Inequality does indeed affect us all, both physically & mentally. It's foolish to say that the poor people are happier than wealthy people. No, poor people are not happy because they have to work that much more to earn just enough to fill theirs & their children's stomachs. Then, there are education costs, housing costs, utilities, healthcare costs, & now, even the clean, drinking water costs money. Add the social exclusivity of poor people & their families due to their poverty & the life of the poor person is just hellish.
To develop & provide sustainable resources to everyone equally, the wealthy & the poor, every country needs to invest in its infrastructure & economic policies. Although, the writer of this opinion post takes a simplistic view that if Netherlands can increase taxes, & also spread its tax net, to help out the vulnerable sections of its own populations, then everyone else can, it is pretty much impossible to do that without proper practice of faith & religion.
How will religion help in alleviating poverty & instituting equality among the populace? Netherlands is a small Scandinavian country with a much smaller population than many developing countries, like Pakistan, India, Brazil, Argentina, Nigeria, Kenya, Thailand etc. It is also a pretty much a homogeneous population, very much unlike many other developing countries around the world. Still, it's impossible to eradicate inequality because the rich control the political policy-making machine.
This eradication, or at least, alleviation of inequality, can only happen through ethical people in governments & policy-making area. Increasing taxes or spreading the tax net far & wide may help in increasing the government coffers but won't help much if that money is once again ends up in the pockets of rich executives & wealthy citizens of the country, or politicians loot that money. So, how does the general public ensure that government is full of good, ethical people? And even after identifying such honest people, can the general public act rationally enough to bring them to power & stick by them, while, they increase taxes on rich people, & use those taxes to upgrade the horrible situation the general public is living in? Remember, all this will take time, whereas, the general public will want to see substantial major changes as soon as possible.
Only ethics can help there, & ethics comes through religion. Ethical & religious people will need to become leaders & consider government coffers public money & hence, need to be spent on them.
Besides ethics & religion, huge changes in electoral policies need to be implemented. These kind of substantial changes to alleviate poverty & inequality need a good & long time frame, like a decade or more, easily. But, in most democracies, even when they are stable, a government & leader has about a few years, anywhere from 8 to 10 years to finish his / her work. Of course, that has to be done, if & when, opposition parties are silent & happy with what the government is doing (then, what's the point of the opposition party?). But, these fundamental economic & social changes can easily take couple of decades to meaningfully show any changes in the system.
So, inequality indeed adversely affects a major portion of the general populace, but alleviating or eradicating inequality requires a lot more work than simply changing the tax system (even that is huge work in itself).
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Inequality affects all of us. I live in Amsterdam, where house prices are now rising so sharply that ordinary, hard-working people don’t get a look-in. In London, it’s been like that for years. Whole neighbourhoods are unaffordable. Century-old football clubs have become the playthings of billionaires.
And the trend continues. More and more of the world’s wealth is in the hands of fewer and fewer people. I believe that tolerating this growing inequality will go down in history as humanity’s biggest mistake since communism.
People are essentially social animals. They can inspire each other, but they can also frustrate and discourage each other. And that’s what gross inequality does. It unravels the very fabric of our societies. It robs people of decent jobs and decent pay. And it robs them of their sense of purpose and self-worth.
In developing countries, the gap between rich and poor is far bigger. And it isn’t merely a technical issue, it is the result of political choices. Inequality is truly the mother of all crises. Whether it is conflict, climate change, economic stagnation or migration flows, inequality is always a major underlying cause.
Last autumn, the UN adopted new global goals. One of the main targets is to eradicate extreme poverty by 2030. To achieve that, economic growth must stay at the level it had for the past 10 years and its benefits must be far bigger than average for the poorest 40%.
The challenge we face is summed up in the slogan: “Leave no one behind”. The smartest policy here is to invest in the poorest of the poor. If we don’t, there is no way we will defeat extreme poverty by 2030. Which means we won’t generate the economic growth needed to achieve the other global goals. And we won’t reach our climate goals either.
“Leave no one behind” is also a moral imperative. In the past 25 years, globalisation has helped the world make spectacular progress on poverty. But at the same time we’ve allowed large groups to lag behind, and an even larger group to fall by the wayside completely. One of the main causes is exclusion. Whether it is on the basis of gender, religion, disability or sexual orientation, entire groups are being left out.
The mantra that no one should be left behind offers hope of a much-needed correction. It means managing globalisation properly. It means ending the unbridled power of elites. If realised, it would mean everyone could finally benefit from – and participate in – global development.
We know how to make this happen. Last year, we analysed Dutch policy to see how we could contribute more to inclusive development. It resulted in a plan of action worth €350m (£269m) that we are now putting into practice.
The plan consists of 20 measures across two areas. The first involves generating work and income for African women and young people with poor future prospects. The second consists of 10 measures to prompt robust political dialogue with developing countries on inclusive growth and development.
That dialogue is crucial, because resistance to change is often strongest precisely where change is needed most. In many poor countries, elites cling stubbornly to wealth and power until conflict, death and destruction are inevitable.
But the most powerful weapon against inequality is tax. Governments have to fight tax avoidance and tax evasion. My country has initiated the renegotiation of 23 tax treaties. We’ve proposed anti-abuse provisions to ensure that the Netherlands is no longer an attractive option for companies that want to avoid taxes. And we now forgo tax exemptions on goods and services provided under official development assistance.
At the same time, we need to broaden the tax base in the developing countries, which often rely on consumption taxes that make the poor pay a higher proportion of their income in tax than the rich. These countries need a progressive tax regime. And for that they need assistance in administering and collecting more complex forms of taxation, such as income and wealth taxes.
Taxation is not a popular subject for politicians. But it deserves far more attention. A recent study, by Jan-Emmanuel De Neve and Nattavudh Powdthavee, brings further proof that higher taxation equals more happiness.
For many developing countries, the tax burden is still 10-15% of gross domestic product. According to the UN, they’ll have to raise collection to about 20% just to be able to finance their share of the global goals. In Scandinavia, the average tax burden is more than 45%. I wish the same for every country! Provided the money is spent well, of course.
So we have our work cut out. To the super rich, I say: trickle-down is dead. To the elites and the kleptocrats in poor countries, I say: there’s a limit to how high you can build the gates around your communities. The time has come to pay. Make sure the payment is in taxes.
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