Introduction
Inequality has been a feature of human civilization and for centuries, there has been the very rich and the very poor. However, modern day society has strived to do away with inequality with an ideal society characterized by equality being envisioned. These ideals have failed to be realized and inequality continues to be rife in the world.
The Organization for Economic Cooperation and Development (2008) documents that the gap between the very rich and the very poor has in fact widened over the last few decades. This inequality is not limited to any country and it affects the developed and developing nations alike.
This paper will argue that there will never be equality in the world; there will always be very rich and very poor people. To reinforce this assertion, a review of inequality in the USA and Nigeria will be done. Inequality that exists with regards to aspects such as education, health, and access to resources will be reviewed.
Inequality in the USA and Nigeria
Both the USA which is a developed country and Nigeria which is a developing country exhibit high levels of income inequality. The OECD (2008) ranks the United States as one of the countries whose economic prosperity has resulted in an even more increased gap between the very rich and the very poor. Oluwatayo (2008) on the other hand asserts that there is a high level of income inequality in low income Nigeria. There are various reasons for this wide income gap in these two countries.
Technological advances have played a part in raising inequality levels in both the USA and Nigeria. Due to technological advances, there has been the increase in technology which has resulted in some workers being laid off as they are replaced by machines which are more efficient.
The majority of these workers are low-skilled which means that they are unlikely to find better jobs. The US is mostly affected by this since many companies seek to automate their processes so as to increase productivity and reduce cost (Ashby& Sobel 2007). Even so, Nigeria also has the same problems since industries in the country are also modernizing and automating many of their tasks.
Another cause of inequality is the lack of access to credit facilities by the poor. In the USA, a person has to have a good credit rating so as to obtain financial assistance from banking institutes. Having property which can be used as collateral also helps in the acquisition of a loan.
The poor are mostly mired in debt which means that their credit rating is bad and they also lack collateral. They are therefore unable to acquire the loans that would act as capital for business. The poor in Nigeria are also faced with the same lack of access to finances.
A study by Oluwatayo (2008) revealed that the poor in Nigeria, who were most practiced subsistence farming, lacked access to credit facilities and hence could not increase their production scales to earn a better living. The rich on the other hand had good credit ratings and could access credit facilities and obtain the necessary capital to undertake profitable ventures.
Education is a major cause of income inequality both in developing and developed nations. This is because of the high wage difference between people with high education and those with low education. In the last few decades, there has education has become a major differentiating factor and graduates earn more than people with high school diplomas even if they are performing similar jobs (Keller 2010).
Since only a small part of the population pursues higher education, the income gap is widened due to education. Oluwatayo (2008) states that in Nigeria, the people with higher literacy levels earn significantly more than the poor who manage to earn meager income. The rising unemployment rates that are currently being experienced have also increase inequality. The OECD (2008) reveals that the employment rates are going lower for people with less education while the well educated people maintain employment with higher pays being given.
Inequality is also a major determinant of access to resources since it results in social stratification. Social stratification causes the rich members of the society to have more powers and freedom than the poor members of the society (Hauser & Becker 2000). Membership to the higher class enables one to have access to resources which make it easier for them to prosper. The poor lack such social capital and without it, they have to put in tremendous effort if they hope to succeed.
Effects of Colonization
Colonization is a major factor in income inequality for Nigeria and many other countries that are former colonies. Kayizzi-Mugerwa (2001) asserts that in former colonies, there is a huge gap between the rural and urban population which is a factor of colonial rule more than anything else.
The people in the urban centers enjoyed educational facilities and development programmes that the colonial rulers placed at the urban centers. The rural population did not enjoy the same and therefore continues to lurk behind even to date. After independence, many colonies exhibited low social and economic attainment and poor development strategies adopted by the new government’s only aggravated the situation.
Colonial rule also brought about large inequalities in terms of land ownership. Frankema (2006) states that in Latin America, the bi-polar land distribution established during colonial rule continues to be the basis of income inequality. In addition to this, many colonial powers took land from the natives and used it for production purposes or to reward people who were in favor of the colonizers.
This created a group of landowning rich and the landless poor. Frankema (2006, p.4) demonstrates that “the poor need collateral assets, of which land is of prime importance, to get access to the capital market”. Without this collateral, the landless poor cannot gain capital and hence become productive.
Consequences of Inequality
Most of the outcomes of the huge inequality experienced all over the world are negative. Income inequality has a negative impact on the economy of a country since it leads to the adoption of policies which are aimed at redistributing resources. These policies include higher taxation and little or no incentives for investors.
Fuad and Oded (2011) declare that increasing inequality substantially reduces the economic growth of a country. Inequality also breeds discontent and this may lead to political instability in a country. This is the case in Nigeria where the poor demand for a share of the country’s vast oil resources.
Inequality also leads to heightened levels of crime in a country. This is because of the frustration that the poor feel and the subsequent animosity they demonstrate towards the richer members of society. Keller (2010) suggests that the poor lack any real incentives to engage in the legal labor market due to meager pay. Since they have to make ends meet, some of them engage in crime and this action negatively affect the entire society.
Income inequality also affects the quality of life of an individual. Neckerman (2004) states that inequality is a major determinant of health since the rich have greater access to health care facilities than the poor. In the USA, the possession of health insurance is necessary for one to access some health services.
While the very rich can easily afford insurance, most of the poor cannot which means that health care is unattainable for them. In addition to this, the very poor at predisposed to engage in unhealthy lifestyles which increase their risks for conditions such as high blood pressure and hearth diseases. Sandro et al (2011, p.1456) highlight that in the year 2000, approximately 119000 deaths in the USA could be attributed to income inequality.
Conclusion
Equality remains an unachievable goal in the world despites efforts to bring about equality. This paper set out to argue that equality will never be achieved and there will always be very rich and very poor people. This paper has shown that there are some common factors in inequality in developed and developing nations.
These inequalities universally result in unequal access to political, economic and social resources. Even though achieving complete equality is unachievable, lessening the gap between the very rich and the very poor should be aimed at so as to bring about social and economic prosperity to many.
References
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Frankema, EH 2006, The Colonial Origins of Inequality: The Causes and Consequences of Land Distribution, Groningen Growth and Development Centre University of Groningen.
Fuad, H & Oded, I 2011, Income inequality, economic growth, and the distribution of income gains: evidence from the United States, Journal of Regional Science, Vol. 51 Issue 3, p518-539.
Hauser, R & Becker, I 2000, The personal distribution of income in an international perspective, Springer, New York.
Kayizzi-Mugerwa, S 2001, Globalization, growth and income inequality: The African experience, OECD Development Centre, Working Paper No. 186.
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