Rich and poor

PUBLISHED : Wednesday, 17 September, 1997, 12:00am
UPDATED : Wednesday, 17 September, 1997, 12:00am

The world which warmly embraced the 'Big Bang' global market philosophy during the 1980s has had time to take stock. Many rich nations and prominent economists remain disciples of the idea that the market must always be put first, and will produce the best system. But the ranks of critics concerned about the growing gap between rich and poor - both as individuals and as nations - are growing, and have been given new prominence by the latest annual report from the United Nations Conference on Trade and Development (Unctad).

Concern about income inequalities has also been in the news recently in Hong Kong. Welfare groups worry about the growing gap. What is at issue is the 'trickle down' theory which asserted that the benefits of increasing affluence would find their way from top to bottom of society. The trouble now is that the stream of wealth appears dammed near its source, never reaching those most in need.

In 1965, the average gross national product per capita for the richest 20 per cent of the world population was 30 times that of the poorest. This had doubled by 1990. The difference in income between the seven richest and seven poorest countries had risen from 20 to 39 times by 1995.

For all the undoubted strengths of the free market, and the benefits which have flowed from an increasingly integrated global economy, it is hard not to be concerned by the 160 million malnourished children, and the report that 1.3 billion people live on less than US$1 a day.

This may be seen as the inevitable outcome of a system which has tended to lionise the profit motive as an end in itself. Trading in existing assets is too easily favoured over wealth creation. Even the middle class is said to be in decline in industrialised nations because of job and income insecurity.

It is vital free trade is safeguarded, and preferably widened. But at the same time developing countries need to be able to proceed at their own pace. In some cases, this may involve debt relief. Providing this for the 20 poorest countries would amount to one quarter of the cost of Chek Lap Kok airport. The globalising free trade sums may be right, but the values behind them may, equally, need examination.