This presentation is about inequality in economics.Economic inequality is the unequal distribution of income and opportunity between different groups in society. It is a concern in almost all countries around the world and often people are trapped in poverty with little chance to climb up the social ladder.
4. What Is Economic Inequality?
Economic inequality refers to the financial disparity in wealth distribution and opportunities among
people belonging to different groups, communities, or countries.. It also refers to the gap between
haves and have-nots. It is common to find that there are people with different levels of wealth and
income, the differences in amounts of wealth and income result in some people living in terrible
poverty while others live in great luxuries. Its increasing trend indicates more differences,
appropriately expressed with the phrase “the rich get richer while the poor get poorer. In other words,
it captures the growing gap in assets or income between the richest and the poorest segments of
society.
5. Economic inequality refers to disparities among individuals' incomes and wealth. And
those differences can be great. Forbes counted a record 2,755 billionaires in the world
as of 2021, when it finalized its most recent rankings. Meanwhile, the World Bank
estimated that in 2021 more than 711 million people globally were living on less than
$1.90 per day. That's actually a big improvement from 1990, when over 1.9 billion
people lived in extreme poverty and the world had only 269 billionaires.
Over the past 30 years, global wealth has increased; overall, living standards have
improved. And others will look at these numbers and think it's inexcusable that anyone
lives in poverty when the world's billionaires are worth a combined $13.1 trillion.1 Of
course, both statements can be simultaneously true.
6. • Poverty: One of the basic causes of unequal distribution of income and
wealth in the country is poverty which is reflected in low consumption level,
low per capita, income, low standard of living of the mass of the people. Even
after decades of implementation of development planning hunger,
malnourishment and suffering from chronic and debilitating diseases are still
the bane of the majority of population.
• Inadequate Development: Another cause of the low levels of income has
been inadequate economic development. Although the government has been
implementing a periodic plan to keep the economic growth high, the results
have not been satisfaction. The growth of such low growth rates of economy
have tended to keep the levels of income low for the mass of the people.
• Economic Concentration: In the developing countries like Nepal, there has
been concentration of economic power in the hands of few business houses,
as a result the rich becomes richer and the poor becomes poorer. Some of the
reasons for the concentration of economic power have been haphazard
industrialization, faulty licensing policy and inter-company investment etc.
CAUSES OF INEQUALITY:
7. • Tax Evasion: Tax evasion is also considered as another cause for inequalities in
income and wealth. The upper middle and richer sections of the society have been
manipulating to evade taxes and amass wealth through black money thereby
becoming richer. On the other hand, the lower middle and the poorer sectiorts of
the society are being reduced to abject poverty under the pressure of ever mounting
indirect taxes an necessities.
• Inequitable distribution of means of production: Inequalities of income and
wealth result from inequitable distribution of the means of production. One of the
means of production in Nepal is land but the distribution of land in Nepal is
unequal. A large majority of the people have small uneconomic holdings while
small fraction of population owns large holdings. The former are being starved
while the latter are becoming richer, there by emphasizing inequalities. The second
means of production is capital. People being poor, capital is scarce in the country
but it is concentrated in the hands of a few rich who use it to their advantages.
8. • Capital intensive Technology: The use of capital intensive technique is one
of the reason of inequalities. The use of capital intensive technology in the
private sector of the economy has led to greater concentration of wealth and
income in the hands of few and deprived the masses of larger.
• Unemployment and Underemployment: One of the prominent reasons
for this unequal distribution of income is widespread unemployment and
underemployment. More than the 5 decades of implementation of economic
planning has failed to relieve unemployment and underemployment in the
country. Inequitable distribution of the means of production, capital
intensive technology, inadequate development etc. are some of the factors
responsible for increasing unemployment and underemployment. As a result,
the poor are becoming poorer.
• Low productivity: Low productivity per unit of labour is also another factor
for increasing inequalities in Nepal. Low productivity keeps the income level
of the people low. A worker with low productivity can not earn more and thus,
remains poorer.
9. • Inflation: Inflation is another cause of inequality. Continuous rise in
price leads to fall in real income of fixed income groups such as salary
earners, rent earner, landless agricultural workers and small land
holders. On the other, the big landlords, businessmen traders
speculators, industrialists etc. have been earning larger incomes and
amassing wealth.
10. MEASURES TO REDUCE INEQUALITY
Developing countries like Nepal are facing the problem of inequality. It creates
situation of conflict in the society. So, the reduction of inequality is the main
responsibility of the government of Nepal. The measures to reduce inequality are as
follows:
• Education to all: A quality education helps people in developing skills needed
to perform challenging jobs, so it helps people get employed and earn for their
living. Therefore the government should invest in the education sector and make
education a public good.
• Implementation of Progressive Taxation: Progressive taxation is an important
instrument in reduction income inequalities. The government should collect
substantial amount in the form of tax from rich and spend in favour of poor to
minimize the inequality.
11. • Social Securities: Social security measures for the labourers are considered
as an important step towards reduction of income inequalities. Hence, there
should be provision of adequate social securities like provident fund, pension
and other facilities to the labourers. It will improve the economic condition of
laborers, Similarly, government should provide social security like allowances
to disabled, old aged, widow people who are unable to work. As a result, it will
bring economic equality in the country.
• Price Policy: It is an undeniable fact that continuous rise in price level has
adversely affected the income of the masses, and increased profit margins of
the producers and distributors. As a result income inequality increases. The
government should so intervene in commodity market as to influence both
the pattern of output and relative prices through taxes and subsidies on
domestic production and consumption, tariffs and subsidies on exports and
imports
12. • Tax and benefit system: Governments can intervene to promote equity, and
reduce inequality and poverty, through the tax and benefits system. This
means employing a progressive tax and benefits system which takes
proportionately more tax from those on higher levels of income, and
redistributes welfare benefits to those on lower incomes.
• Equal access in services and opportunities: There is no equal access in
enough services and opportunities to the people. Therefore, all people have
no equal opportunities to uplift their economic condition. Those people who
are able to get better education and training, they are able to get better job
with higher salary. People who born in poor families, they have no
opportunities for better educations and training. As a result, they get low paid
job or remains unemployed. It further widens the inequality. Therefore,
government should provide equal access in services, training and
opportunities to all classes of people. As a result, all people get equal
opportunities in each and every field of the economy. It will provide equal
opportunities to uplift life. It will reduce inequality.
13. • Control high population growth: There is high population growth among
the poor. They have limited resources or income or assets. It leads to
inequality. Therefore, control of high population growth is necessary to
reduce inequality. High population growth can be controlled by providing
employment opportunities to women, spreading education, providing means
of family planning to the married couples, spreading population education,
etc.
• Employment opportunities: Problem of economic inequality can be solved
by creating the employment opportunities in both rural and urban areas. To
provide employment opportunities to the unskilled labour in rural areas, -
suitable public work programs should be designed and organized. As regards,
educated unemployed workers, emphasis should be given an labour intensive
industrialization. This requires professional training, financial helps from
bank and financial institutions and facilities for raw material supplies and
marketing
