Inequality is a policy choice. Governments can close the gap between rich and poor, and some are already doing so, writes Max Lawson, head of inequality policy for Oxfam International
We live in a world where the top one per cent own more than everyone else combined.
Many feel that this process of division between haves and have-nots is unstoppable. That it is the result of globalisation, and of the march of technological progress. That our leaders are not just unwilling but effectively unable to reverse this unstoppable tide.If this were true, then every country, regardless of its government’s actions, would be seeing a remorseless rise in inequality. But the Commitment to Reducing Inequality (CRI) index created by Oxfam and Development Finance International shows that this is not the case.
While some governments are doing nothing to tackle inequality, and in fact are helping to make it worse, many others are taking a different route. Inequality is a policy choice. Tackling inequality is central to the fight against extreme poverty, with the World Bank and others clear that unless we see a significant closing of the gap between the richest and the rest, then ending extreme poverty will not be possible.
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One positive example is Namibia. Here is a country that inherited the highest levels of inequality in the world when it gained independence from apartheid-era South Africa in 1990. Bucking the global trend of increasing inequality, Namibia’s Gini coefficient – the standard measure of inequality in income distribution – has fallen by some 15 points since 1993.
The Namibian government has managed to systematically reduce the gap between rich and poor, more than halving the poverty rate from 53 per cent to 23 per cent.Its investment in education has been key: the country has the second highest percentage of budget spending on education in the world, allowing it to provide free secondary schooling to all. Of course, more remains to be done. Namibia’s tax system needs improving and its minimum wage is inadequate. But it is clearly demonstrating a serious commitment to reducing inequality.
Other countries are also using policy tools to buck the inequality trend, with some surprising results. Despite its many problems in other areas, Zimbabwe spends the highest percentage of its budget on education of any country, a commitment recognised by Unesco as having a positive impact on children. Malawi has one of the world’s most progressive tax systems, helping to ensure that those who can afford it support those who can’t – although it could do far more to collect tax. Mongolia treats workers and trade unions better than developed Portugal, where significant restrictions on collective bargaining are in place.
Inequality is a policy choice and tackling inequality is central to the fight against extreme poverty
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