Gifts from the rich for world’s poor a boon or bane?
By Ana Nicolaci da Costa
LONDON: Huge gifts to charity from US billionaire Warren Buffett and others have won widespread praise, but some say the same economic process that helped earn those fortunes is leaving billions more in dire poverty.
Buffett pledged to give away a mammoth $37 billion of his fortune -- more than most African countries' GDP estimates for this year -- the bulk of which will go to the Bill and Melinda Gates Foundation.
But the size of the gift also highlights growing inequality in the distribution of wealth, even as world economic output doubled in the last 10 years.
“The way we have proceeded with globalization has exacerbated the inequalities because it has been very asymmetric,” said Joseph Stiglitz, a Nobel prize-winning economist and professor at Columbia University in New York.
“Capital moves more freely than labour and that means that the bargaining position of workers is disadvantaged relative to capital.”
Analysts say the huge numbers of workers coming into the market through globalization in China and India have driven down wages in rich countries by making their workforce compete with much cheaper labour elsewhere.
At the same time, the upside for wages in poor countries is capped by an infinite pool of labour to choose from.
This helps explain the numbers in the 2005 UN Human Development Report, which show the richest 50 individuals in the world have a combined income greater than that of the poorest 416 million and that the unequal distribution of income worsened within many countries in the last 20 years.
To be sure, unfettered economic growth is not solely to blame for growing inequality.
Corrupt national governments help to keep nearly half of Africa's people below the poverty line and inequality rampant in Latin America despite two decades of economic reforms.
Yet even emerging economic powerhouses such as India and China -- whose impressive growth rates have helped lift thousands out of poverty -- are still haunted by widening wealth gaps.—Reuters
