Yesterday was the United Nations Human Rights Day and the implications of increasing global income and wealth inequality are so destructive of those rights that as we approach the 2020 elections, all political parties should make some statement on this matter as it relates to Guyana. Building bridges and roads, talk about oil, the state of the sugar industry, focusing upon education and health care, etc. only make sense if they are contributing in an equitable manner to the welfare of the people, and the growth in inequality and the resultant poverty it breeds usually stymie such objectives.
According to the Economic Policy Institute, in the United States of America ‘CEO compensation has grown 940% since 1978 but that of the typical worker has risen only 12% during that time (https://www.epi.org/publication/ ceo-compensation-2018/). I have not yet tried to assess the situation in Guyana but a friend recently sent me an email claiming that after about 150 years of the oil business in Trinidad & Tobago, ‘over a period of four to five decades the incomes of the top one per cent have soared. Second, the incomes of middle-earners have stagnated. Third, wages have barely risen even though productivity has done so, meaning that an increasing share of GDP has gone to investors in the form of interest, dividends and capital gains, rather than to labour in the form of wages. Fourth, the rich have reinvested the fruits of their success, such that inequality of wealth (ie, the stock of assets less liabilities such as mortgage debt) has risen, too.’
National income and wealth disparity has been socially and politically destabilising. It has stimulated many right-wing political parties in Western Europe, and those who feel left behind to and vote for Britain to leave the European Union (https://voxeu.org/article /brexit-and-wage-inequality) and the likes of Donald Trump. Thus curbing inequality is today on the political agenda of most liberal democratic countries.
Political manifestos mean little in Guyana but the deleterious effects of inequality are so severe that its reduction should be a top priority. At the very least, the political elite should provide a clear analysis of the current level of inequality and poverty and in an annualised fashion that allows for annual monitoring, where it is expected to be by the next and perhaps future elections. Inequality adversely affects society in many fundamental ways but today, using recent studies (Boushey, Heather (2019) How Inequality Constricts Our Economy and What We Can Do about It, Harvard University Press) from which most of the information below has been taken, I will deal with how it affects the children of the poor, which alone makes its elimination a priority.
Studies that attempt to link measurable adult outcomes to identifiable differences in the childhood experiences of similar people have come to some startling conclusions. The ‘fetal origins hypothesis’ of David J Baker indicates that adult health outcomes have their origins in experiences in the womb, thus challenging the conventional belief that many disorders are primarily the result of bad genetics and bad lifestyles. He showed that under-nutrition during gestation increases likelihood of disease in adult life and that a child’s birth weight is not just an indicator of infant health but also a key predictor of future health. In particular, relationships were shown between birth weights and increased rates of cardiovascular disease and diabetes in later life. A later study found that a 10% increase in birth weight increases a child’s probability of graduating high school by about 1%, their earnings by about 1% and their height by .75 of a centimeter by age eighteen.
Children whose mothers had access to supplemental nutrition assistance programmes when they were in the womb were not only born healthier but the receipt of this nutrition has been linked to the child’s adult achievements in terms of health and economic well-being. Indeed, adults whose families received the benefit were significantly less likely to have a combination of obesity, high blood pressure, and diabetes. They were also 18% more likely to graduate from high school and less likely to need such benefit in their adult life. ‘The early investment in their well-being seemingly led to economic outcomes that meant fewer of them needed such support later on.’
The intention is not to argue that a child’s life is already determined in the womb. Sensible policies can address inequality and improve children’s outcomes by simply giving low-income families money, although how this money is used appears much more important. Economists studying the impact of income changes on low income children found that at least in the short run a US$1,000 increase received from the US federal tax credit had a causal effect on children’s performance in school, raising combined math and reading test scores by 6% of a standard deviation, and a similar study of the Canadian child-benefit programme also found positive effects.
There is compelling evidence that safety net programmes have lasting effects on the lives of poor children: ‘providing more assistance when children are young seems to lead to important improvements in where they end up in adulthood. The rich usually have access to prenatal care, sufficient food, high-quality teachers, books to read, extracurricular lessons to attend, etc, and these ‘circumstances affect children’s development in everything from their health and ability to focus at school to their educational opportunities—and these, in turn, affect their economic outcomes as adults.’
There is a lot more. For example, economically-related stress associated with lower incomes could lead to worse outcomes that stay with the children over time. But the data shows that policymakers could close the gaps created by economic inequality by safety net programmes e.g. nutrition support, cash payments, and free health care. Safety net programmes have lasting effects on the lives of poor children. ‘We’ve started to accumulate a body of evidence … that all points to the fact that providing more assistance when children are young seems to lead to important improvements in where they end up in adulthood.’
It is in this kind of context that the call is being made for politicians to pay more attention to income and wealth inequalities and for the Guyana Government to immediately begin to fulfill its commitment to the United Nations Sustainable Development Goals to: ‘Implement appropriate social protection systems and measures for all, including floors, and achieve substantial coverage of the poor and the vulnerable.’ This should be viewed as a first step towards a universal basic income aimed at helping to reverse the massive income and wealth inequalities that have now become a global threat.
