accordingly, the current global economic disparity and social injustice become grave issue that having serious repercussion on social status, decision making process and liberty. Moreover, the vast inequality negatively affects not only human dignity in the society that prevailed in caste system, causing human misery, but it also limits freedom and voicing concerns in decision making that concern their long term development and livelihood. Therefore, wealth disparity and injustice could harm socio-political system on state and circumscribe liberty matter on people (Charles). Despites some argues that inequality is necessary for economic growth because it will eventually spill over on poor, however, thing turns into contradictory economically as the developing countries have stagnated growth rate. In other word, injustice in distribution has deepened the health and social problem, sever social inequality among children in the developing countries due to the designation of policy and unequal structure of power in multilateral institutions that favored on the developed world with the imposition of protectionism (Isabel and Matthew, 2011) (Neederven, 2002). Today, in this deepening of inequality world after the global financial crisis 2008, which having serious wave of political repercussion, has resulted in the demonstration movement of young people to revolutionize their politics that occurred in the Tunisia, Egypt, Israel, Syria, Canada, London and US.

Hence, the rest of the paper organized as follow. Firstly, it provides the underlying causes of inequality issue. Secondly, it point out whether income and wealth disparity matter to the people in this globalized world. Lastly, it analyses on the consequence of the inequality in health, education and wealth on social, economic and politics in undirected way.

. Does Globalization have caused the persistence of inequality issue?

Globalization has changed the lives of millions people in a fundamental way from being worse off to better off that never seen before via the diffusion of technology, free flow movement of people, ideas, goods and services and capital across border without any barriers. However, this globalization process has been utilized by the super power country like the US to dominate the global economy via global self-impose policy, financial system and economic system in the multilateral institutions which denote as the Neo-liberalism. The neo-liberal development policy which regards as Washington Consensus (WC) stresses on the main three steps.

The first step is to control inflation by stabilization, and to remove government spending deficits. As a result, the money supply could reduce by cutting public spending and raising interest rate. The second step is structural adjustment, this involves by letting the market to operate without state interfere in the market process accompany with the public enterprises privatization, and liberalization in trade, investment and finance. The third step is export led growth which involves encouraging foreign investors to bring in capital and technology without government regulation (Ravenhill, 2008). This WC looks perfect in paper that has predominated the development policy in the multilateral institution mainly in the WB and IMF yet the structural adjustment program in second step has devastated the economy in some country particularly in Greece in the sense that the government has lost self-ownership by laid off worker that weaken the investment confident as ‘one policy fit all’ without taking the specific contextual difference into consideration. In this same light, the Greece sovereign debt crisis is the pertinent example on how the structural adjustment program has killed Greece economy and worsens inequality between the huge wealth holder and resource empty holder as the hundred thousand purely demonstrated against the government policy as well as the IMF.

Additionally, the widening gap of education level between skilled and unskilled labors in either core or periphery world has deteriorated in this competitive world economy, where the developing country particularly Sub-Saharan Africa country still struggle in the dire position of poor living condition and on the track to improve the quality of worker with the modest average growth rate of 3 percents between 2001-2009, reverse the previous three decade of bad economy record growth (Philip et al, 20011). On the other hand, the persistence of health disparity situation due to the imposition of the intellectual property right in the medicine from the developed country has limited poor people ability to afford buying the drugs to treat and prevent disease, resulted in millions of children die each year unimaginably. Of course, globalization has brought enormous benefits to the people lives and technical progress in almost every field particularly in people longevity and living condition but this force has created the vast disparity both in monetary sense and in life expectancy in the peripheral countries which a child born in the Sierra Leone, who having life expectancy just only 37 years old accompany with the high mortality risk during giving birth unlike the US children’s (WDR, 2006).

Meanwhile, the source of wealth inequality could stem from the financial flow. According to Economic Watch, 700 billion dollars is flowing so rapidly in the large financial market today due to the high intensity and rapidity of the globalization that the world has ever witnessed. As a result, this tremendous amount of assets undeniably could destroy the foundation of the global economy. Raghuram Rajan argues, the growing income inequality was a key factor leading to the financial crisis and to the current economic downturn, and it also has widened the income and wealth holder in the way that the change term of trade and commodity market which negatively effect on the poor people, situate mainly in the periphery country. Consequently, the rise of demonstration in the Egypt after the dead of the vendors has questioned the sense of social justice and awareness on growing income and wealth disparity by draw analogy of the outside world economic prosperity and liberty. The political consciousness in Egypt is appealing which push the people to start the populace demonstration to challenge the Mubarak government credential. Without taking so long, the people have won and the Mubarak regime slide away as a best political settlement. In spite of globalization force has changed millions people lives from worse to better off, this forces has posed a threat to people living condition in some parts of the world particularly in Sub-Saharan country. Nevertheless, what is the most concern is the globalization has caused inequality problem and resulted in populace protest in Egypt which is bad for the economy and social as a whole. Thus, inequality and unevenly distribution are partially derived from the adverse effect of globalization and the super-power country poltics..

. Does Inequality Matter?

Distribution of the part of economic growth cake proportionately is pre requisite for eliminating inequality. Charles (2005) argues, inequality matter due to its negative impact not only on human dignity in the society that prevailed in caste system, degrading value, but it also limits freedom and voicing concerns in decision making that concern their long term development and livelihood. Therefore, wealth disparity and injustice could harm socio-political system on state and circumscribe liberty matter on people. On the other hand, the inequality within and between country is controversial in many aspects. First of all, regarding the global inequality is diminishing due to the strong growth of China and India economy. This inclusiveness of both huge populous countries could deepen the poor country inequality in some country like in the Sub Saharan country. Another reason, global inequality is just a change in absolute income. Hence, poor countries won’t care to march up with rich ones, but they will try to improve their living standard. However, national inequality is the real matter because it is the result of national political disturbance (Bhagwati, 2004). From egalitarian view, global inequality may matter. It is an ethical issue that rich countries have to take into account on the faire distribution of wealth. As improvement of technology and communication, people will be aware of inequality gap between poor and rich (Kuznet, 1965). Thus, globalization plays very important in giving perception about inequality and the poor won’t satisfy with their income increase if they know that the rich get richer in the absolute term.

Of course, inequality is the main momentum which leads to social illness. Social illness are those social problem that are seen as the result of income inequality such as robbery, burglary, prostitution, drug abuse/trafficking, social insecurity, murder, imprisonment, increase of birth rate and the loss of trust(Dalibor Rohac). Anyway, inequality creates social hierarchy which means rich and poor are separated by a wide gap (Dalibor Rohac). This make the poor become more resented with what they get, and it will result in unrest one day when the poor can’t put up with such unequal distribution. More importantly, the era of inequality is described as the ‘’New gilded Age’’ which can put society in chaos, and democracy in jeopardize (Paul Krugman).

The Egypt social unrest is the applicable case Arab Spring due to inequality issue. The unrest in Egypt started since 2011 after the successive eruption of demonstration in other Middle East states. This unrest is the effort of many anti-government groups such Youth movement Group, Muslim Brotherhood, National Association for Change (NAC) and so on. With the force of globalization which made people aware more and more of inequality, Egyptian people also influenced by this wind of globalization. Exactly, through the mass media, people could clearly compare themselves to other people in term of income distribution. Recently, the unjust in distribution of benefit from oil investment which most benefits go to the rich people, and poor people could get very less from those natural resource investments. Another important event is Youth movement group that uses Facebook as the way to gather and shows their opinion. Members of Youth movement did connect each other through its membership in Facebook, and then spread all its activities thorough this online system. Thus, inequality concerns people so many aspects that could not neglect in this information telecommunication era.

. Consequences of Inequality

Globalization has brought a lot of improvement in term of economic growth, productivity, people's living standard and many other things but at the same time it also widens the gap between the poor and rich nations, the gap within the nations and citizens income that might trigger the inequality in society. In this section, we will try to highlight the complicatedness, multidimensional nature of inequality that keeps showing up in the age of globalization. Even though the fact that China and India does benefit a lot from globalization and their economies are growing like a rocket, absolute inequality between the richest and poorest countries is greater than ever before in history. And at the same time it also illustrates that the rise of China and India creates a new dimension to the persistent problem of inequality. The rising of economic inequality over the past 30 years has pushed scholars to do extensive research on the causes and consequences of inequality both in the United States and, more recently, globally. The consequences of inequality can be related to the area of health, education, crime, social capital, and political power.

Health Inequality

The focus in health research has been on the effect of economic inequality on mean rather than variance in health within a particular population, and most research has examined contextual effects of inequality. Some contend that inequality is bad for health because it undermines social capital or because it is associated with poorer social welfare provisions or other institutional arrangements that disadvantage the poor (Lynch et al. 2004).

During the first ecological studies, economic inequality seemed to be related with cross-national and sub national variation in mortality, self-rated health, and other indicators. However, more recent results employing multilevel models have raised some doubt. Differentiation in inequality does not appear to justify variation in health among rich countries (Beckfield 2004). Inequality may be associated with state-level differences in health in the United States (Lynch et al. 2004). Inequality within neighborhoods does not appear to be detrimental to health. In an ecological analysis Moore (2006) finds that the association of inequality with health is stronger in peripheral than non-peripheral countries (with periphery status based on the country’s position in world trade networks), and Subramanian et al. (2003) report that community-level inequality affects self-rated health in Chile.

Wealth Inequality

International economic inequality gives way for powerful countries to shape the growth of global markets in ways that limit the benefits globalization might offer to poorer countries. Similarly, capital flows are shaped in ways that disadvantage poorer nations while increasing the frequency of financial crises. Economic inequality within developing countries often enables elites to establish policies and institutions yielding patterns of development that disproportionately favor their own interests. Domestic inequality also allows them to resist useful institutional changes.

The report shows that inequality between the United States and the world’s poorest country, in terms of per capita income, rose from 38.5 to 1 in 1960 to 64 to 1 in 2005.Moreover, in 2000, the wealthiest 1% percent of the world’s people earned 415 times more than the earnings of the poorest 1%—up from 216 times in 1980, despite hurtling advances by a few nations. The global distribution of household wealth is even more unequal. In 2000, the top 10% of adults (over age 20) in the world owned 85% of such wealth, while the bottom half owned barely 1%. From the 1960s to 1990s, domestic income inequality rose in 65% of developing countries, declining in only 13%. A population-weighted measure of each nation’s GDP comfortingly registers a small decline in inequality in the world from 1967 to 2000. In truth, the entire decline this measure records is due to China’s economic miracle. Among the rest of the countries of the world, the trend is toward greater inequality. A recent World Bank study warns that only one of the eight Millennium Development Goals it set—that of halving poverty—will be achieved. The failure of wealthy nations to fulfill their commitments to fund foreign assistance will be a key factor if this occurs.

Inequality in Education and Human Index Development

Although there are a lot of researches have been done regarding to the relationship between family income and school outcomes, the complexity and implication of inequality in education is far from studying. Kane (2004) finds a relational effect of income on college enrollment; socio economic differences widened between 1980–1982 and 1992, as college enrollment remained stable in the lowest income quartile while rising among other income groups. In research on the contextual effects of income inequality, Mayer (2001a) reports that state-level inequality is associated with higher educational attainment and with higher inequality in attainment. She finds that state-level inequality is associated with higher returns to schooling, higher state spending for education, lower college tuition, and higher economic segregation, but that only higher state spending, lower college tuition, and returns to schooling had an impact on education. The UNDP has published a revised index of human development that also accounts for inequality (IHDI). Countries with large social disparities, particularly those in Central and South America, perform worse than under the previous measuring concept. Overall, however, the order of the 139 countries changes very little. Nonetheless, the new index is likely to become an informative source for policy makers and researchers alike. Whether the IHDI will fully replace the old HDI, meanwhile, it is questionable: Given the increased demand for disaggregated data to calculate the adjustment rates, it will be difficult to reconstruct the IHDI for previous decades. Instead of replacing the HDI, the IHDI will likely serve as a complementary indicator.

Social Relations

The implications of inequality for social relations are salient because of concerns that rising inequality will deepen social divisions. More than that, social relations, including economic segregation and social capital, are often said to mediate the effect of contextual inequality on individual-level outcomes. As sociologists have documented, people associate more with others like them, both because they prefer it and because structural arrangements—neighborhoods, schools, workplaces, voluntary associations—tend to bring like people together. Social ties are less homophilous on the basis of socioeconomic status than on the basis of ascribed characteristics such as race or age, but social relations are still more likely to form and less likely to dissolve for those of similar education and occupational status (McPherson et al. 2001). However, the deepening of the wealth disparity in the Egypt, Middle East regions has invoked the public protest due to the discontent and dissatisfaction on the policy over the distribution of the benefits and prevailing of socio-political corruption which had knock out the Mubarak regime in 2010 and disrupt the economy growth for awhile .Thus, inequality is bad for the economy and society.

Conclusion

The rising of inequality issue has become the undesirable thing for the entire global society which has taken part in both developed and developing country political economy dimension as the global demonstration wave take place today’s. In recent report of Asian Development Bank warned that the augment of income in three Asian states namely China, India, and Indonesia could worsen the inequality gap, a plight situation that could have detrimental effect on the political stability and long term economic growth as the Gini-coefficient rose from 39 to 45 in the early of 1990 to 2005. As Anartaya Sen argues, the basic capability equality is importance for people to lead the kind of live they value and justice is normative issue yet the inequality is becoming an illegitimate issue that has pushed state to be responsive of growing wealth disparity and distribution models because with the communication and technological progress, people is raising the sense of awareness on each other living condition all over the world, and their desire to live more evenly is increasing. People are asking for more. Not only are they asking for bread but they are asking for a more even distribution of bread. Thus, by capturing inequality is a vicious cycle with unequal level of playing fields, state plays a determinant role not only in equalize the opportunity but also in distribute of the pie of economic growth cake equally and prevent undesirable outcome as the growing of wealth and income disparity could potentially fragment social unit, harm the quality of governance, lower the productivity growth and increase pressure for inefficient populist policies.

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