Guest post by Alan Cunningham – The Role of Globalization in Income Inequality and the Demand to Treat Income Inequality as a National Security Threat
In the long run of justice, the main force for greater equality is the spread of knowledge and skills – Thomas Piketty, French economist
Income inequality is an issue that is probably one of the most frequently debated policy topics in domestic and foreign presidential, congressional, and parliamentary elections. This is an area of human security, but, due to its impact on society and the country as a whole, it should be considered a national security issue due to the amount of power and destruction it has on society.
In the creation of income inequality in many countries, however, one can find the culprit in globalization. Having such a policy of liberalization caused many adverse reactions especially to the Third World, which was largely underdeveloped and beset by poverty, disease, and hunger. But the relationship between globalization and income inequality is not as black and white.
The Relationship between Globalization and Income Inequality
The relationship between the two is somewhat difficult to describe due to the fact that there are many different causes of income inequality.
William R. Hauk, professor of economics at the University of South Carolina, wrote in op-ed piece how income inequality can be caused, positing two explanations:
“Globalization can increase wage inequality in relatively rich countries by increasing imports of manufactured goods using low-skilled labor from developing countries. On the contrary, it opens up more opportunities for exports in high-tech companies that use a higher labor force. both of these can widen the wage gap between high-skilled and low-skilled workers. Technological change can also increase wage inequality. Fewer secretaries, typists, or assembly workers are needed if computers and automation replace the production process. Conversely, newer technology can increase the demand for services, for example, engineers who can service the machine.While the two explanations are not exclusive, for a long time, many economists tend to favor the technological explanation.
However, an abstract of a paper published by the Leibniz Information Center for Economics (written by a Master’s student at the University of Sydney, Australia) summarizes the relationship, and how other theorists consider it, well, stated“On the one hand, globalization is considered to promote global economic growth and social progress, but on the other hand, it is blamed for increasing income inequality and environmental degradation, causing social degeneration and difficulties in competition”.
In short, while globalization does not have some measurable benefits global economic aid“The by-product is an economy that is increasingly divided into winners and losers from this process”.
Globalization Consensus
One of the best examples of this globalization policy is the Washington Consensus. This explained as, “[the idea] that global prosperity will be maximized by the liberalization of trade, finance, and investment, and by limiting national economies to provide an environment in which capital can work”. To expand, it starting as a“a set of policies designed to create economic stability by controlling inflation and reducing the government’s budget deficit… the second stage is the reform of trade and exchange rate policies so that the country can integrate into the global economy. [and] involves lifting country restrictions on imports and exports and often involves currency devaluation. The final stage is to allow market forces to operate freely by eliminating state subsidies and controls and engaging in privatization programs”.
The goal of all these projects is to help privatize state-run enterprises, cut social spending programs, and overall trade liberalization.
The effects of this can be seen most easily in Latin America, with which country “besieged by debt defaults, deep recessions, and banking crises”.
As Moisés Naím (former Executive Director of the World Bank and Minister of Trade and Industry of Venezuela) notes in the introduction Cristina Marcano and Barrera Tyszka biography of Hugo Chávez“People’s impatience is also fueled by disillusionment with the pro-business, market-oriented reforms known as the “Washington Consensus” (liberalization of trade and foreign investment, privatization, deregulation. etc.). The promise at the time was that these economic reforms, while initially painful, is a ticket to imminent prosperity. However, what most Latin Americans have achieved in more than a decade is financial ruin, high unemployment, mediocre economic growth… Corruption—widespread, persistent, and ruthlessly destroying the poor —is becoming an obsession everywhere. And the fight against corruption is being undermined by politicians who use it as a weapon to sink their rivals”.
In this short paragraph, Naím explains the impact of Consensus policies especially in Venezuela, but all of Latin America (as well as the conditions that brought Chavez to power) and their ineffectiveness for the average Third World person. The end result for many Latin Americans is even more economic inequality, less control over business, an increase in corruption, and far more pain than gain.
Final Consensus
The relationship between income inequality and globalization is one of the things and benefits for big business and larger and more developed countries, while less developed countries, with advanced technology become worse and more isolated from the world. In the case of Venezuela as well, Naím made the argument that the failure of the Consensus led to conditions ripe for Chavez to take power and Venezuela to become poorer and poorer. There are many potential solutions that can be used to fix economic inequality and actually help Third World affairs; Erik Maskin from Harvard University seems to have raised an interesting solution, which seems to work; they propose “Raise skill levels by providing job training to low-skilled workers to match international opportunities…[and] for third parties like governments, multilateral agencies, NGOs and private foundations to sign in”.
By raising the skill level of workers, they will be better suited to the challenges of the workplace and can stay in their own country rather than having to go out of their country’s borders and be able to compete properly at home. country. While this is only a proposed theory, Maskin’s final point is certainly undeniable; having governments, NGOs, and other institutions to help reformulate globalization is a necessity for the Third World.
This article was contributed by Alan Cunningham, a graduate of Norwich University and the University of Texas at Austin, with degrees in international relations, history, and communications. He works as a financial crime analyst and is a Staff Writer for various human rights, national security, and military online news publications. He aims to join the US Armed Forces as an Officer in 2022 and plans to earn a PhD in History and a JD.
▼▼ Thanks for reading. Share using the link below. ▼▼