Inequalities have rendered global economy more fragile: UNCTAD
Published: Sep 23, 2020
By TIOLCORPLAWS News Service
GENEVA, SEPT 23, 2020: THE world should tackle hyper-inequality to build back a better global economy from the devastation caused by the coronavirus pandemic, according to UNCTAD's Trade and Development Report 2020.
Of all the pre-existing conditions exposed by the COVID-19 shock, hyper-inequality - the product of four decades of wage repression (see Figure) - poses the biggest threat.
The report warns that talk of a "K"-shaped recovery is already pointing to the prospect of an even more unequal future, with a "v-shaped" recovery for the wealthy and a struggle for everyone else.
Building on long-standing research, UNCTAD worries that polarization is now hard-wired into the hyperglobalized growth model in both developed and developing countries.
It argues that tackling this problem must go beyond calls to "leave no one behind" and look instead at how policy choices pick winners and threaten to block a more inclusive recovery.
The global financial crisis revealed the extent to which the financial industry had come to dominate policy and business decisions while fuelling unreliable and unsustainable growth.
"Change was promptly promised but the rules and practices governing the distribution of income and economic power have remained largely the same," said Richard Kozul-Wright, UNCTAD's director of the division on globalization and development strategies.
According to the report, the channelling of almost a trillion dollars a year by S&P companies to stock buybacks, rather than investment, is a measure of just how rigged the rules of the game have become, while the prevailing policy mix has favoured rising asset prices only adding to the problem.
