Extreme disparity attack on democracy

The first task is to distinguish between what is feasible and what is not. For example, some have proposed including the provision of employment for all adults in the UN Millennium Development Goals' successor framework, which is to be unveiled in 2015. This is an impossible target. All economies of any reasonable size will have some unemployment. In fact, a limited amount of unemployment can help to promote development. To declare "employment" a right is to divest the word "right" of its meaning.

Next, there must be recognition that economies are complex and interconnected. Consider, for example, a government policy in which subsidies, funded with newly printed money, are handed out to residents of 1,000 villages. This will not necessarily be a boon for the economy as a whole. Injecting money might improve the living standards in the villages receiving the funds, but doing so may well drive up the cost of food throughout the country, causing residents of non-subsidized villages to fall into poverty. The macroeconomic impact of micro-interventions is an important reason why poverty has persisted, despite well-meaning interventions to combat it.

Another reason poverty endures is persistent - and, in many places, widening - inequality. The current level of global inequality is unconscionable. In 2013, the World Bank helped bring the term "shared prosperity" into everyday discourse by declaring, for the first time, that every society should make progress toward this goal its mission. To be sure, there will always be a certain amount of inequality in the world; in fact, as with unemployment, a limited amount is desirable as a driver of competition and growth. But the deep and pervasive inequality that exists today can only be condemned.

According to some back-of-the-envelope calculations, the wealth of the world's 50 richest people totals $1.5 trillion, equivalent to 175 percent of Indonesia's GDP, or a little more than Japan's foreign exchange reserves. If one assumes that this wealth yields 8 percent a year, the annual income of the world's 50 wealthiest people is close to the total income of the poorest 1 billion - in other words, those living below the poverty line.

This is a collective failure. We must consider policies and interventions to curb such extreme inequality. We must do this not only out of a sense of justice, but also because, in a world afflicted with such extreme disparities, the poorest residents lose their voice even when they have the right to vote. Extreme inequality is, ultimately, an assault on democracy.

The author, senior vice-president and chief economist of the World Bank, is professor of Economics at Cornell University.