So, the wealth gap keeps increasing, or in other words, it keeps getting worse ... not in North Korea or China or one of those Middle Eastern monarchies, but in the world's biggest champion of free market & capitalism; US.
In US, the richest 10% of the population earn 16.5 times as much as the poorest 10%. On top of that, the top 5% of American households own almost 91 times the wealth of the average American household.
OECD report cites the reasons for this rising wealth gap to education levels of rich & poor, rise of non-standard work (temporary & self-employment work), & faulty tax systems & erosion of social benefits. Let's examine each of them.
Difference in education is going to increase the wealth gap. But what the OECD didn't look into is that education, in itself, has become so expensive that obtaining an under-graduate degree now requires a fortune, esp. from a good, respected university. Rich kids are supported by their fathers' wealth while they are getting that education, but a poor kid cannot lean on his parents (assuming he/she has one or both) for tuition. Rich kids graduate with no debt to be repaid, but masses of poor kids graduate with mountains of education debt or student loan.
On top of that, education in itself is not going to land one in the higher echelons of corporate America, where they will be paid 6-figure salaries & numerous chances of upward mobility in the corporate hierarchy. Nowadays, it's the age of networking. Of course, rich kids will have that powerful network to lean on, whereas, poor kids are outside of that powerful social circle. So, even when, kids of both social classes have equal education, they are still unequal due to debt levels & network.
That leads to the next point that the rise of non-standard work is due to rising hordes of poor students graduating with degrees but without any network. So, they may still get a job in a company but at the lowest level of corporate hierarchy. If & when the company plans to cut down its costs, the lower rungs of the corporate ladder are cut loose first. Since, those people need the money & have few options, if any, other than keep working with whatever companies are offering them, they accept temporary work & self-employment. Wealthy people have financial & influential networks to pull them into the upper echelons of the corporate world & hence, their jobs never get slashed.
Tax systems are made by legislators, who, in turn, are controlled & influenced by rich people of the country. Since, the rich didn't become rich by handing out their money, they will never willingly ask any legislator to increase taxes on them. So the tax systems will never change for the better. They may become worse, though, for the poor.
Social benefits are usually tied to permanent jobs & higher taxes. Since, permanent jobs are being cut, in favour of temporary work, & taxes will never be raised to help the poor populace, social benefits are only going to be reduced.
So, the question is; will this wealth gap ever reduce? My resounding answer is: NO, IT WILL NOT. Why?
Because, education is only going to get expensive. Good, secure, high-paying, permanent jobs will only go to people with influential networks. Tax systems will only become worse for the poor (& better for the rich), since when politicians have ever tried to upset the hand which feed them (rich business elites). Social benefits are only to be eroded to the point where bare minimums will still be available, but the vast majority of poor won't qualify for most social benefits.
Then, there will be revolutions on the streets, similar to Occupy Wall Street protests, except they will be bloodier & far more violent than the preview the world got back in 2008. Remember the French Revolution. OECD developed countries are going back into that era of a club of rich elites controlling almost all wealth of the nation & their citizenry. History is going to repeat itself.
---------------------------------------------------------------------------------
“In most countries, the gap between rich & poor is at its highest level since 30 years. Today, in OECD countries, the richest 10% of the population earn 9.6 times the income of the poorest 10%,” said the Organization for Economic Cooperation & Development (OECD) in a report ... . “In the 1980s this ratio stood at 7:1 rising to 8:1 in the 1990s & 9:1 in the 2000s.”
Compare the average 9.6 index with the US, where the richest 10% of the population earn 16.5 times as much as the poorest 10%. The poorest citizens of Israel scrape by on one-fifteenth of the earnings of the richest 10%.
The US also has the widest gap between the income of the richest & the average households. The top 5% of US households own practically 91 times the wealth of the average.
The OECD report, covering the situation in 18 member nations, says half of total wealth resides in the hands of just 10% of population, while the next 50% hold almost all of the second half, leaving the remaining 40% with the scraps - just over 3% of the wealth.
The record level of inequality is explained partly by a wider gap in education between the richest & poorest social groups, leading to lower quality & productivity in the workforce.
Another factor that OECD considers responsible for growing inequality is the growth in what it calls non-standard work, which includes temporary contracts & self-employment.
Since the mid-’90s more than half of all new jobs created in OECD countries fell into this category, according to the report. Families that rely on this type of employment are much more likely to be poor, exacerbating overall inequality.
OECD experts warn that the rising level of inequality is hampering world economic growth.
“High & often growing inequality raises major economic concerns, not just for the low earners themselves, but for the wider health & sustainability of our economies,” the report says. “Put simply: rising inequality is bad for long-term growth.”
The report also cites increasingly less progressive tax systems & social benefits losing ground to inflation as reasons why income redistribution schemes have become less effective as of late. Instead, the study advocates a more direct system of taxation & transfer.
“Redistribution via taxes & transfers is a powerful instrument to contribute to more equality & more growth,” the report says.
It also mentions the increasing number of working women as one of the factors contributing to the growth in inequality. Women earn 15% less than men, according to the report, which says ensuring equal pay for men & women could be one way to reduce the wealth gap.
Latin America is one of the few regions where inequality hasn’t been growing in the last 30 years, despite the social gap there being initially higher, the OECD said.
In US, the richest 10% of the population earn 16.5 times as much as the poorest 10%. On top of that, the top 5% of American households own almost 91 times the wealth of the average American household.
OECD report cites the reasons for this rising wealth gap to education levels of rich & poor, rise of non-standard work (temporary & self-employment work), & faulty tax systems & erosion of social benefits. Let's examine each of them.
Difference in education is going to increase the wealth gap. But what the OECD didn't look into is that education, in itself, has become so expensive that obtaining an under-graduate degree now requires a fortune, esp. from a good, respected university. Rich kids are supported by their fathers' wealth while they are getting that education, but a poor kid cannot lean on his parents (assuming he/she has one or both) for tuition. Rich kids graduate with no debt to be repaid, but masses of poor kids graduate with mountains of education debt or student loan.
On top of that, education in itself is not going to land one in the higher echelons of corporate America, where they will be paid 6-figure salaries & numerous chances of upward mobility in the corporate hierarchy. Nowadays, it's the age of networking. Of course, rich kids will have that powerful network to lean on, whereas, poor kids are outside of that powerful social circle. So, even when, kids of both social classes have equal education, they are still unequal due to debt levels & network.
That leads to the next point that the rise of non-standard work is due to rising hordes of poor students graduating with degrees but without any network. So, they may still get a job in a company but at the lowest level of corporate hierarchy. If & when the company plans to cut down its costs, the lower rungs of the corporate ladder are cut loose first. Since, those people need the money & have few options, if any, other than keep working with whatever companies are offering them, they accept temporary work & self-employment. Wealthy people have financial & influential networks to pull them into the upper echelons of the corporate world & hence, their jobs never get slashed.
Tax systems are made by legislators, who, in turn, are controlled & influenced by rich people of the country. Since, the rich didn't become rich by handing out their money, they will never willingly ask any legislator to increase taxes on them. So the tax systems will never change for the better. They may become worse, though, for the poor.
Social benefits are usually tied to permanent jobs & higher taxes. Since, permanent jobs are being cut, in favour of temporary work, & taxes will never be raised to help the poor populace, social benefits are only going to be reduced.
So, the question is; will this wealth gap ever reduce? My resounding answer is: NO, IT WILL NOT. Why?
Because, education is only going to get expensive. Good, secure, high-paying, permanent jobs will only go to people with influential networks. Tax systems will only become worse for the poor (& better for the rich), since when politicians have ever tried to upset the hand which feed them (rich business elites). Social benefits are only to be eroded to the point where bare minimums will still be available, but the vast majority of poor won't qualify for most social benefits.
Then, there will be revolutions on the streets, similar to Occupy Wall Street protests, except they will be bloodier & far more violent than the preview the world got back in 2008. Remember the French Revolution. OECD developed countries are going back into that era of a club of rich elites controlling almost all wealth of the nation & their citizenry. History is going to repeat itself.
---------------------------------------------------------------------------------
“In most countries, the gap between rich & poor is at its highest level since 30 years. Today, in OECD countries, the richest 10% of the population earn 9.6 times the income of the poorest 10%,” said the Organization for Economic Cooperation & Development (OECD) in a report ... . “In the 1980s this ratio stood at 7:1 rising to 8:1 in the 1990s & 9:1 in the 2000s.”
Compare the average 9.6 index with the US, where the richest 10% of the population earn 16.5 times as much as the poorest 10%. The poorest citizens of Israel scrape by on one-fifteenth of the earnings of the richest 10%.
The US also has the widest gap between the income of the richest & the average households. The top 5% of US households own practically 91 times the wealth of the average.
The OECD report, covering the situation in 18 member nations, says half of total wealth resides in the hands of just 10% of population, while the next 50% hold almost all of the second half, leaving the remaining 40% with the scraps - just over 3% of the wealth.
The record level of inequality is explained partly by a wider gap in education between the richest & poorest social groups, leading to lower quality & productivity in the workforce.
Another factor that OECD considers responsible for growing inequality is the growth in what it calls non-standard work, which includes temporary contracts & self-employment.
Since the mid-’90s more than half of all new jobs created in OECD countries fell into this category, according to the report. Families that rely on this type of employment are much more likely to be poor, exacerbating overall inequality.
OECD experts warn that the rising level of inequality is hampering world economic growth.
“High & often growing inequality raises major economic concerns, not just for the low earners themselves, but for the wider health & sustainability of our economies,” the report says. “Put simply: rising inequality is bad for long-term growth.”
The report also cites increasingly less progressive tax systems & social benefits losing ground to inflation as reasons why income redistribution schemes have become less effective as of late. Instead, the study advocates a more direct system of taxation & transfer.
“Redistribution via taxes & transfers is a powerful instrument to contribute to more equality & more growth,” the report says.
It also mentions the increasing number of working women as one of the factors contributing to the growth in inequality. Women earn 15% less than men, according to the report, which says ensuring equal pay for men & women could be one way to reduce the wealth gap.
Latin America is one of the few regions where inequality hasn’t been growing in the last 30 years, despite the social gap there being initially higher, the OECD said.
No comments:
Post a Comment