The ratio of the average income of people in the top 5% to the bottom 5% has grown from 6 to 1 in 1980 to over 200 to 1 now. Some 20% of the world receives 80% of the income. In addition to the moral implications, the disparity in wealth could lead to increased migration of the poor to richer regions, resulting in conflict. Although the world economy has grown to $33 trillion-with dramatic increases in life expectancy, primary school enrolments, access to safe drinking water and sanitation, and decreases in infant mortality-without major policy interventions the disparities could grow enough to create global instabilities. Agricultural subsidies in OECD countries that hurt developing countries' trade totaled $257 billion and provided 32% of OECD farmers' income.

Economic growth in India and China will be a major engine for meeting the UN MDG of halving world poverty by 2015, because 66% of the people living on just $1 a day are in Asia. Although significant growth has occurred in some developing countries, income per capita has been dropping steadily over the past 30 years in poorer areas, and remittances have become a major source of foreign currency. According to the World Bank, people living on less than $1 a day dropped from 40% to 21% of global population between 1981 and 2001, while the number of people living on $2 a day increased. GDP per capita in all developing countries rose by 30% during the same 20 years, but the rich-poor gap is getting wider within richer as well as poorer countries.

 

We need to create a flexible global strategic plan that uses the strength of free markets with rules based on global ethics. People in the top 5% of income should make special attempts to aid the bottom 5%, following the examples of Ted Turner, Bill Gates, and George Soros. International meetings have recommended improved international financial governance, increased trade, debt relief, national economic policy reforms, mobilization of domestic financial resources, reduction of corruption, and the creation of partnerships among development actors. The IMF now allows countries in arrears to negotiate new agreements, pending policy conditions.

Ethical market economies are encouraged when people have a "level playing field" guaranteed by an honest judicial system and by governments that provide political stability, a chance to participate in local development decisions, business incentives to comply with social and environmental goals, fairer trade, a healthy investment climate, and access to land, capital, and information. Since capital flows to profit potential, ethical activities have to be shown to be profitable and corporations have to be held accountable. Unfortunately, corruption and organized crime are still major impediments to development.

Richer nations should cut harmful agricultural subsidies, open their markets, and provide 0.7% of their GDP to aid poorer nations. We have to replace welfare attitudes with entrepreneurial spirit, reinforced by expanded microcredit mechanisms coupled with technical assistance, while using state welfare in states with little private sector. International taxes to internalize current externalities can generate extra funds to finance global public goods and global governance reforms.

 

Africa: The number of people living on $1 a day doubled over the last 20 years in sub-Saharan Africa. Self-defeating attitudes among the poor should be replaced with entrepreneurial spirit. Africa is not likely to create ethical and dynamic markets until cultures become open to independent, critical thinking and produce favorable climates for foreign investment. Reorient the WTO toward meeting needs of developing countries. To reduce poverty by 50% in sub-Saharan Africa by 2015, national economies would have to average 7% growth a year-more than twice the current rate. The role of the state is more important where there is little private sector. Some question whether ethical markets can exist, since markets are driven by the profit motive and ethical entrepreneurship is not well known in Africa. Others point out that ethical markets can be created in the interests of the rich as well as the poor.

 

Asia and Oceania: East Asian GDP per capita has tripled since 1981; extreme poverty fell from 58 to 16%, and in China it fell from 64 to 17%. The majority of the poorest live in Asia. China averaged almost 9% annual growth in GDP per capita in the 1980s and 1990s and 7-8% recently. Vietnam saw growth of almost 6% in the 1990s, which reduced poverty by more than a third between 1993 and 1998, followed by 7% during 2000 and 2001. Economic initiatives that develop material civilization can be combined with those that develop spiritual civilization. Competition and symbiosis (encouraged by real socialism and some religions), along with self-reliance (encouraged by Confucianism and Taoism), are the bases of a more ethical market economy. Some question if market economies have ever been ethical, but agree that greater political and financial transparency and accountability will help. Japan's return to economic growth will help the region. The keys to economic growth in the Middle East are the resolution of the Israeli-Palestinian conflict, the rule of law, and small business development.

 

Europe: The EU enlargement forces new inter-European poverty reduction efforts. A new economic system with autonomous individuals based on new knowledge and an emerging global ethics is evitable. Ethical markets require democracy and freedom of cultural expression based on values that are globally valid and respected and that are enforced by political measures and informed consumer behavior. Europe needs to harmonize differences in law and environmental tax reform, submit statements of ethics and values to shareholders, and deregulate obstacles to productive activity. Development policy should change the "poverty of spirit" as well as economic poverty.

 

Latin America: The financial infrastructure to create and support equality does not exist in the region. The gap between rich and poor is the primary cause of social instability in Latin America. Distribution of the means of production and land tenure must change with the participation of lower-income people in all phases of development projects. Without an educated middle class and active civil society, policies to help the poor are not likely. However, it is encouraging to see that the region has seen primary school enrollment rise from 67% in 1990 to almost 90% today.

 

North America: Ethical markets are created by prices that include social and environmental costs, socially responsible investing, fuller business disclosures, and a fairer tax code that taxes social externalities like pollution. It is simply impossible to make everyone equal, but equal opportunity is possible.