The Dangers of Economic Inequality

Vikas Shah - November 16th 2010

Manchester Business School – Transforming Management - http://shah.tm.mbs.ac.uk

The Guardian, along with many major news agencies around the world have been
reporting the tragic story of how, "South African police chiefs have called for
residents of a township near Cape Town to help track down the "useless scoundrels"
who on Saturday killed a bride on honeymoon with her British husband. Anni
Dewani, 28, a Swedish-born engineer, who had been married for less than two weeks
to 31-year-old Shrien Dewani from Westbury-on-Trym, Bristol, was found murdered
in Cape Town's Khayelitsha township."

This is a horrific story, but one which is becoming increasingly common to see in
global newswires.

Non-conflict Armed Violence

Research by the Geneva Declaration Secretariat shows that, "...More than 740,000
men, women, and children die each year as a result of armed violence. By far the
largest aspect of the global burden of armed violence is the deaths and injuries that
occur in non-conflict or non-war settings. Countries such as South Africa, Jamaica,
and El Salvador suffer from extremely high recorded levels of homicide, with more
deaths each year than in many contemporary wars. Approximately 490,000 deaths
from homicide are estimated to have occurred in 2004." To put that in context, more
people than the entire population of the City of Manchester are conservatively
estimated to have been killed, every year, in non-conflict armed violence (which
refers to the intentional killing of one person, by another, outside the world of law
enforcement, war, and other conflict situations).

On the assumption (which I hope the reader holds as dear as I) that the (preventable)
loss of even one human life is unacceptable; here, we have a situation where many
hundreds of thousands of individuals die, needlessly, every year- for reasons which
are wholly preventable.

Violent Economics

In 2004, the World Health Organisation published a report into, "The economic
dimensions of interpersonal violence". Looking specifically at the economic factors
contributing to violent acts, the writers analysed a number of key studies citing:

Gonzales de Olarte & Llosa (1999) "poverty seems to be an aggravating factor in all
types of violence"

Unnithan & Whitt (1992) "inequality [was] a better predictor of violence than
economic development... Increasing inequality was found to predispose more to lethal
violence"

Kaplan et. al (1996) "...rates of homicides and violent crime were strongly associated
with income inequality. In addition, unemployment was found to be associated with
income inequality."
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Kawachi, Kennedy & Wilkinson (1999) "income inequality, as a measure of relative
depravation, was consistently associated with violent crimes."

Drawing paradigm from the world of terrorism- many of the world's leading thinkers
agree that extremism usually emerges in situations where the population have no
economic alternative. In this case, we see a similar picture- it is not simply the fact
that a populous is in poverty which acts the precursor to violence- but more so the
inequality which occurs. In Afghanistan, for example, there were clear cases of
insurgency increasing as the population became aggravated of the [alleged] wealth
being accumulated by the Karzai family while the majority of the population was left
starving.

As the Geneva Declaration Secretariat confirm, "Analysis of homicide rates by level of

human development reveals the concentration of violent deaths in countries marked
by a lack of resources and poverty. The homicide rate in countries with low levels of
human development is more than three times higher than the average rate in
countries with high or medium levels of human development. This should come as no
surprise: crime rarely occurs in isolation and is one of a range of co-factors
associated with underdevelopment. High levels of income inequality, rapid
urbanization, a high share of unemployed youth in the population, poorly resourced
criminal justice systems, and the proliferation of firearms are all associated with both
crime and low levels of development."

This is Preventable

Economic development is one of the major tools we have to improve global security.
This development takes many forms, from the provision of healthcare and education,
to the development of industry, infrastructure and agriculture; along with the skills of
peace-builders and NGO's in beginning the process of building bridges in
communities, where otherwise there were walls. These may sound like huge goals,
but they are achievable. Hunger, for example, acts (understandably) as one of the
strongest psychological factors in one's own sense of poverty. Can hunger be
eliminated, "The United Nations estimates that it would take at least $30 billion per
year to solve the food crisis, mainly by boosting agricultural productivity in the
developing world. Over the decade that it would take to make sustainable
improvements in the lives of the 862 million undernourished people, that amounts to
$300 billion". To put that in context, it would cost over ten years, to eliminate
hunger, roughly 30% of what the UK government spent in one year to prop-up our
banking system. The net effect of the latter being a recession with healthy banks, the
net effect of the former being two billion people in the world who don't have to worry
about feeding themselves or their families. It doesn't take too much academic
examination to understand which would benefit society more? Even if we look at the
root causes of non-conflict armed violence; international drugs trade, criminal gangs,
ethno-religious conflict, and more- in all these cases, there are hundreds of studies by
the brightest minds in the world showing that by addressing the root economic causes
of these situations (alongside improvements in law-enforcement, and so forth)- they
can be resolved.

A Fitting Tribute

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For Anni Dewani, though, the economic rhetoric I have espoused here comes too late.
No amount of discussion will bring her back to her husband or family; and as the
guardian reports, "More than 600 people, many of them friends and family, have left
tributes to Anni Dewani on the Facebook site."

As someone who has, in their lifetime, been affected by violent crime (albeit not with
the resulting loss of life of someone close to me)- I can wholeheartedly empathise with
the sentiments of the Dewani family who will, with complete justification, feel intense
anger towards the individuals who have taken the life of a family member.

The problem occurs though, when anger turns to hate, and is used to build more walls;
and that transition does not take much to occur.

In Manchester, I work closely with a number of charities- one of them being "Mothers
Against Violence." Many of their members, are families who have had loved ones
taken away in preventable incidents (in the main, involving firearms). The members
of this charity have channelled the anger and loss they felt into a positive form; they
work not only with the families who have been affected by violence, but with the
individuals who have perpetrated the crimes, and the wider community- the aim being
to provide opportunities for younger people within communities to ensure they do not
fall into the same habits- and to ensure the community has an open dialogue to build
ties, and not walls. In many of these cases, their anecdotal evidence also supports that
most of these crimes occur in communities where severe inequality and lack of
economic opportunity exists.

At a local community level, organisations such as MAV (above) do great work to try
and build communities and resolve these problems, but at a global level this comes
down to us, as voters and participants in our 'advanced democracies' to rally our
leaders in business and politics to act on inequality- rather than spending trillions of
dollars on wars- providing equal opportunity is the best way we have of building a
safer and more secure future for the generations following us, to ensure they do not
have to endure the fear, pain and loss we have.

And that, I would argue, is the best tribute of all.