In rich and powerful nations like the United States, many would assume that issues of poverty and unequal wealth distribution were simply nonexistent, right? Many would be wrong.
A new report released by the World Economic Forum on Jan. 16 showed that, while the U.S. is one of the wealthiest nations in the world, it’s also one of the most unequal, coming in at No. 23 out of 30 developed nations for inequality, according to the report.
The forum ranked the world’s developed countries using a benchmark called the “inclusive development index,” which factors in statistics on income, health, poverty and sustainability, the publication reported. However, when it came to the WEF’s “inclusion category” — which measures distribution of wealth, income and poverty levels — the U.S. performed the worst, highlighting its long-standing issues with wealth concentration.
The stark earnings gap between Black and white Americans also is a growing problem in the U.S., with the disparities widening year by year. A study from the Institute of Women’s Policy Research in 2016 showed that Black Americans and Latinos (both male and female) lagged behind in weekly wage earnings compared to their counterparts. For instance, Black and Hispanic workers had their weekly wages decrease in 2015, while workers of other races saw their weekly earnings nearly double.
When comparing Black and white economic wealth, study after study has shown that Black Americans fall behind in this area as well because they simply don’t earn as much. In 2016, researchers from the Corporation for Enterprise Development and the Institute for Policy Studies examined the growing racial wealth gap and found that it would take the average Black family a lengthy 228 years just to accrue the wealth of today’s average white family. That’s because, over the past 30 years, the wealth of white families ballooned 84 percent — three times the rate of economic growth for Black households.
Institutional racism has played a role in the widening disparity, as researchers highlighted the wealth-building policies that have consistently given white families financial advantages over Black ones. Such policies have exacerbated America’s poor distribution of wealth and have further slowed the upward mobility of African-Americans on the economic ladder.
“If the past 30 years were to repeat, the next three decades would see the average wealth of White households increase by over $18,000 per year, while Latino and Black households would see their respective wealth increase by about $2,250 and $750 per year,” the study read.
Moreover, the WEF report pointed to America’s low marks in providing its citizens with social protections, or “safety nets,” employment and adequate labor compensation. Government programs to assist low-income Americans are often looked down upon in this country and now face huge rollbacks as President Donald Trump and his administration take office. Citizens already are fighting to make a living wage, as the $7.25-per-hour minimum wage in place in most states leaves many families straddling the poverty line.
The U.S. was similar to countries like Brazil, Japan, Nigeria and others in that its inclusive-development rankings paled in comparison to its GDP-per-capita rankings, the analysis showed. The “Land of Opportunity” had the greatest gap between the two measures, indicating that its economic prosperity wasn’t being shared among the nation’s middle and lower socioeconomic classes.
” … 51 percent of the 103 countries for which these data are available saw their IDI scores decline over the past five years, attesting to the legitimacy of public concern and challenge facing policymakers regarding the difficulty of translating economic growth into broad social progress,” the report read. “In 42 percent of countries, the IDI decreased even as GDP per capita increased. In over 75 percent of economies, wealth inequality was a chief culprit.”
The WEF analysis comes on the heels of a similar report published by nonprofit Oxfam on Jan. 16 showing that eight of the world’s richest people have as much combined wealth as half of the entire human race. Oxfam does these calculations every year and published its results just in time for the World Economic Forum in Davos, Switzerland, this week, according to The New York Times.
So how is it that America is one of the richest nations in the world, yet its wealth distribution is still so uneven?
Jack Ma, founder of leading consumer and business e-commerce website Alibaba, gave an interesting theory on Jan. 18 about where the U.S. had gone wrong economically in the past 30 years. Ma, who established his company as a means to connect Chinese manufacturers with buyers overseas, asserted that the U.S. had spent way too much time and energy focused on globalization, international wars and Wall Street.
“American international companies made millions and millions of dollars from globalization,” he said at the World Economic Forum. “In the past 30 years, America had 13 wars spending $2 trillion. [But] no matter how good your strategy is, you’re supposed to spend money on your own people.”
“The money [went] to Wall Street,” Ma added. “Then what happened? Year 2008 wiped out $19.2 trillion in U.S. income. … What if the money was spent on the Midwest of the United States?”
Liberals have long criticized the U.S.’s prioritization of military spending over funding for government programs, while conservatives have argued that globalization and international business are good for growing the economy. Still, there’s much debate over what the nation can do to ensure that economic prosperity is enjoyed by Americans.
Ma concluded by criticizing the U.S. for its concerning rate of income inequality, saying, “You did not distribute the money in the proper way.”