‘Does globalization lead to global inequality and is it getting worse?’
Globalization is one of the most complex, conflict-laden and problematic concepts created by man. There are countless debates regarding the matter since the emergence of capitalism and there had been no clear consensus on what globalization really is and what its profound effects to the world are. Globalization refers to the economic term that denotes a large-scale acceleration of the interconnections in the global economy. The phenomena gave rise to open international markets and global corporations (as cited in and , ). Although many believed that globalization has worsened poverty and inequality in most third world countries, we can not refute the fact that it also improved living standards and has a net benefit for the poorest of the poor.
Though globalization connects people as never before, it also dramatically increased inequality between the nations. As puts it, the assets of the 200 riches people are greater than the combined income of more than 2 billion workers (2000). Mass poverty and unemployment, as results of globalization, constitutes the massive growth in inequality. The absolute gap in living standards and the ratio of average incomes in the richest countries compared to that of the most developing countries has continued to rise. In fact, the United States, the richest country in the world, documented more than 60 million poor where only 1 per cent of the population owns 39 per cent of the country’s wealth (, 1998).
Threatening workers from unfair competition that are enabled by overseas sweatshops, specially the presence of children in the workplace, is another dark side of the international economy. While overseas investments are viewed as a process of taking advantage of the low labor costs, globalization also freezes multinational corporations (MNCs) in home countries causing employee turnovers and lay-offs (, 2003, ). Evidently, globalization is a clear violation of the workers’ rights as governments accept foreign investors without realizing that working citizens will be the most affected. Structural adjustment programs also cuts costs in exchange for longer work hours and restriction of labour union participation that leads to exploitation of foreign markets for greater profits. Globalization diluted the responsibility of the capital owners, consumed the resources of the host country and foreign companies are not providing any substitute to the affected people (, 2006).
Anti-globalists also argued that most individuals making decisions regarding allocation of resources that drives globalization and economic growth overlooked the importance of poverty and distribution. The concept of poverty has two central meanings: absolute standard of living and income gaps. A relative causality between poverty and inequality and globalization (, 2005, ). The possibility of the exacerbation of real income inequality gives questions to sustainable living. Globalization raises concerns of compensation received by low-skilled, low-waged workers compared to that of high-skilled workers. The take home pay of those who are at the lower end of the income distribution will only continue to decline, not to mention taxes and other individual liabilities (, 2007). Since job retrainings are costly, the quality of labor conditions suffer as global competition jeopardizes the comparative advantage of the home country workers while elevating the skills of host country workers.
To contradict, claims four positive effects of geo-economic expansions: reallocation of resources, greater economies of scale, increased competition and transfer of technologies. Trade allows counties to become wealthier through concentrating resources on production of goods and services. In effect, local currency will be strengthened while also satisfying domestic consumption needs. In so doing, labor will be more efficient and jobs will be created. Production expansion beyond domestic needs and greater economies of scale are also possible in international economy. In addition, competition reduces the monopsony power of domestic companies and the monopoly powers of domestic employers. A raise in productivity and worker compensation through transfer of knowledge, technology and learning is also probable (2006, ).
Arguably, ’s arguments have many holes on it. Increased in purchasing power and production cannot be considered as solid evidences to accept international free trades. What is essential amongst globalization advantages is that a large part of the world population does not have any access to such benefits. The central question lies on the feasible fair deal with globalization division and an increased distribution of opportunities in a global order (, 2004).
There are no solid evidences that globalization either increase or reduce poverty and inequality neither. Or better yet, we could consider that all societies are unequal. Looking at it from different perspectives depends on the indicators chosen. Proponents of globalization believed that it could improve the conditions of the poor. Since poverty rested on most poor countries, it could also mean the upliftment of the economic conditions of these countries. As it narrow the gap between the rich and the poor, the national wealth will also be improved. The other way around claims that globalization is a clear red herring as it takes away the rights of the people of a decent life. Many opponents viewed globalization as an effective instrument to worsen the status of poor performing countries.
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