How economic inequality harms societies

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We can improve the real quality of human life by reducing the differences in incomes between us, says Richard Wilkinson, author of the ground-breaking ‘Spirit Level’ book.

Ever wondered why the crime rate and other social ills seem to be on the rise?

Wilkinson suggests that these problems seem to be more prevalent in countries or societies that are more unequal.

Malaysia, for instance, is by all accounts a rather unequal society. Should we then be surprised at the level of social problems in the country?

You can see that one of the recommendations that Wilkinson puts forward is for a more progressive tax system – i.e. higher taxes for the wealthy to try and narrow the income gap.

Unfortunately, what we are seeing now in Malaysia are cuts in tax rates at the higher levels and the proposal to introduce GST. This is moving us towards a more regressive tax system, and it won’t help in stemming the tide of inequality in our country. Similarly neoliberal policies including privatisation appear to be transferring more profits to the top 20 per cent of society.

How then to reduce social problems?

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PAK MERIT

Widening & incresing Gini coefficient in Malaysia due to corrupted practices where the connected ones know the lobang (loopholes) to exploit to become richer.
Also those who earn less tend to show off by spending beyond their means (eg hire purchase flashy cars & gadgets) and do not save enough for their future !!!!!

plabeuk

We all – including those who rule us – already know that inequality in wealth is a recipe for social ills. Yet, when a Mat Salleh says it, we take a fresh look at the idea, or pretend to.

Carlos

So you actually agreed on the implementation of NEP to reduce economic inequality, helping bumiputras to catch up with the Chinese especially?
Good!

sunnyooi

We do tax higher income earners more in Malaysia. Anyone who pays income tax should know.

Terry Netto

Nice piece. Thanks, Anil. And may 2012 be a wonderful year for you and your loved ones.

Monyet King

Anil, you said “Malaysia, for instance, is by all accounts a rather unequal society”. Could you care to explain how you arrived at this conclusion. Was it based on any economic data or was it just simply tembak ?. And you said “by all accounts” – that’s pretty strong phrase. The Gini coefficient is a good indicator of income inequality – may be you want to look at and compare this indicator in many countries before shooting. In terms of income tax, at the moment, there are only about 2 million taxpayers in this country (out of a working population… Read more »

Gerakan K loves fried banana

Anil: How economic inequality harms societies ???

GK LFB: So, are you trying to propose economic equality something like COMMUNISM ???

tunglang

It doesn’t make much sense for government to tax the average income earners and tax comparatively ‘little’ of the rich for them to enjoy more of their disposable incomes. What it should be doing is to tax the rich more which won’t harm much of their spending power after tax and help the struggling to overcome inflation and reduced spending power. With stagnation of incomes for the last 15 years, you wonder what is left after working half of one’s entire career struggling to save. The long term effects of inequalities will rear their ugly heads just like the recent… Read more »