Inequality of income is a complex problem found in most of the world, but one key factor of its understanding that needs to be acknowledges is; its genesis is completely different from system to system, country to country. With this in mind, finding any reliable, universal solution to reducing income inequality is not that easy.

Income inequality can be considered an economic disease, able to spread in any economy, at any time, but with the initial contamination taking root in many different cultural, political, and individual wrangles that have yet to be uncovered.

Economists, policymakers, and leaders around the world interpret the problem of income inequality from many different angles. In a broader perspective, it is viewed as the ill-effects of capitalism or the failure of the state to socialize its excess. Indeed, as we go further in our quest to find the roots and origins, we find a bubble of income inequality so large that its shadows are visible in China, India, Europe, and of course, the United States.

One popular factor closely associated with income inequality is education. At face value, it seems rather plausible to believe that people educated from world-class, top-tier universities and elite colleges will have an edge over others in influence, power, and riches.

Another line of thinking which articulates reason for differences between the rich and the poor is distribution of wealth. For example, in 2001, 10 percent of the American population held almost 71 percent of all the wealth in the U.S., and nearly 60 percent of the population held just close to 5 percent of the wealth. Further, it showed a distorted difference in wages between CEOs and the average worker. In 1970, CEOs made 39 times more than the average worker. In the 2001, that number had inflated exponentially and CEOs were now making more than 1,039 times more.

In India, income inequality has almost doubled in the last two decades. The top ten percent of wage earners now make 12 times more than the bottom 10 percent in the 1990s. Further, there is evidence of growing concentration of wealth among the elite. The consumption of top 20 percent of households grew with almost 3 percent per year in 2000 compared to 2 percent in 1990s.

There are no hard-and-fast rules that can solve our current economic problems. Income inequality is a product of not just defective economic policy, but rather it is an amalgam of various socioeconomic, political, and cultural factors. It is a multifaceted problem, entrapping the whole of society, and it requires determination to reach its roots and perhaps broad-based scientific study before all people can rightfully earn what they can.

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The 21st century witnessed one of the most perilous and unethical alliances of mankind’s biggest foes: greed and capitalism. A system where the will or self interest emerges as a master of all human actions in the economic sphere.

There has been a change in the way organisations do businesses and there has been a change in the way businesses are being managed. With the passage of time, businesses have become more isolated from the basic idea of self-interest and more fascinated with profits, expanding their wealth based on what they see as most lucrative rather then on ethical foundations.

There is contamination of capitalism in every corner of the imagination, through the unscrupulous pursuit of profits, selfishness, and through an incorrect comprehension of the idea of economic freedom.

It is true that a farmer in the fertile English midland produces potatoes not to make consumers happy, but for his self-interest and survival. But it may also be true that if the farmer regularly exceeds his need, greed might lead to consumer concerns elsewhere, such as unjustified price movements or supply barriers.

Many illustrations, mathematically and not, can demonstrate how this system becomes contaminated. When capitalism was introduced it was hailed has a unique path to prosperity, opportunity, and more importantly, an end to inequality.

Over the years the urge to make money has killed morality. Now we are trapped in a net which was earlier believed to be a liberator from material discomfort. Greed became epidemic at all levels of commercial existence in the world.

We are living in a society where wealth commands, and those who posses wealth command the world — often in a way that only benefits themselves. The ideals of capitalism to provide opportunities that benefit everybody are contaminated by self interest, and this transition from self-interest to greed in recent years proved fatal. If the bottom line of business is profits, then it is cultivating greed and no benefit at all.

The outburst of protests across the world primarily addressed income inequality and unethical behaviour on part of entrepreneurs. Over the years, the divide between rich and poor deepened in the US, according to the Congressional budget office. Between 1979 and 2007 the incomes of the top 1% grew by a whoping 275% average, and during the same time 60% of the American middle class income grew by just 40%.

Economist and Noble Laureate Paul Krugman wrote in the New York Times that the ‘we’re the 99%’ slogan correctly defines the issue as “being the middle class versus the elite.” He also noted that the movement debunked the wrong notion that rising inequality is “mainly about the well-educated doing better than the less educated.” True enough, economic injustice is not just about education, but to fully comprehend the deep-rooted cause requires organizes and collective study.

Under an Islamic economic system we will not find any of these character-based problems or growing inequality. The Islamic economic system is primarily based on Islamic laws and principles, while capitalism is constructed upon morality. Ideally, if something is based on religion there is no danger of greed and malice, because no religion has ever preached greed. The Islamic economic system considers greed as a grave sin, so if the system tried to bring in something which is based on faith, people might refrain from evil deeds. But unfortunately Islamic economic system is hardly prevalent.

What we need is to find ways to resolve inefficiencies of the system through religious methodologies rather than criticism of capitalism.

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Operation Homefront has announced that it will be able to fill unmet needs in specific local communities and nationwide as a result of $175,000 in special funding from Walmart. Four community grants will help meet basic needs like food assistance and rent in Seattle, WA; Fenton, MO; Charlotte, NC; and San Diego, CA, for all eligible service members.

On the national level, Operation Homefront is using the contribution to serve the families of National Guardsmen and Reservists for longer periods before and after active-duty deployments.

With deployments being altered as a result of the withdrawal from Iraq, Guardsmen and Reservists find themselves with lapses in income.  When they return home to an economy where the unemployment rate among recent veterans in the country is significantly higher than civilians, many find themselves without an income for extended periods of time.

“The holidays are over, but the needs of our military families continue,” said Jim Knotts, President and CEO of Operation Home front.  “The end of deployments to Iraq and quickening redeployments from Afghanistan means fewer service members are in harm’s way.

However, there are still many who are answering the call to duty.  Each one of them has a family back home.  Operation Home front is committed to continuing to help the families back home, even beyond the deployments to Afghanistan.”

Operation Home front, a national nonprofit with 24 local Chapters, provides emergency assistance – including food aid, rent and mortgage assistance, and help with car repairs – to active-duty service members of all branches.  The organization’s policy had been that National Guard and Reservist families were eligible for aid 30 days pre-deployment, during deployment, and 90 days post-deployment.

As a result of the Walmart grant, these families are now eligible for 60 days pre-deployment, during deployment, and 120 days post-deployment.  Based upon demand, Operation Homefront hopes to be able to expand the eligibility even longer.

“These citizen-soldiers and their families make the same sacrifices as our active-duty military, and also face the difficulty of transitioning in and out of service,” continued Knotts. “Walmart has been our steadfast partner in helping military families for years.  Walmart’s contribution will give these families a bit more breathing room, whether they are facing a financial shortfall while a loved-one is overseas, or trying to find work in today’s difficult job market.”

Image Courtesy of   lev radin / Shutterstock.com

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The World Economic Forum (WEF), based in Geneva, have been meeting up for their yearly convention on January 25 and will be concluding the exclusive gathering on January 29. The WEF was established in 1971 and is an independent international organization formally designed to improve the state of the world and organize annual meetings in Davos to discuss, debate, redefine, and rebut many of the world’s most pressing economic and political issues.

Every year in snow-covered Davos, WEF organizes a meeting hailed as a convergence of the elite, from the world of business, governance and academics engaged in finding strategic solutions to global economic problems and perhaps acting as a counsel of change.

This year, the theme is “The Great Transformation: Shaping New Models” which have be organized in the backdrop of eurozone fiscal fissure, tussle for reform and installation of democracy in the Arab world, slow and sensitive global growth, and lastly, the unending enigma of capitalistic disorder.

Assume the world is a stage. We have seen many despotic characters fall in the Arab world, and many characters emerging with ponderous levels of debt on their backs, casting a shadow of  imminent instability to the global economy. Also, the world witnessed a few Asian players taking the lead in the economic game, and there has been a transformation in the totality of the economic and political picture of the world.

Nonetheless, it will be intriguing to see at this juncture, as the European monetary union is on the verge of collapse due to fiscal disorder and as capitalism is brutally blamed for excessive greed, what transformation WEF can bring or advocate in Davos.

The co-efficient of congress 

Due to several fundamental changes occurring in the world, we have lost sight of where the world is going. Professor Klaus Schwab, the founder of WEF, stated that we clearly need new models for global, regional, and national business decision-making. According to him, new models are needed to account for the fundamental power shifts that have already happened and continue to take place. Additionally, the following are also needed:

1. New models are needed to acknowledge that we live together in a multicultural, multi-ethnic, and multi-religious world.
2. A model is needed to seriously address the social impact of globalization and new waves of technological innovation.
3. Another model is needed for job creation.

As correctly recognized by Professor Schwab, there is a need to review the distribution of power in the world, such as new shifts in balance of economic power from west to east, so there can be a greater variation in attendees. Countries which were not a part of this gathering in the past have been invited for the 2012 edition and this time around, the WEF is welcoming people from the Arab world, including Egyptian presidential candidates, the Tunisian prime minister, and the Libyan interim prime minister.

Speaking to journalists near the forum’s headquarters, Professor Schwab stated recently, “Capitalism, in its current form, has no place in the world around us.” Sharan Burrow, General Secretary of the International Trade Union Confederation said, “It is too optimistic to say we need a new system. The system is not working because of extraordinary greed, extraordinary inequality and attacks on workers’ rights that are leading to a crash in demand.”

Income inequality is rampant in the world today, according to a report published by the Organization for Economic Cooperation and Development (OCED). Wage gaps between the rich and the poor have reached their highest point in 30 years.

It has been observed that job creation is the key to eliminating the disparities in people’s incomes as well as sluggish growth rate and most importantly social unrest, so there is hope that the WEF meeting at Davos can inspire the reconstruction of a defunct system of capitalism by introducing far reaching changes.

Image Courtesy of   http://www.flickr.com/photos/worldeconomicforum/

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Senator Bernie Sanders delivered an epic speech on the Senate floor once again. Reminding Americans about the growing income gap, the Senator from Vermont urged President Obama to not shrink the debt on the backs of the middle class and working families.

In his 10,000 word speech, Sanders explained what causes deficits including war, Wall Street bailouts and tax breaks for the wealthiest Americans. He stated what I have been trying to say for months now. Why are we only trying to reduce the deficit by cutting spending? Sure, spending probably should be cut. But, we also need to increase revenue. It is basic mathematical skills.

Senator Sanders summed up his argument in a letter to the president. “As we address the issue of deficit reduction we must not ignore the painful economic reality of today — which is that the wealthiest people in our country and the largest corporations are doing phenomenally well while the middle class is collapsing and poverty is increasing. In fact, the United States today has, by far, the most unequal distribution of wealth and income of any major country on earth,” Sanders writes.

Sanders points out the importance of shared sacrifice to get out of our debt and reduce the federal deficit. “It is absolutely imperative, however, that as we go forward with deficit reduction we completely reject the Republican approach that demands savage cuts in desperately-needed programs for working families, the elderly, the sick, our children and the poor, while not asking the wealthiest among us to contribute one penny.”

He goes on to close his letter with a plea to Obama.”Mr. President, please listen to the overwhelming majority of the American people who believe that deficit reduction must be about shared sacrifice. The wealthiest Americans and the most profitable corporations in this country must pay their fair share. At least 50 percent of any deficit reduction package must come from revenue raised by ending tax breaks for the wealthy and eliminating tax loopholes that benefit large, profitable corporations and Wall Street financial institutions. A sensible deficit reduction package must also include significant cuts to unnecessary and wasteful Pentagon spending.

“Please do not yield to outrageous Republican demands that would greatly increase suffering for the weakest and most vulnerable members of our society. Now is the time to stand with the tens of millions of Americans who are struggling to survive economically, not with the millionaires and billionaires who have never had it so good.”

Sign or view the letter here.

Image Courtesy of  http://www.flickr.com/photos/arbayne/

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