Prominent Economists Rally for Urgent Action to Tackle “Crisis of Extreme Inequality”

Over 230 Economists and Political Figures have jointly urged the United Nations and the World Bank to intensify their efforts in addressing the growing disparity between the wealthy and impoverished worldwide, asserting that numerous governments are neglecting this issue.

In a publicly released letter directed towards UN Secretary-General António Guterres and World Bank President Ajay Banga, the collective demanded more ambitious objectives to alleviate inequality and emphasized the necessity for improved assessment of income and wealth gaps.

According to the letter, there has been a significant simultaneous increase in extreme poverty and extreme wealth, a trend not observed in the past 25 years. The letter highlights that the wealthiest 10% of the global population presently claims 52% of the global income, while the poorest 50% earns only 8.5% of it.

“We are presented with a crucial opportunity this summer to strengthen our determination in bridging this profound divide and send a resolute message to people worldwide that the institutions meant to serve them are fully committed to resolving the crisis of extreme inequality.”

Among the signatories are former UN Secretary-General Ban Ki-moon, former Prime Minister of New Zealand Helen Clark, and renowned economists Joseph Stiglitz, Jayati Ghosh, and Thomas Piketty.

The call for action comes at a time when Russia has withdrawn from a significant UN-brokered agreement that permitted the export of grain from Ukraine via the Black Sea. The collapse of this pact poses a threat of soaring global food prices and the potential to push millions more into hunger.

In a televised statement on Monday, Guterres remarked, “Hundreds of millions of people are confronted with hunger, while consumers are grappling with a worldwide crisis of soaring living costs, and they will bear the consequences.”

Guterres acknowledged that the agreement, established in July of the previous year, played a significant role in reducing food prices by more than 23% since Russia’s full-scale invasion of Ukraine in February 2022, which triggered a surge in energy and food costs.

Among the 17 UN Sustainable Development Goals adopted by most governments in 2015, one of the objectives was to reduce inequality by 2030. However, after five years, global inequality, measured by the disparity in average incomes between countries, experienced the largest annual increase in three decades, primarily driven by the Covid-19 pandemic, as stated by the World Bank.

Furthermore, in October of the previous year, the global financial institution highlighted that progress in reducing extreme poverty had come to a standstill. In April, the UN also noted that the world was significantly off track in achieving the Sustainable Development Goals, which encompass targets related to hunger, poverty, health, education, and climate.

The letter released on Monday emphasized that the goal of reducing inequality has largely been disregarded. It further stated, “We are aware that high inequality undermines all our social and environmental objectives… Without a significant reduction in inequality, the simultaneous goals of eradicating poverty and mitigating climate change will be in direct conflict.”

The letter highlighted that the World Bank and the UN hold a unique position to provide the much-needed rallying cry for a reduction in inequality, which the divided world urgently requires today. The signatories urged both institutions to seize this opportunity and support more robust goals.

A spokesperson for the World Bank responded positively to the ideas presented in the letter. The spokesperson stated, “We acknowledge the need for greater efforts in addressing inequality and improving progress measurement.” This statement was shared with CNN.

A meeting scheduled at the UN headquarters in New York on Tuesday will witness the launch of a “call to action” on global inequality by a coalition comprising organizations such as Oxfam and UNAIDS. Government representatives are expected to attend this gathering.