Why the Rich Keep Getting Richer and the Poor Struggle

 

The Wealth Gap Widens: Why the Rich Keep Getting Richer and the Poor Struggle

 

Introduction:

 

In recent decades, a striking trend has emerged in societies worldwide: the rich continue to amass wealth at an astonishing rate while the poor struggle to make ends meet. This growing wealth gap has raised concerns about economic inequality and its consequences. This article explores the factors that contribute to the rich becoming richer and the poor becoming poorer, shedding light on the challenges faced by the less fortunate.For three decades, the number of people living in extreme poverty— defined as those who live on less than $2.15 per person per day at 2017 purchasing power parity—was declining. But the trend was interrupted in 2020, when poverty rose due to the disruption caused by the COVID-19 crisis. The number of people in extreme poverty rose by 70 million to more than 700 million people. The global extreme poverty rate reached 9.3 percent, up from 8.4 percent in 2019.The recent crises have pushed the world further off track from the  global goal of ending extreme poverty by 2030. Given current trends, 574 million people—nearly 7 percent of the world’s population—will still be living on less than $2.15 a day in 2030. The world’s poorest people bore the steepest costs of the pandemic. Their income losses were twice as high as the world’s richest, and global inequality rose for the first time in decades. The richest 1% own almost half of the world's wealth, while the poorest half of the world own just 0.75% In fact, they have acquired nearly twice as much wealth in new money as the bottom 99% of the world's population.

According to the Economic Survey Of Nepal  2022/23, 15.1 per cent of the population is below the poverty line, and a majority of them living in rural areas of the country. Over 15 per cent of Nepal’s population is below the poverty line. This is an improvement from 2018/19 when 17.4 per cent of the population was below the poverty line..The poorest also faced large setbacks in health and education which, if left unaddressed by policy action, will have lasting consequences for their lifetime income prospects.

 

Unequal Distribution of Resources:

A significant reason behind the widening wealth gap is the unequal distribution of resources. The rich have access to a range of financial instruments, investment opportunities, and favorable tax policies that enable them to accumulate wealth more easily. On the other hand, the poor often lack the means to invest, have limited access to credit, and bear the burden of regressive taxation. This disparity in resource availability creates a cycle of wealth accumulation for the rich and hinders economic progress for the poor.

 

Education and Skills Gap:

Education plays a crucial role in socioeconomic mobility, but it remains an area of stark inequality. Wealthy individuals can afford quality education from prestigious institutions, providing them with valuable skills and networks that facilitate their path to success. In contrast, the poor often face inadequate educational resources, limited access to higher education, and fewer opportunities for skill development. This education and skills gap perpetuates the cycle of poverty, as the poor struggle to secure well-paying jobs and find themselves stuck in low-wage employment.

 

Inherited Wealth and Privilege:

Inherited wealth acts as a powerful catalyst in perpetuating the wealth disparity. Wealthy families can pass down assets, businesses, and valuable connections to future generations, creating a significant advantage from the start. Conversely, the lack of intergenerational wealth transfer puts the poor at a severe disadvantage, as they start with limited financial resources and fewer opportunities for upward mobility. Inherited privilege further compounds this inequality, widening the gap between the rich and the poor.

 

Globalization and Technological Advances:

While globalization and technological advancements have brought numerous benefits, they have also contributed to the wealth disparity. Globalization has led to the outsourcing of jobs, leaving many low-skilled workers unemployed or struggling with reduced wages. Technological progress, such as automation, has further replaced labor-intensive jobs, widening the income gap and leaving the less skilled and educated with limited employment options. The rich, however, benefit from globalization and technological advancements by capitalizing on investment opportunities and leveraging new technologies to expand their wealth.

 

Weak Labor Protections :

Over the years, labor protections have weakened, making it harder for workers to negotiate fair wages and secure decent working conditions. Wage stagnation, where wages fail to keep pace with inflation and productivity, exacerbates the financial challenges faced by the poor. In contrast, the rich often have the means to invest in businesses and assets, allowing them to benefit from the fruits of economic growth and secure higher returns on their investments.

 

Addressing the Issue:
 
To address the growing wealth gap and alleviate the struggles faced by the poor, several measures can be considered:
 

Education and Skills Development: Investing in quality education and vocational training for all, regardless of socioeconomic background, can empower individuals to compete in the job market and increase their earning potential.

 

Progressive Taxation: Implementing progressive tax policies ensures that the wealthy contribute a larger portion of their income to fund social programs and reduce income inequality.

 

Strengthening Labor Protections: Enforcing fair labor laws, protecting workers' rights, and ensuring a living wage can help uplift the poor and provide them with better economic opportunities.

 

Financial Inclusion and Access: Expanding access to financial services and credit for the poor can enable them to build assets, start businesses