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Michael Porter 5 Forces

By dihessa Oct 20, 2013 1107 Words
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As Poverty Shrinks, Should We Worry About Inequality? – Kenneth Rapoza Forbes Magazine Thanks to global capitalism, there are much less poor people running around the world today than there was a decade ago. But there are also more rich people. Way more. And in rich countries, there are less middle class. So even as poverty is shrinking, inequality is rising among income levels as the new global plutocracy takes shape. Today, 43% live on less than $2 per day. Thirty years ago, around 75% of the developing world was living on that. Extreme poverty—those living on less than $1.25 per day —has declined even more. The share of those living hand-to-mouth is down to 22% in 2008 from 52% in 1981, according to World Bank’s head of poverty reduction, Otaviano Canuto. On Wednesday, Canuto wrote on the Bank’s Growth & Crisis blog that despite the substantial declines in global poverty, significant income disparities have not changed on a global level, due in part to increased income disparities in the emerging markets like China and Russia. Both governments have expressed concern over rising income inequality in those nations. Russia’s capital, Moscow, is home to more billionaires than New York and London, but one drive through Moscow and it is clear that this sort of wealth is not trickling down to the have-nots. Moscow looks old, except for the new steel towers being eructed by VTB Bank and others across the Moscow River. Canuto asks: so long as poverty is falling around the world, should we worry about income inequality? Considering he is the head of the Bank’s poverty reduction program, his answer should come as no surprise.  Canuto says, Even if incomes are growing for everyone, persistent inequality should concern policy makers when perceptions of ‘unfairness’ lead to political instability, when income inequality limits the potential for future growth and poverty reduction, and when inequality harms people’s opportunities and welfare.” I’m staring at a picture of Carlos Slim on the cover of the Forbes billionaire issue. The richest man in the world. And Sara Blakely, my age, a billionaire. And I’m looking at the Principality of Monaco ads and I’m getting jealous. Don’t these guys ever have less? One percent of a billion dollars is a $100 million in annual interest, people! That’s a lot of money.  I work very hard. I have my Masters Degree.  I’ve never cracked six figures, like most Americans. Where’s the nearest Occupy campsite? The inequality worries investors, too, not just the common riff-raff. “People are angry because they are seeing their living standards coming down and they are not going to stay quiet,” says Rudolph Riad Younes, managing director of Artio Global Management in New York City. Recent political and social developments show that the effects of income inequality manifest themselves in many countries around the world. So much so that inequality was a central theme at last year’s World Economic Forum. Countries known to be relatively egalitarian, like Sweden, Finland and Denmark, have all seen rises in income disparity between the classes, Canuto said. “It is also a concern in the U.K. and the U.S., where ‘occupy’ movements have coalesced in protest of income and wealth disparities between the top one percent and the remaining 99,” Canuto writes.  “And over the past year in the Arab world, the social unrest that swept the region serves, in part, as a reflection of deep injustices that result from little opportunity and hope for the youth.” A Citi Private Bank study last month showed that the world’s wealthy are most concerned with losing their riches to government policies designed to pacify the middle and lower incomes.

Let's Eradicate Poverty And Darn The Inequality – Tim Worstall Forbes Magazine Forgive me but I find it very difficult indeed to understand some people’s view of the world. To the point that I’m not entirely sure that I’m sharing the planet with people of the same species. The World Bank has just announced that poverty, real poverty this is, the bowl of lentils if you’re lucky each day sort of poverty, has been halved in recent years. And they float the thought that perhaps we should continue what we’re doing so that it can be eradicated. Hey, sounds like a plan to me. But there seem to people who disagree: Extreme global poverty could be eradicated by the end of the next decade under optimistic new targets unveiled by the World Bank that have divided development experts. The bank’s president, Jim Yong Kim, claimed signs of recovery in the global economy meant there was now an “opportunity to create a world free from the stain of poverty” by 2030. Who could actually argue against that? The idea that all humans should be getting three squares, a change of clothes and a roof over their heads? Apparently there are some: Critics accused the World Bank of being “very unambitious” and obsessed with economic growth rather tackling inequality after the leak of planning documents in March that were heavily focused on free market orthodoxy as the primary solution to global poverty. Well, if this free market stuff has been producing the desired reduction in poverty then why not do some more of it to reduce poverty further? Peter Chowla, a co-ordinator at the Bretton Woods Project, a campaign group set up to monitor the World Bank. “Talk of sharing the proceeds of growth is not the same as tackling inequality, which has soared in recent decades.” From my point of view there’s two problems with that. The first being that factually it is simply wrong. Global inequality, the only form that I can see it being just and righteous to complain about, has been falling. Precisely and exactly as a result of this reduction in poverty. The second, and I agree that this is a moral point, is, well, who cares? That there are children wondering whether there is a bowl of lentils today worries me. That there might be those who get ten such bowls as a result of all getting one does not. And it most certainly does not worry me that the solution to all having such a bowl is that some can have many bowls. Apparently Mr. Chowla disagrees. Bully for Mr. Chowla, given that I am restricted to being polite about it all here at Forbes. Darn the inequality and let’s get poverty beaten first, eh? Let that globalisation, those free markets, rip and we can worry about inequality of bowls after everyone has one.

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