Rising inequality and related disparities and anxieties have been stoking social discontent and are a major driver of the increased political polarisation and populist nationalism that are so evident today.

An increasingly unequal society can weaken trust in public institutions and undermine democratic governance.

Mounting global disparities can imperil geopolitical stability.

Rising inequality has emerged as an important topic of political debate and a major public policy concern.

High and rising inequality

Current inequality levels are high.

Contemporary global inequalities are close to the peak levels observed in the early 20th century, at the end of the prewar era (variously described as the Belle Époque or the Gilded Age) that saw sharp increases in global inequality.

Over the past four decades, there has been a broad trend of rising income inequality across countries.

Income inequality has risen in most advanced economies and major emerging economies, which together account for about two-thirds of the world's population and 85 percent of global GDP (Figure 1).

The increase has been particularly large in the United States, among advanced economies, and in China, India, and Russia, among major emerging economies.

Beyond these groups of countries, the trend in the developing world at large has been more mixed, but many countries have seen increases in inequality.

In regions such as Latin America, the Middle East and North Africa, and sub-Saharan Africa, income inequality levels on average have been relatively more stable, but inequality was already at high levels in these regions—the highest in the world.

Wealth inequality within countries is typically much higher than income inequality.

It has followed a rising trend across countries since around 1980, similar to income inequality.

Higher wealth inequality feeds higher future income inequality through capital income and inheritance.

Figure 1. Inequality has risen in most advanced and major emerging economies
Richest 10% income share, 1980-2020

Source: Author, using data from World Inequality Database.
Note: Pre-tax national income. Some data points are extrapolated.

The increase in inequality has been especially marked at the top end of the income distribution, with the income share of the top 10 percent (and even more so that of the top 1 percent) rising sharply in many countries.

This was so particularly up to the global financial crisis of 2008-09.

Those in low- and middle-income groups have suffered a loss of income share, with those in the bottom 50 percent typically experiencing larger losses of income share.

These trends in inequality have been associated with an erosion of the middle class and a decline in intergenerational mobility, especially in advanced economies experiencing larger increases in inequality and a greater polarization in income distribution.

While within-country inequality has been rising, inequality between countries (reflecting per capita income differences) has been falling in recent decades.

Faster-growing emerging economies, especially the large ones such as China and India, have been narrowing the income gap with advanced economies.

Global inequality—the sum of within-country and between-country inequality—has declined somewhat since around 2000, with the fall in between-country inequality more than offsetting the rise in within-country inequality.

As within-country inequality has been rising, it now accounts for a much larger part of global inequality (about two-thirds in 2020, up from less than half in 1980).

Looking ahead, how within-country inequality evolves will matter even more for global inequality.

The interplay between the evolution of within-country inequality and between-country inequality, coupled with the differential growth performance of emerging and advanced economies, in recent decades presents an interesting picture of middle-class dynamics at the global level (as depicted by the well-known "elephant curve" of the incidence of global economic growth). It shows, for the period since 1980, a rising middle class in the emerging world and a squeezed middle class in rich countries.

It also shows an increasing concentration of income at the very top of the income distribution globally.

Drivers of rising inequality

Shifting economic paradigms are altering distributional dynamics. Transformative technological change, led by digital technologies, has been reshaping markets, business models, and the nature of work in ways that can increase inequality within economies.

While the specifics differ across countries, this has been happening broadly through three channels. Continue reading

Some 573 people have joined the billionaire ranks since 2020 bringing the worldwide total to 2,668, according to an analysis released by Oxfam on Sunday.

That means a new billionaire was minted about every 30 hours, on average, so far during the pandemic.

The report, which draws on data compiled by Forbes, looks at the rise of inequality over the past two years. It is timed to coincide with the kickoff of the annual World Economic Forum meeting in Davos, Switzerland, a gathering of some of the wealthiest people and world leaders.

Billionaires have seen their total net worth soar by $3.8 trillion, or 42%, to $12.7 trillion during the pandemic.

A large part of the increase has been fuelled by strong gains in the stock markets which was aided by governments injecting money into the global economy to soften the financial blow of the coronavirus.

Much of the jump in wealth came in the first year of the pandemic. It then plateaued and has since dropped a bit, said Max Lawson, head of inequality policy at Oxfam.

At the same time, Covid-19, growing inequality and rising food prices could push as many as 263 million people into extreme poverty this year, reversing decades of progress, Oxfam said in a report released last month.

"I've never seen such a dramatic growth in poverty and growth in wealth at the same moment in history," Lawson said. "It's going to hurt a lot of people." Continue reading

"Either you want to kill Grandma or you want to destroy the economy and leave millions of people unemployed, and people fight and they polarize, but we don't ask, ‘What is the wealth for?'" said Mary Hirschfeld, associate professor of economics and theology at Villanova University.

"And on the health side, it's just a very thin idea about health" that doesn't consider the importance of social interaction, work, productivity and human relationships, she said.

Consensus is absent in liberal, present-day society about what goods to pursue and tends to emphasize "instrumental goods," such as health and wealth, she said.

However, a "thicker conception" of the common good is needed and is precisely what Catholic social teaching can contribute to the public conversation.

The online event was organized by the Lumen Christi Institute at the University of Chicago as a follow-up to an event it held last month that addressed the COVID-19 response mostly from an economic perspective.

Much of the June 2 discussion, moderated by Joseph Capizzi, moral theology professor at The Catholic University of America in Washington, hinged on the principles of Catholic social teaching.

Dr. Daniel Sulmasy, a physician and professor of biomedical ethics at Georgetown University, underlined competing conceptions of the common good that emerged during the public debate, including the utilitarian, neo-liberal and totalitarian perspectives.

He contrasted these views with the Catholic understanding of the common good, which he described as "integral," where the good and flourishing of the individual is in part constituted by the good and flourishing of the whole and vice versa.

This "integral" approach seeks both to protect the vulnerable from COVID-19 and to act in solidarity with the poor, he said.

Kirk Doran, associate professor of economics at the University of Notre Dame, also emphasized that "there is no dichotomy between health and wealth." Rather, health and wealth are "intimately related."

"What we're trying to do is to understand a very subtle set of responses that are rippling through our economy, rippling through people's emotional lives, rippling through everything, and they're all affecting each other at the same time, and that's what makes this super complicated," said Doran.

"If it was simple tradeoffs between health and wealth, it would be easier."

Doran's observation of the social movement that emerged online — what he called "a viral desire" — to protect others by not engaging in usual economic activity, opened the discussion on the principle of solidarity in Catholic social teaching. Continue reading

If you're lucky enough to be a member of the global 1%, last year was another good year to be alive (every year is pretty great, though).

Your wealth bracket increased its share of global riches so that it holds just over half of global wealth, according to a new report from Credit Suisse.

In the years 2000 to 2007, the richest people on Earth actually saw their proportion of global wealth fall, from 49% to 45%. But since the recession the trend has gone into reverse: The top 1% now controls 50.4% of all household wealth.

Wondering if you're in this elite club? You'd need a total of $759,900 in assets, after debts have been subtracted.

What about the top 10%? That's a little easier: you'd only need $68,500. And the top half: Count yourself in if you have $3,210.

"While the bottom half of adults collectively own less than 1% of total wealth, the richest decile holds 87.7% of assets, and the top percentile alone accounts for half of total household wealth," the report says.

In fact, the 1% is doing better relatively speaking than the 10%, which achieved its highest wealth share back in 2000.

Credit Suisse puts the stunning rise of the 1%, and the inequality that goes with it, down to one main factor: growth in equity prices around the world. The rich are getting richer because they own things that are appreciating in value.

At the same time, average wages in the U.S. and elsewhere have been stagnating: Wages now make up a record-low share of U.S. gross domestic product. Continue reading

Sources

• Co.Exist, from an article written by Ben Schiller, New York-based staff writer for Co.Exist.
• Image: Financial Post

SPIEGEL: Mrs. Gates, how does it feel to be so rich that you can use your money to influence the lives of millions of people?

Gates: Our money looks huge, but it's actually not when you look at the range of projects that we're going after. Bill and I believe philanthropy can only be effective if it starts things and proves whether they actually work or not. That's the place that governments often don't want to, or can't, work. We might take on six candidates for developing a malaria vaccine knowing that five will fall away. But we'll get one hit. And to meet a mom and know that her baby is alive and that we had something to do with it, that feels great.

SPIEGEL: Why didn't you just entrust your fortune to an institution like the media mogul Ted Turner, who donated a billion dollars to the United Nations?

Gates: Bill and I felt like we had something to add from the private sector. He started Microsoft; I worked there for nine years. We felt the private sector has a view of things that is beneficial to this work. You bring a kind of thinking, an entrepreneurial thinking. And then, if it works, governments can scale it up.

SPIEGEL: Are you not challenging the UN's leadership role when it comes to development aid?

Gates: Every single thing we do has to be done with governments. Look, we could go out and spend the entire resource in two years. Gone, done. But would we have a catalytic effect? Would we have left something behind? Would we have saved as many maternal lives or childhood lives? The answer would be no. Continue reading

• Source: Spiegel Online
• Image: GirltalkHQ

Whether the poor also get poorer is another matter.

What would the taxi driver who took me across Beijing last year in a Toyota tricked out with three smartphones have said?

Not so long ago, he was driving a three-wheeled, pedal-powered rickshaw.

It's more a case of the poor getting richer too - but without political intervention, they'll never catch the rich.

In the English-speaking world particularly, still reeling from the global financial crisis and growing tired of a managerial elite whose salaries appear unstoppably stratospheric, Piketty's new, best-selling doorstop of a book - Capital in the Twenty-First Century - is altering the debate about wealth, income and the future of capitalism and is set to be Harvard University Press's all-time best-seller.

Piketty has reframed the discussion by combining, for the first time, data sources spanning more than three centuries to prove that those with accumulated wealth are almost guaranteed always to become richer than those who work for a living.

The distinction between wealth and income is important.

Although excessively high incomes for chief executives is a live political issue, and Piketty would tax them at a rate as high as 80%, the bigger issue is the inter-generational impact of wealth accumulation.

He proposes taxing such wealth at a rate of 0.1-0.5% for fortunes of less than €1 million ($1.6 million), 1% for fortunes from €1-5 million, 2% for €5-10 million and from 5-10% for fortunes in the hundreds of billions of euros.

Critics note that if he's calling $1.6 million a fortune, then Piketty is putting many of the developed world's homeowners in the same boat as the "one per cent" global elite.

However, most of the attacks on his findings focus on the proposed solutions rather than the quality of the research that animates his conclusions. Continue reading.

Source: The Listener

Image: Emmanuelle Marchadour/AP in The Guardian

After being accused of lavish spending, Bishop Franz-Peter Tebartz-van Elst of Limburg has travelled to Rome to meet officials at the Vatican, where Pope Francis has made it clear he prefers Church leaders to adopt a simple lifestyle.

Controversy over Bishop Tebart-van Elst has focused on cost overruns on his luxurious new residence complex and related renovations, now priced at $NZ50 million.

The bishop reportedly can afford this expenditure because German dioceses have untaxed secret reserves called the "bishop's chair", known only to the bishop and a few advisors.

In some older dioceses, "bishop's chair" reserves include age-old property holdings, donations from former princely rulers and funds from German states over the past two centuries.

As pressure increases for transparency in the Church's financial affairs, some dioceses are now revealing the extent of their "bishop's chair" funds.

Cologne, the largest and reportedly richest diocese in Europe, announced "in connection with the current discussion about Church finances" that its archbishop had reserves equal to $NZ268 million in 2012.

The small diocese of Trier, Germany's oldest, had a reserve of $NZ136 million and said part of its earnings went to pay damages to victims of the clerical sexual abuse scandals that rocked the German Church in recent years.

The increasing exodus of disillusioned Catholics from the Church in Germany has even alarmed the German Chancellor, Angela Merkel, whose spokesman said the situation in Limburg was proving a burden to the Catholic Church.

Christians in Germany pay a church tax, which in 2012 raised more than $NZ8 billion for the Catholics and more than $NZ7 billion for the Protestant churches.

A Catholic who formally resigns from the Church no longer has to pay this tax.

Sources:

Reuters

The Tablet

Associated Press

Image: Vatican Insider

The research paper also said Max Weber's theories about the Protestant work ethic were supported by the results of the study and that they apply more widely than thought, including in the choice of political institutions and in explaining income inequality.

The pope spoke out as he welcomed Britain's new ambassador to the Vatican, Nigel Baker, on what was his 43rd birthday.

Mr Baker presented his letters of credential to the Pontiff in a colourful ceremony at his summer lakeside residence.