Inequality and Its Discontents

Leaders around the world seem to be convinced that inequality and lack of broad participation in economic growth, if allowed to persist, will lead to social discord and even violence. But is inequality the real problem?

As Indian Prime Minister Manmohan Singh put it at the International Conference of Dalits and Minorities, held in New Delhi in December, “Even as absolute poverty may be reduced by growth, inequalities can get sharpened. This can be politically and socially extremely destabilizing.” So India must “take steps that reduce social and economic inequalities, without hurting the process of growth and without reducing the incentives for individual enterprise and creativity.”

Likewise, at the World Economic Forum in Davos in January, Brazilian President Luiz Inácio Lula da Silva said,“ It will be through economic growth, job generation, and income distribution that we will live in a peaceful world.” He then urged lower barriers to agricultural exports to help the poor in developing countries.

Such arguments have the ring of common sense. If people believe that they will share in overall economic growth, they should be more likely to support social peace. If they do not, unrest will become more likely.