Rising Inequality a Cause for Concern

In advance of the elite going to Davos for their annual meeting the World Economic Forum it has published it latest Global Risks Report. It highlights several risks facing the global economy and places the issue of income inequality as the number one risk as it is associated with a rise in populism and threatens the cohesiveness of countries. I have for a long time been concerned about the fact that the top 1% seem to be getting far too much of the income and more importantly they have too much of the global wealth which means the system is becoming self-perpetuating over generations. This is not just a threat to society it is a threat to democracy as the elites have the time and money and networks to influence the framing of economic and social policies. Also when people see others being over rewarded they tend to get resentful, and ultimately there will be a backlash against a broken system. The scooping of income by the top 1% is clearly more prevalent in the United States but has also been a feature of the UK economy. The causes of this growth in inequality are complex such as the impact of technology, globalisation, favourable tax treatment, poor corporate governance, the effects of quantitative easing policies and plain old corruption.

Graph: Share of top 1% of national income

There is a nice discussion following the launch of the Global Risk Report for 2017 below: