Social stratification, inequality, injustice, and poverty are considered to be fundamental obstacles to a country’s economic and social growth. Both developing and developed nations still suffer from these issues to a great extent; therefore, forming appropriate policy-based solutions is essential. However, the well-considered response is only possible after a thorough analysis of modern financial and social conditions. Thus, comprehending the causes of poverty and inequalities, understanding the role of globalization, and learning various theoretical arguments can lead to the establishment of appropriate policy recommendations.
Causes of Poverty and Inequality
Inequality in the United States appears to be the result of political decisions that have empowered particular segments of the population since the 1970s. Intellectual property rights in particular stand out, as they allow a wide range of companies to create powerful monopolies and limit competition. This has led to a steady increase in prices for consumers (Reich, 2015). The softening of antitrust laws has only augmented the consolidation of certain companies in different fields. These outcomes solidify particular providers of broadband internet and pharmaceuticals, among others, into de facto regional monopolies. As a result, new competition is limited, lessening the chances of novel companies to emerge while simultaneously allowing for higher prices. The reduction in the actual quality of some services, such as broadband internet, is another side effect of the lack of regulations and restrictions (Reich, 2015). These issues are of a political origin because of the prevalence of lobbying in the United States system, where the financial resources of large companies can be concentrated. This leads to a widening of inequality, as the top earners use their financial advantages to push for legislation that benefits them.
Poverty, while often linked to inequality, is not always the result of widening gaps between economic classes, instead, it can increase due to disadvantage laws and regulations. It is vital to understand the relativism of poverty, as economic inequality means significantly different living standards around the world. In the United States, poverty can at times be seen as the result of job insecurity and the steady weakening of unions (Reich, 2015). Without collective bargaining, employers do not need to increase salaries and can often terminate employment at will. Furthermore, there has been a shift away from working-class issues among decision-makers, with new focuses on environmentalism and civil liberties. As a result, the resources and attention of lobbying groups and politicians have not been on the most vulnerable segment of society (Hacker & Pierson, 2010). Consequently, when the country undergoes economic shocks, elements of the working class are put at risk of poverty. Therefore, without adequate attention from decision-makers nor alternative methods of self-protection such as unions, poverty remains a reality for much lower class Americans.
Role of Globalization
First, to thoroughly understand the impact globalization might have on the state of poverty and inequality, one might fully comprehend the meaning behind the term. Although the concept can be interpreted in various ways, literature considers globalism to be a “state of the world involving networks of interdependence at multicontinental distances” (Keohane & Nye, 2000, p. 105). The connections between the countries transpire due to the development of trade and the overall impacts of shared knowledge, concepts, specialists, resources, commodities, and scientific information. Therefore, globalization occurs as a result of the expanding nature of globalism. For example, the financial crisis that happened in Thailand, in 1997, considerably impacted other Asian nations and subsequently the rest of the world (Keohane & Nye, 2000). Notably, regardless of the integrating nature of the concept, globalization and globalism do not lead to universal equality or comparable life-standards around the globe.
Distinctly, hundreds of millions in South Asia or Africa do not have access to the Internet or telephone, in comparison to individuals from North American states. Therefore, the process of globalization is followed by substantial gaps between wealthy nations and poor countries. Studies claim that describing globalization as a tool for development and poverty reduction might be faulty, as “It implies neither homogenization nor equity” (Keohane & Nye, 2000, p. 106). Thus, globalism is in no way a uniform term, as its manifestations can vary significantly from region to region. Additionally, internally, US citizens at the bottom of the income ladder are less likely to find employment, as corporations are looking for employees in developing countries, due to lower labor costs (Hunt & Colander, 2016). Overall, globalization does not impliedly address the issue with global poverty and inequality levels, and in some cases, only increases the separation.
Theoretical Arguments
Globalization allows firms to access labor around the world, leading to set up production in areas where the cost of workers is low. The creation of new jobs for predominantly low-skilled or unskilled workers has led to a steady reduction in poverty in places, including China and India (Hunt & Colander, 2016). This slowly helps narrow the income gap worldwide as more people in developing countries gain steady jobs. This is particularly visible in China, where wage growth has led to some companies shifting their production out of it and into new, developing nations. However, the outsourcing of manufacturing from the developing world to poorer countries has created inequality within those same states. The lower costs to corporations have led to an expansion in research and development, creating a process of creative destruction where low-skilled positions are automated (Hunt & Colander, 2016). As a result, both poverty and inequality within specific countries have expanded, as the lowest-skilled workers are replaced and can no longer find other jobs.
However, global trade creates opportunities for developing countries to export local goods at competitive prices, reflecting their lower manufacturing costs. Access to the global market allows for the creation of new jobs and better wages in developing states, with both reduced local poverty and international inequality (Hunt & Colander, 2016). However, the low prices of goods from developing nations put manufacturers from the developed world at a disadvantage, potentially leading to bankruptcy and loss of employment. In these cases, international trade can lead to a small increase in poverty when low-skilled workers lose their positions and are unable to find new jobs. Overall, the relationship between globalization, poverty, and inequality is mixed, as growth in one area leads to a reduction in another. However, overall, the more extreme poverty in the developing world is declining partly due to the explanation of new labor as a result of globalization.
Policy Remedies for Poverty and Inequality
Poverty and inequality resolution requires various innovative policies and strategies. The study suggests that one of the central steps to implement is the possible isolation of market dominance of particular actors (Chua, 2014). For example, the overall improvement of the educational system and training would enable disadvantaged people from various developing countries to enjoy the benefits of globalization similarly to the elites. Additionally, quota-based policies can be useful for some nations, as government-led incorporation of minorities into economic processes can initiate the path pointing to equality in the society (Chua, 2014). Thus, more people will be able to participate in various aspects of a globalized world, heading to consequent poverty reduction.
Two of the recommended policy solutions are not related to the traditional neoliberal understanding of economic processes. Instead, the empowerment of local communities through education and government-based support is the fundamental idea behind the propositions. The most appropriate way for countries to resolve the issues of inequalities is to address particular needs that minority groups might have. Therefore, fixing the problems, such as a lack of qualification, financial stability, basic needs, or education, will eventually enable them to flourish in a globalized world.
Lastly, inequality and poverty reduction have been the goals of many nations and generations; though, it is a time-consuming process. However, I believe that the implementation of policies related to the empowerment of local minority groups through education, training, and quotas might be a crucial initial measure. Certain government-officials tend to focus on the establishment of artificial jobs for low-skilled workers, which might be less effective than investing in training programs. The latter would subsequently lead to the establishment of more prominent high-skilled labor, economic growth, poverty elimination, and the eradication of some aspects of inequalities. Although it might not be realistic to anticipate the drastic transformation in the nearest future, governments should treat change as a long-term commitment.
Conclusion
In conclusion, the relationships between poverty, inequality, and globalization is mixed, while trending towards negative. While interconnectedness has created new jobs and steadily increasing living standards in some places, the replacement of low-skilled workers in the developed world has expanded poverty and inequality. Addressing the political causes of inequality, particularly the expansion of corporate resources in decision-making is vital to limit the widening gap between the rich and the poor.
References
Chua, A. (2014). A world on the edge.The Wilson Quarterly, 38(1), 30-51. Web.
Hacker, J., & Pierson, P. (2010). Winner-take-all politics: Inequality, political organization, and the rise of top income in the United States.Politics & Society, 38(2), 152-204. Web.
Hunt, E., & Colander, D. (2016). Social science: An introduction to the study of society (15th ed.). Routledge.
Keohane, R. O., & Nye, J. S. (2000). Globalization: What’s new? What’s not? (And so what?).Foreign Policy, (118), 104–119. Web.
Reich, R. (2015). The political roots of widening inequality.The American Prospect. Web.