Inequality Matters

Martin Wolf may be correct when saying that nations around the world, specifically China and India, have grown their respective GDP’s as a result of the globalizing world. But to what expense? Wolf cleverly argues that poverty and inequality have lowered as a result of the globalizers. But how is this possible if the purchasing power of the world is generally measured in western currency value. This is one of the arguments made by Robert Hunter Wade. Let’s say  currency value is measured in terms of the the US dollar and nations like China and India have lower currency values than that of the dollar. That means the wealthiest Chinese and Indians are worth such and such as based on the US dollar. But Chinese workers are earning Yuan which is equal to (currently) .15 US dollars. That to me shows that most Chinese workers have very low purchasing power on the world market. Such disparity shows  tremendous inequality amongst the Chinese.
Wade also provides us with insight to how “neoliberals” such as Wolf have formulated this idea that poverty has decreased. He claims that NGO’s like World Bank are in fact measuring this based on the individual nations PPP. But Wade argues that both India and China have not participated or given the NGO’s the data in which this formula is based on. Instead the neoliberal argument is based solely on estimated guessing in which are based on rising GDP numbers. Too much vital information is left out in order to make such a claim, more reliable data is needed in order to make an appropriate poverty headcount and inequality measurement.
More importantly it appears that the NGO’s are not building a real effort to measure the true poverty line that exist in the world. Rising GDP’s are great for national wealth, but as we can in see in the US, it does not appear to be translating into less inequality. In fact the inequality in this country is growing and at a very fast rate. It is hard for me to accept an argument that poverty and inequality in lowering around the world efficiently enough  when it’s rising in the wealthiest nation with the highest GDP and one of the greatest currencies in terms of purchasing power. Not to mention one of the world’s largest populations.
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2 Responses to “Inequality Matters”

  1. anthonymunozjr says:

    Using the growth of the US GDP is a great example ,showing the dangers of focusing on advancement via national wealth, rather than in terms of inequality and poverty. How substantial a nations GDP is for national wealth compared to the actual holdings of the wealth in the hands of few ignores such disparities.

  2. Prof. Hala says:

    Impressive, wide-ranging post. And nice title!

    I find it somewhat ironic that such a staunch advocate of the global economy fails to measure incomes at “global” or market-exchange rates and instead relies on measures that make adjustments for international differences in purchasing power. That these are so huge in many cases (like China and India) indicates we have a long way to go before achieving a truly integrated, global economy (where there would actually be PPP) — for better or worse (for the better, according to Wade, for the worse, according to Wolf).

    One note: the UN is more accurately referred to as an IGO (inter-governmental organization), since its members are governments (although some NGOs have “observer” status), whereas NGOs exclude governments.