Beware, Income Disparity is among the Leading Global Trends

 Author: Grete Mautner

Column: Economics

Region: USA in the World

It’s hardly a secret that there was an abrupt increase in income disparity pretty much all across the globe in the period from 1980 to 2017, as it has been recently confirmed by a report released by World Inequality Lab (WIL).

Pretty much the same conclusion was voiced by a group of international analysts led by prominent French economist, Thomas Piketty. The report’s findings could easily be described as shocking. Upon compiling the World Wealth and Income Database, Thomas Piketty and his colleagues revealed today the global level of income disparity fell to levels seen back in 1913!

In November, the Global Wealth Report of Credit Suisse bank revealed that the level of global welfare increased by 6.4% in the period from mid-2016 to mid-2017, while adding that half this increase would benefit the notorious 1% of the world’s inhabitants. Last year alone, the number of millionaires across the globe increased by 2.3 million people.

A recent study by the University of Michigan revealed that in the time since the 2008 crisis, the richest part of American society managed to recover from all of their financial losses suffered during the recent global crisis, unlike the rest of society. Last year, the most financially successful Americans were 24 times richer than the average American family, which constitutes a significant increase over the level of 2007, when the gap didn’t exceed 16.5 times.

Among the most important conclusions that most modern economists would make upon analyzing the data available is that we’re witnessing the “parasitic” nature of modern capitalism. Over the last four decades that have passed since the ultra-liberal reforms of Thatcher and Reagan, there has been a visible increase in speculative enrichment across the West, where incomes from short-term capital investments would outpace investments in productive labor.

It was precisely speculative profits that were behind the growing inequality of recent decades.

In addition, across the better part of Western society the better part of national assets fell into private hands due to five decades of privatization. As a result, governments found themselves incapable of redistributing wealth within societies. A volatile and highly unstable social situation is now emerging across the globe, just like in the years that preceded the First World War, which can bring many governments down and change the political map of the world through revolutions.

A number of analysts believe that the “explosive” growth of inequality, along with global warming, is among the principal threats to the human race.

Since 1980, the notorious 1% of the richest people in the world received twice as much income as the poorest half of the world’s population, which translates into 27% of the total income of the world, while half of the world’s population, the poorest found themselves getting the short end of the stick with 13% of global income falling into their hands.

The richest part of the world’s population consists of 75 million people. As for the poorest, it exceeds 50% of the world’s population, which amounts to 3.7 billion people.

Moreover, the largest increase in income inequality for the specified period of time was registered in North America, China, India and Russia. 

In Russia, the percentage of incomes of 10% of the most affluent citizens rose to 46% from just over 20% in the early 1980s. No more than 10% of the society appropriates 37% of national wealth in Europe, 41% in China, and 46% in Russia. In Brazil and the Middle East, this figure is 55% and 61% respectively. The growth of inequality in the US is especially obvious, where the notorious 1% is holding in its hands 40% of the national wealth, while in 1980 this figure did not exceed 22%.

It is surprising that even in such a socially oriented country as Germany, the level of inequality returned to the pre-WWI levels. As of today, the top 10% of society has accumulated 40% of national wealth in its hands, while the bottom 50% has no more than 17%, just like a hundred years ago.

The authors of various social reports seem to agree that we’re witnessing social regression in the better part of developed countries. If in the three decades after the WWII, as a result of the unprecedented growth of wealth, a large middle class was formed on the basis of a democratic society, these days the middle class is eroding, the population of those states is getting increasingly poor. Globalization has contributed to the significant enrichment of the wealthy in the West, along with the emergence of a middle class and the “new rich” in Asia. But this happened largely at the expense of the European and American middle class, as jobs and wealth were taken across the ocean. In developed countries, social elevators have practically disappeared, it is becoming increasingly difficult for the lower strata of society to overcome the class disparity to enjoy the benefits of modern civilization. They will not receive high-quality education or medical care, as they are being presented with no better option than living in a social ghetto.

Today, the richest man in Europe, according to Bloomberg agency, is the president of the Louis Vuitton Moet Hennessy group of companies, Bernard Arnaud, whose fortune is estimated to reach 70.7 billion dollars. Thus, the French businessman overtook the Spanish founder of the Inditex group which owns such brands as Zara and Massimo Dutti, Amancio Ortega, whose capital is said to reach 70.2 billion dollars. In the list of the richest people in the world, the head of LVMH ranked in fourth place. As for the world’s richest man, it is still the founder and CEO of Amazon, Jeff Bezos.

However, it remains unclear what the notorious 1% of richest people on the planet want? Are the rich dreaming about a private paradise on Earth? Well, each of them can afford it. All they need is healthcare and safety guarantees that the poorer “plebs” can provide them with. Indeed, according to the convictions of some of them, the rapid growth of the population is potentially catastrophic, as they see it as an environmental, social and industrial threat. Billions of people roaming the planet in search of food and safety make the Earth increasingly uninhabitable. While the rich have gathered here to live forever.

That’s where the Bill & Melinda Gates Foundation comes into play. The fund is a major investor in medical science and development and birth control projects. Developments are associated with the sterilization of the population in developing countries through mandatory vaccinations, as well as with the promotion of GMO products. It is believed that this global project was launched on May 5, 2009 during a secret meeting of some of the richest people in the United States. Exclusive invitations were signed by Bill Gates, David Rockefeller and Warren Buffet. CNN founder Ted Turner unintentionally revealed the content of this meeting, saying that the rich agreed that the reduction of the population by two billion people would be perfect for them.

In principle, that’s what we’re witnessing globally today. As food stores for the poor are selling junk and social medical care starts and end with a queue at the public clinic. We are left with but one choice – the drug store, and what set of side effects those expensive pills would bring is known only to the likes of Bill Gates.

It has been scientifically proven that to reduce inequality a properly built progressive tax scale must be put in place. This is achieved by the socially-oriented countries of Europe. However, in the United States and several other countries there is a tendency to lower taxes for super-rich individuals and corporations, which only makes social inequality worse. 

More recently, the Special Rapporteur on extreme poverty and human rights, published a report in which he stated that under President Donald Trump, the United States became the world’s champion in extreme inequality. This is facilitated by the recently adopted tax reform and cuts in social care. According to Alston, the American dream is quickly turning into an American illusion.

Obviously, the owners of capital ceased to fear communism-inducing revolutions. But may those be just around the corner?

Grete Mautner is an independent researcher and journalist from Germany, exclusively for the online magazine “New Eastern Outlook.” 

https://journal-neo.org/2018/12/11/beware-income-disparity-is-among-the-leading-global-trends/