Our Agonizing Tale of Inequality
It’s time we stop referring to economic inequality as a mere “gap” between the have and have-nots. That ship has sailed. What we have now is a growing black hole that has been tearing our so-called democracies apart, crippling their abilities to provide for their citizens.
If left undeterred, it will unleash upon us a huge beast capable of nasty social catastrophes. Yes, you read that right.
The phenomenon is global in scale. Wealth is concentrated in the hands of a select few, while everyone else is stuck in a quagmire. The world’s billionaires claim as much wealth as over 4 billion people combined. When some 2 thousand individuals are as rich as half the Earth’s population, we have a problem. You don’t have to be a radical Marxist to agree.
Then, COVID-19 hit. Human lives weren’t the only cost of the deadly virus. Endangered were the livelihoods of billions of people around the globe due to the pandemic-induced recession. To echo a familiar cliché, the rich got richer and the poor got poorer. As many as 150 million people are expected to slip below the extreme poverty line by the end of this year, a sharp reversal of fortune in our society’s collective progress.
It’s time for a new economy, one where people come first. All the foundations upon which our economic principles were built must be reviewed and perhaps even scrapped. We must start afresh, reconstructing the system in a way that realizes good development outcomes for all of us. But, how can we get there?
The first step is to tackle economic inequality, one of the greatest challenges to our modern era.
No, I do not propose a system of total equality, where each individual gets exactly the same resources or opportunities as her neighbor, regardless of her specific needs. Total equality is not the goal. A world where its inhabitants all live in extreme poverty would be an equal one, but who would want to live there?
What we need to do is equitably share the economic pie. Equity is our new goal. In recognizing that each person was shaped by different life circumstances, we can seamlessly allocate resources to yield a fair outcome for everyone. See the difference?
When talking about inequality, experts like to look at either income or wealth distributions. Both are sometimes used interchangeably, but they are actually very disparate.
Income is how much someone gets paid every year, like a running faucet. Wealth is more like a reservoir. It describes everything someone owns, like money in the bank, company shares, yachts, tigers, you name it.
As you know, America has a chronic case of income disparity. According to economist Emmanuel Saez, the top 10% of earners capture more than half of the country’s total income. CEO compensation has grown almost 1,000 percent since 1978. In that same time frame, the average salary has grown only 12 percent.
Income inequality is growing, alright. But there’s much more to the gaping black hole.
The ultra-rich don’t typically realize much in the form of ordinary income. Most of the time, they end up investing their money in assets. For years on end, their money just sits there, growing and growing and growing, unhindered and untaxed. Without lifting a finger, they keep getting richer while the rest of the common folk gives away a good chunk of their earned taxable incomes to their states.
Wealth concentration is like income inequality on steroids. It paints a much bigger picture of what’s really going on in the economy.
A lot of factors are to blame here: globalization, advances in technology, the rise of the financial sector, and shifts toward less-progressive taxation, to name a few. Low-skilled jobs are being outsourced to poorer countries, digitization is restructuring the nature of the business world, and the financial sector keeps deepening the pockets of the upper crust while snubbing society at large. In the meantime, the rich aren’t paying their fair share in taxes, what with fiscal regimes becoming less progressive.
To top it off, the 1980s saw the rise of a bubbling fervor for neoliberalism — policies that prioritize big businesses, free-market capitalism, and productivity. But when the market is riddled with lop-sided opportunities at seeking education, skills, or employment and is flailing around all sorts of biases, then “letting the markets decide” doesn’t bode all that well for everybody.
No wonder recent years have been witnessing an international march toward right-wing nationalism. Countries have been headed in that direction ever since the 2008 mortgage crisis drilled a crater into the world economy. Protectionism, extreme patriotism, and opposition to immigration all describe this political movement — think the xenophobic Trump administration and the Brexit campaign.
Bernie Sanders was on point when he claimed that the three most affluent people in the world (then Jeff Bezos, Warren Buffet, and Bill Gates) own as much wealth as the bottom half of Americans. That’s in the world’s greatest economic powerhouse, folks.
Zoom out to the macro sphere and the 22 richest men in the world own more wealth than all the women in Africa combined. In fact, women across all ethnic and racial spectrums are more likely than men to live in poverty — too deterministic of a fate in an era that praises freedom and the fight for gender parity.
What’s truly agonizing in this endless tale about humankind is that we have enough wealth to go around. As a civilization, we have never been richer. The only problem is, it’s all controlled by a small group of people. The rest of us are left to scramble for the scraps, suffering disproportionately from our own lack of resources.
Global inequality has contaminated virtually all aspects of what it means to be a human being living in society. But it shouldn’t be taken as a given.
Where there’s a will, there’s a way, and, when it comes to the economic black hole, that way is through taxes. Together, we can take new steps to fix it and start rebalancing the scale. Make no mistake, it’s an onerous task, but it’s very tangible if only we begin to rethink our outdated systems and demanding that our governments follow the lead.