Wherever you live in the world, here’s a newsflash: You’ve been robbed. Not by a hidden bandit, but a global kleptocracy: the super-rich who’ve managed to rob the poor blind in every corner of the globe for the past seven decades. And a research team led by pioneering economist Thomas Piketty, the World Inequality Lab, has mapped out how that theft has played out on a global scale.
Not surprisingly, America was near the top of the list in terms of how unequal our country is, in addition to being far richer as a whole than any other nation. Still, while inequality is universal—polarizing countries and dividing individual nations internally—some countries are, surprisingly, more unequal than others.
As of 2016, the top 10 percent of earners in Europe held about 37 percent of total national income; the United States’ and Canada’s top earners held closer to half. In India, sub-Saharan Africa, and Brazil, the top share reached about 55 percent, and the Middle East’s top 10th had captured more than 60 percent. Back in the 1970s, the privately held share of national income was about twice to three and a half times the national income, but now individuals control the equivalent of four to seven times the national income. According to the researchers, the pattern “marks the end of a postwar egalitarian regime which took different forms in these regions.”
The common rebuttal is that even if the “richer are getting richer,” free markets ensure that all boats rise. But some boats rise much faster than others—and others still have already capsized. Compare the different experiences of the United States and the European Union. According to lead researcher Lucas Chancel, “the US experienced an extreme rise in inequality over the past decades,” such that the top 1 percent of earners doubled their wealth to 20 percent of national income, while the bottom half fell from 20 to 10 percent of the national income. But in Europe, the polarization was relatively stable, with the poorest slipping just a few percentage points.
Similarly uneven outcomes have emerged in post-communist transition economies. Russia has seen a “brutal” economic liberalization since the 1980s, Chancel says, “and the rise in inequality was extreme and fast, with a few individuals capturing most of the benefits of privatization policies.” By contrast, China undertook a much more incremental approach to market opening while the government ”managed to invest a lot in education and infrastructures for its low income groups,” and thus avoided the same abysmal social division that Russia has suffered since the late 1980s, though China’s inequality is rising steadily as the country grows more affluent today.
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Although the opening of trade is often associated with “regressive tax policies or large transfers of public capital to the private sector,” Chancel concludes, the uneven landscape “shows that it is hard to blame trade deals in general (or technological progress) for the rise in inequality.”
The wealth gap is epidemic but not inevitable. Policy choices still make a difference. In the United States, deeply ingrained antipathy for the welfare state and regulation has pushed a harsh neoliberal agenda since the late 1970s—a pattern that is now being reproduced across the Global South as poor countries attempt to capitalize on global trade but in the process are becoming more exposed to extreme market volatility and devastating poverty and social strife.
President Trump’s new tax plan promises more of the same, and worse. The vast majority of the tax cut Trump just signed will go to the wealthiest segment of society. Such a sudden, dramatic drop in the corporate rate, from 35 percent to 21, Chancel writes, will lead to an explosion of economic polarization. As compared with tax policy in Europe (which has actually maintained a lower corporate tax rate but held on to strong social programs), the GOP bill will result in “savings” for the wealthiest Americans that will come directly at the expense of the poorest in society, according to Chancel, leaving “lesser and lesser resources for governments to do the required investments in education, health or transport infrastructure the US particularly needs. This plan will turbocharge inequality in the US.”
America’s economic volatility is supposedly offset by democratic governance, but the lawmaking and regulatory bodies that control social policy are increasingly beholden to a plutocratic elite. So what other avenues of power remain for ordinary working people?
We can mitigate the worst effects of capitalist overproduction through mobilizing what’s left of our democratic institutions at the local and state levels, where social spending and education investment are often concentrated. Mobilizing grassroots campaigns to boost the minimum wage, expand union representation, institute universal health care, or guarantee retirement security obviously can’t overturn the global trend in wealth accumulation, but will at least move struggling communities toward a fairer social contract.
With austerity policies rapidly eroding the welfare state, it’s important to be vigilant about the many ways spending priorities will now be retooled to further institutionalize structural poverty. Tearing up free-trade deals—which Trump has repeatedly threatened as part of his populist-nationalist rhetoric—does nothing to alleviate inequality unless coupled with meaningful social investments. Subsidies for polluting industries and predatory health-care insurers can lower consumer costs in the short term, but only at great cost to the environment and public health.
To ensure that future generations are better prepared to stop and reverse wealth polarization, developing a socially conscious, educated citizenry is key. On the other hand, given the number of college graduates working low-wage jobs and facing debt, Chancel emphasized, “education can’t do everything against inequality. This is where minimum wage policies, support to trade unions, work regulation policies, [and] laws to ensure that workers are represented in corporate governance institutions can play an important role” in balancing out structural inequality.
Going forward, public schools are one pivot point where children learn to either reproduce systemic inequality or develop strategies to end it. To that end, it is no wonder Republicans are particularly keen on privatizing education, slashing funds for impoverished college students, and aggravating segregation in public schools. Perhaps when Marx expounded, 150 years ago, on the crisis of overproduction of material goods, one thing he overlooked was the equal threat of an underproduction of radical ideas to identify and redress the roots of social inequity. We’ve been on a fast track to social injustice for four generations now—we don’t know how many more we have to develop new, more diverse pathways to correct humanity’s course on socioeconomic development before it’s too late.
