Does inequality lead to growth?
(The Hindu, 03/06/24)
There is growing inequality in India, where some argue that it is higher than during colonial times:
- Top 1% of the Indian population holds 1% of the total national wealth (as of 2022-23). Source: World Inequality Lab (WID)
- The top 10% of the Indian population holds 77% of the total national wealth. Source: Oxfam International.
There are various approaches to wealth redistribution aimed at reducing inequality. These include Progressive Income Tax, Wealth Tax, Inheritance Tax, Universal Basic Income, Expansion of social security & welfare programmes.
How can inequality harm growth?
High levels of inequality can lead to:
- Monopoly power: When businesses have too much control over a market, they can set higher prices, reducing real wages and consumption.
- Weaker multiplier effect: When workers have less income, their spending power decreases, dampening the positive impact of investment on the economy
- Human Capital Investment: High levels of inequality can hinder investment in human capital, particularly for those from lower-income backgrounds. This can happen in a few ways: limited access to education and healthcare.
- Social Unrest and Political Instability: Extreme income gaps can breed social discontent and instability, which can deter investment and harm economic activity
How Wealth Redistribution help in reducing inequality?
- Long-term Growth: Redistribution can help create a larger pool of skilled and educated workers, which can boost productivity and long-term growth.
- Improved Investment Targeting: By directing resources towards those who will spend it (lower-income groups), redistribution can lead to a more efficient allocation of capital within the economy.
- Basic Needs and Human Rights: Proponents of redistribution argue that everyone deserves access to basic necessities like food, shelter, and healthcare. Redistribution can help ensure these basic needs are met and promote a more just society.
- Equality of Opportunity: A highly unequal society often limits opportunities for those born into poverty. Redistribution can help level the playing field and offer everyone a fairer chance to succeed.
What are some potential drawbacks of redistribution?
- Reduced Investment: Some argue that high wealth taxes could discourage investment, as entrepreneurs and businesses may be less motivated to take risks if a significant portion of their potential profits is taken by the government
- Deadweight Loss: Redistribution programs can involve significant administrative costs and inefficiencies, leading to a “deadweight loss” – a situation where the overall economic pie shrinks due to the costs of the program
- Disincentive to Work: Some argue that wealth redistribution can create a disincentive to work hard and be successful, as the potential rewards are diminished
- Unfairness: Some believe individuals have the right to keep the wealth they accumulate through hard work and taking risks, and that redistribution unfairly penalizes success.
- Market Distortion: Critics might argue that government intervention in wealth distribution disrupts the natural balance of a free market economy.
- Targeting: Effectively identifying and targeting those who truly need wealth redistribution can be a complex and expensive task
Can you answer the following question?
Income and wealth inequality have emerged as major challenges in India. Critically examine the arguments for and against wealth redistribution as a policy tool to address this issue.
Fewer women are being hired for leadership positions
(The Hindu, 03/06/24)
The representation of women in the overall workforce and in senior positions over the years. Women’s representation in the overall workforce increased from 23.9% in 2016 to 27.3% in 2022. It stayed the same in 2023 before decreasing to 26.8% in 2024.
- A similar trend was also seen in the representation of women in senior leadership positions. It took four years (2016 to 2019) for the share of women in senior positions to go up by one percentage point and another four years (2019 to 2022) for it to go up by another point.
Why Are Fewer Women Hired for Leadership Positions?
- Unconscious Patriarchal Bias: Hiring managers may hold unconscious biases that favor men for leadership roles. These biases can manifest in everything from resume screening to interview styles.
- Lack of Sponsorship: Women often lack access to the same professional networks and mentors as men. Sponsorship, where someone advocates for another’s career advancement, can be crucial for reaching leadership positions.
- Work-Life Balance Challenges: Women often face greater challenges balancing work and family life. The long hours and demanding nature of leadership positions can be particularly difficult for them.
- Systemic Barriers: Company cultures that don’t support flexible work arrangements or have a lack of parental leave policies can hinder women’s advancement.
What are the consequences of Fewer Women in Leadership?
- Missed Talent and Innovation: Companies lose out on the skills, perspectives, and leadership styles that women bring to the table.
- Perpetuation of gender biases: When women are underrepresented in leadership, it can reinforce the notion that women are not suited for such roles, perpetuating gender biases and stereotypes.
- Lower Employee Engagement: When women don’t see a clear path to leadership, they may become less engaged or motivated in their careers.
- Reduced Role Model Effect: The lack of female role models can discourage younger women from pursuing leadership aspirations.
What measures can be adopted to Increase Women in Leadership?
- Targeted Development Programs: Providing leadership development programs specifically for women can equip them with the skills and confidence to thrive in leadership roles.
- Implement inclusion and sponsorship initiatives: Companies should actively promote diversity and inclusion programs, including unconscious bias training, mentorship programs, and leadership development opportunities for women.
- Encourage work-life balance: Offering flexible work arrangements, parental leave, and support for caregiving responsibilities can help women balance their professional and personal lives more effectively
- Transparency and Accountability: Setting clear goals for promoting diversity in leadership and tracking progress towards those goals can help hold companies accountable.
Can you answer the following question?
Despite significant progress, women remain underrepresented in leadership positions across various sectors in India. Analyze the factors hindering women’s rise to leadership roles and suggest measures to address this issue.
महाराष्ट्रातील सर्व स्पर्धा परीक्षांसाठी ऑनलाईन क्लास, व्हिडिओ कोर्स, टेस्ट सिरीज, पुस्तके आणि इतर अभ्यास साहित्य खाली दिलेल्या लिंक वर क्लिक करून मिळवा.
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