Yet another report has been released showing the capitalist “trickle down” promise is rubbish.
The World Inequality Report 2018 — produced by the World Inequality Lab at the Paris School of Economics — busts the neoliberals’ myths about globalisation and privatisation working for everyone. It shows that the wealth gap is widening and, in some countries, very dramatically.
The report’s authors, who include the famous economist and author Thomas Piketty, say they want to fill what they believe is a “democratic gap” and equip people with the “necessary facts to engage in informed public debates on inequality”.
They hope to “present statistics that can be easily understood and used by the public, to help ground the democratic debate in facts”.
They state they are not trying to convince people of the need for change but, rather, to equip people with the macro and micro economic trends. The data they studied is cumulative, starting in the early 2000s. It now includes more than 100 researchers covering more than 70 countries on all continents.
The report states that since the 1980s, there has been an inexorable rise in income inequality “in nearly all world regions in recent decades, but at different speeds”. It increased most sharply in the United States, but is also marked in China and Russia as those countries moved away from a centralised, communist-oriented system to embrace capitalism.
The report states: “Economic inequality is largely driven by the unequal ownership of capital, which can be either privately or publicly owned. We show that since 1980, very large transfers of public to private wealth occurred in nearly all countries, whether rich or emerging.
“While national wealth has substantially increased, public wealth is now negative or close to zero in rich countries. Arguably this limits the ability of governments to tackle inequality; certainly, it has important implications for wealth inequality among individuals.”
There has been a general rise of net private wealth which, interestingly, the global financial crisis did not affect. Correspondingly, there has been a decline in net public wealth (public assets minus public debts) in nearly all countries since the 1980s.
“In China and Russia, public wealth declined from 60–70% of national wealth to 20–30%. Net public wealth has even become negative in recent years in the United States and the UK, and is only slightly positive in Japan, Germany, and France. This arguably limits government ability to regulate the economy, redistribute income and mitigate rising inequality.”
The report found rising income inequality within countries has fuelled the rise of wealth inequality. It projects that with a business-as-usual approach, inequality will worsen.
“If we assume the world trend to be captured by the combined experience of China, Europe and the United States, the wealth share of the world’s top 1% wealthiest people increased from 28% to 33%, while the share commanded by the bottom 75% oscillated around 10% between 1980 and 2016.”
Even with relatively high income growth predictions in Africa, Latin America and Asia in the next three decades, global income inequality will increase even more if countries follow the high-inequality trajectory followed by the US between 1980 and 2016, the report states.
It recommends a progressive taxation system as a “proven tool” to combat rising income and wealth inequality. It says there needs to be a global financial register to record the ownership of financial assets, which would mitigate against tax evasion and money laundering.
It says greater access to equal education and well-paying jobs are key to addressing stagnating income growth rates for the poorest half of the population.
And, it says, governments should invest public money into health and environmental protection to tackle existing inequality and prevent further increases.
All these measures are self-evident if you want to redistribute wealth. The problem, as we know, is that governments, in the main, rule for the rich and so have an interest in sticking to the business-as-usual scenario.
The usefulness, however, of such a report is to mine the data to help create political movements strong enough to challenge the system that perpetuates such gross inequality.