Reducing Income Inequality Through Greater Prosperity

Reducing Income Inequality Through Greater Prosperity

The growing economic inequality in the world is something that can no longer be denied. It seems as the world moves forwards, the gap between the rich and the poor increases in leaps and bounds. Among industrial nations, the United States is by far the most top-heavy, with much a greater share of national wealth and income going to the richest one percent than any other country. Unsurprisingly, there are even greater disparities by race, class, homeownership status, and education, with non-Hispanic whites, the wealthy, homeowners, and those with more education seeing their income and wealth rise, while blacks, lower-income households, renters, and those with less than a college education saw theirs fall.

A couple of weeks ago a prompt was posted on the official Instagram account of Eco warrior Princess. The question was this: Instead of helping the rich get richer, what’s one action you are taking to help reduce inequality? In reading the responses I came to a startling realisation; a good number of people in the Global North have convinced themselves that the way out of inequality is simply a matter of taking more from the so-called billionaires and sharing it amongst the economically disadvantaged.

I see it differently. To me, the solution here is to create more prosperity. Sure, more billionaires will be created, but a lot more people will be lifted out of poverty. I do not have the expertise of Harvard trained economists or the oratorical skills of politicians but what I have is personal experience. I have lived with people working their way out of poverty. I have lived in communities trying to lift themselves out of poverty. I might not be able to tell you what works, but I can tell you that what does not work is trying to make the rich have a little less.

A better understanding might come from an illustration with the pie. Do we bake more pies or do we fight over the one in the pan? I say we bake more pies. For their labour, the skilled baker might be entitled to more than anyone else, but what does it matter if more mouths are fed? Very few people who are poor will tell you their way out of poverty is to take money away from billionaires; the truth is we don’t really care about the billionaires or their billions. The continuous propagation of the belief that the solution to economic inequalities is simply to take more money from billionaires is a pipe dream most unlikely to come true.

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I live in Nigeria which according to the World Bank is the poverty capital of the world. Surprisingly, in conversations on how to solve our problems, we often get left out. Most people in the West see the solution as an issue of taking more from the billionaires. For us on the ground, the reality is a bit different. As a simple exercise I invite you to go on the street and ask any poor person or see a homeless person you come across what they think their way out of poverty is. I’m willing to bet you that the most popular response you would get would be tied to the provision of good jobs. If poor people have increased access to jobs, a sense of human dignity is returned to them and they can gradually work their ways out of poverty. You know who is likely to create that job? The billionaires or millionaires who are future billionaires. And this is the reality. Not some political or economic projection or wishful thinking.

A man carrying a pile of rags in Kano, Nigeria. Photo: Eiseke Bolaji.

A good example of this is China. In the last 30-40 years China has been able to lift about 745 million people out of extreme poverty. This is a feat unseen in modern times. In that time China has grown from being a developing country to the second largest economy in the world worth $14.3 trillion. You know what else has grown in that time? The number of Chinese billionaires. According to Forbes, at last count China had 698 billionaires, second only to the US, more than the number of India, Germany, Russia, Hong Kong, Brazil, Canada and the United Kingdom combined.

Related Post: Growing Inequalities: Closing the Widening Inequality Gap Between Rich and Poor Countries

This is in no way a defence of the billionaires of this world. I think most of them are vile people who will devour anything in their way to add more zeros to their net worth. This is not an argument for billionaires not to be taxed either. By all means, tax them and if they make more money, tax them even more. The reality here though is that increased taxation of the rich does not equal the redistribution of that wealth to the poor. Consider that today, the UK has one of the most stringent tax regimes in the world. The wealth tax and other such wealth redistribution measures that Americans quarrel over have existed in the UK for years. Regardless of this fact, the UK is in no way free from economic inequality

This is not an argument in defence of any futuristic wealth I may yet amass. It is a plea for us to adopt an abundance mindset on this topic. We need to understand that when all is said and done, a better solution here is to try to create more wealth for more people than to spend time sharing that which has been created. In 2020, Shopify Partners generated $12.5 billion in revenue. This number is up more than 84% from $6.8 billion in 2019. That means hundreds of thousands of small businesses whose owners have forever been lifted from low incomes or poverty. Yes, Shopify founder and CEO Tobias Lütke will own an outsized share in that wealth created but how is it we choose to face that and not the people actually being empowered, lifted up and out of meagre earnings?

Or is this no longer about the poor?

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Cover image of woman in rural Guatemala handwashing garments in river by Esteban Benites.

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