In this era when we appear to be on the verge of a cyber war if not a direct battle with Russia on one side, the United States and its Western allies on the other and with hundreds of diplomats being expelled from each other’s countries, most analysts believe poverty alleviation or the gap between the rich and the poor is one of the root causes of this possible catastrophe.
Reports on Monday said Russia had launched a full-scale and ‘malicious’ cyber war against Western targets including nuclear sites, power stations, vital State institutions and other strategic areas apparently in retaliation against the attack on the Syrian regimes, chemical sites and laboratories.
In such an apocalyptic scenario with the predictably unpredictable US President Donald Trump having no clear-cut foreign or economic policy, other world leaders need to take urgent steps to address the crisis of widespread poverty.
According to the Bloomberg media company, the gap between the rich and the poor may be reaching its peak. It says the gap between the rich and the poor may fall if equity prices are curtailed, but millennials face ‘perfect storm’ that most won’t overcome. In a recent report on global wealth, Credit Suisse Group AG noted a shift away from equities and other securities to physical assets like property. That may be a harbinger of a return to the broad-based wealth creation that characterized the years before the 2008 financial crisis, when most levels of the society benefitted from economic growth, analysts at the Swiss Bank’s Research Institute said.
“In recent years, wealth inequality has trended upwards, propelled in part by the rising share of financial assets and a strengthening US dollar. These factors may be waning, but the impact on wealth inequality is unclear at present,” the study said.
Income inequality has become a hot-button issue since the crisis, with economists warning that it is polarizing society and stoking discontent. The value of financial assets, especially company securities, is probably a key factor because wealthier individuals hold a disproportionate share of their assets in this form. Wealth inequality can be expected to level off and perhaps fall if equity prices are curtailed in the years ahead, the analysts said.
The report says, disparities increased in the 12 months to mid-2017 even as the world became richer overall. Global wealth grew at a faster pace to $280 trillion, the highest since the bank began tracking it in 2000. The US accounted for more than half the increase. The growth was fuelled not only by widespread gains in equity markets but also substantial increases in non-financial assets, the report said. Average global wealth grew 4.9 per cent to a record $56,540 per adult, with the richest 1 per cent owning about half of all household wealth.
Millennials are doing less well than their parents at the same age after the capital losses of the crisis. Rising student debt in developed countries, tighter mortgage rules after 2008, higher house prices and less access to pensions are creating a “perfect storm” that is holding back wealth accumulation, the report says. “We expect only a minority of high achievers and those in high-demand sectors such as technology or finance to effectively overcome the ‘millennial disadvantage,”’ Credit Suisse Chairman Urs Rohner said in the report.
Global wealth rose 6.4 per cent, or by $16.7 trillion, faster than the 3.9 per cent growth rate of the previous 12-month period. In addition to the US, China, India and the euro currency countries also made major contributions. Switzerland, Australia and the US continue to occupy the top three positions in the ranking of wealth per adult, while Britain and Singapore dropped two notches to eighth and ninth place. North America and Europe together account for 64 per cent of the total household wealth, but just 17 per cent of the adult population. Median wealth fell in Africa, the Asia-Pacific and Latin America. “Our projections for 2022 suggest more pessimistic scenarios for the immediate years ahead,” the report said.
According to an Asian Development Bank report, in Sri Lanka, 6.7% of the population lived below the national poverty line in 2012. In Sri Lanka, the proportion of employed population below $1.90 purchasing power parity a day in 2013 is 4.2%. For every 1,000 babies born in Sri Lanka in 2015, 8 die before their first birthday.
In this situation, it is necessary for our national leaders -- political, religious or social -- to avoid wasteful expenditure, luxury and extravagance. They need to set an example to the people by turning back to ‘Alpechchathawaya’ or a simple and humble lifestyle so that they could save more and share more with those who are caught in a poverty trap manipulated by a self-centred and wicked society.