Rising Inequality Spooking the 0.0001%
Contributors to this blog–and CCPA experts–have been warning about the negative economic and social consequences of rising inequality for decades.Â Â
Now the even the 0.0001% are getting concerned.Â Â Experts polled for the Global Risks Report for this month’sÂ meetings of the World Economic Forum in Davos –one of the most eleite gatherings of the powerful in the world — selected severe income inequality as the most likely global risk to manifest in the next ten years.Â
The report notes that “shrinking tax revenues have deteriorated the fiscal position of governments and reduced their ability to ease social hardship with welfare and counter-cyclical spending”.Â It acknowledges that the “growing sense that wealth and power are becoming more entrenched in the hands of political and financial elites”.Â It warns that a lack of social mobility and hope, especially for youth, could feed more social unrest as we’ve experienced from the U.S. to the Middle East.Â If not addressed, it could feed a vicious cycle and “potential slide into dystopia”.
Scary prospects prospects indeed, even for the elite–including Prime Minister Stephen Harper–gathered in the rarified confines of Davos.
In Washington, Alan Krueger, Chairman of Obama’s Council of Economic Advisors delivered aÂ Â speech yesterday highlighting the real problems of the Rise and Consequences of Inequality in the United States.Â
There’s some interesting material there: he makes the strong point that rising inequality has hampered economic growth.Â He saysÂ “there’s no sign.. that the tax increases in the early 1990s had an adverse impact on growth” and “there is little empirical supportÂ for the claim that reducing the progressivity of the taxÂ code has spurred income growth, business formation or job growth.”Â
He cites studies showing that “a more fair distribution of wages would be good for business because it would raise morale and productivity”.Â Â Â Krueger also highlights some of the excellent work by Ottawa professor Miles Corak and his “Great Gatsby Curve”Â showing that rising inequality is associatedÂ with lower intergenerational mobility.Â Â Â Â Horatio Alger no more.
These issues and concerns certainly aren’t new to Krueger, who did ground-breaking work on the impacts of minimum wages, but they may start to spook the Davos crowd.Â Â The question is: what are they going to do about it?Â
Krueger has some decent though modest suggestions aligned with his his boss’s policies.Â Â The solutions suggested for Davos are even more self-serving and far outÂ to sea: “equipping youths with the skills Â to succeed and enable them to move to where their labour labour is most needed through safe well-managed migration channels” (!)Â
Time for them to man the lifeboats!