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Growing Global Inequality Gap ‘Has Reached a Tipping Point’

‘When such a large group in the population gains so little from economic growth, the social fabric frays and trust in institutions is weakened.’

By Nadia Prupis

With the gap between the rich and poor growing worldwide, a new study by the Organization for Economic Cooperation and Development (OECD) published Thursday suggests that the only way to reverse such rampant inequality is by implementing government measures aimed at balancing the playing field

Chief among those measures: Tax the rich and push for gender equality.

In its 34 member states, income inequality has reached record highs, the OECD found in its study, In It Together: Why Less Inequality Benefits All. The average income of the top 10 percent was 9.6 times higher than the bottom 10 percent, the OECD found. In the U.S., it was 19 times higher.

“We have reached a tipping point,” said OECD secretary-general Ángel Gurría. “The evidence shows that high inequality is bad for growth. The case for policy action is as much economic as social. By not addressing inequality, governments are cutting into the social fabric of their countries and hurting their long-term economic growth.”

“In recent decades, as much as 40% of the population at the lower end of the distribution has benefited little from economic growth in many countries,” the study found. “In some cases, low earners have even seen their incomes fall in real terms. When such a large group in the population gains so little from economic growth, the social fabric frays and trust in institutions is weakened.”

Working conditions have also deteriorated, largely due to the rise of a “non-standard” economy that incentivizes part-time work, self-employment, and temporary contracting.

“Between 1995 and 2013, more than 50 percent of all jobs created in OECD countries fell into these categories,” the OECD stated in a press release on Thursday. “Low-skilled temporary workers, in particular, have much lower and instable earnings than permanent workers.”

However, the study found that an increase in the number of women working “helped stem the rise in inequality, despite their being about 16% less likely to be in paid work and earn about 15% less than men.”

Inequality is highest in Chile, Mexico, the United States, Turkey, and Israel. It is lowest in Denmark, Slovenia, Slovak Republic and Norway.

Higher inequality also drags down economic growth by making opportunities more scant for the bottom 40 percent and often preventing low-income children from receiving quality education, or enough of it. The long-term rise of inequality “has indeed put a significant brake on long-term growth,” from developed nations to emerging economies, the OECD found.

“If the bottom loses ground, everyone is losing ground,” the report states.

The OECD recommends a wide range of solutions to reverse the growing wealth gap, including removing the obstacles that prevent mothers from working; doing more to provide youth with useful skills and allow workers to continue updating those skills over time; and redistribute wealth through taxes and transfers, which the report describes as a “powerful instrument to contribute to more equality and more growth.”

“In recent decades, the effectiveness of redistribution mechanisms has been weakened in many countries,” the OECD states. “To address this, policies need to ensure that wealthier individuals, but also multinational firms, pay their share of the tax burden.”

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CTuttle

  • http://firedoglake.com/ CTuttle

    *ugh* Not looking good…

    https://youtu.be/vhyxezfOfoE

  • http://firedoglake.com/ CTuttle

    At least my two Senators were Nays…!

  • jane24

    Thanks for posting this, CT. Not only are things looking grimmer for minimum wage earners, (despite recent minimum wage hikes in a few areas), but the middle income bracket is also suffering and on the downward slide. Benefit packages aren’t what they used to be! Health plans are a fine example. Deductibles are now so high that for many, their health plan no longer provides for routine health care, but amounts to no more than “disaster” insurance.

    I do think it may be a while before the ptb feel the need to act on inequality. Imo, this has not hit them in the pocket book hard enough -yet.

  • Bluedot

    You got that one right. Health insurance is now mostly useless due to deductibles. I have no proof but I would bet it is leading to less health care and more bankruptcy. I could tell tales about several in my own family who thought they were covered.

    And while some places are increasing wages, many more are not. My one grandson is a ” manager” at a fast food restaurant. He makes $8 an hour. And he works just less than forty hours but more than those who ” work” for him. Meanwhile, the top ten percent are doing fine and the top tenth of one percent are princes.

    Ugh.

  • Bluedot

    Obummer wants this as his legacy. He is delusional.

  • Bluedot

    thanks Tut. This is good stuff.

  • TalkingWarrior

    A very good pick for your evening post, CT.

    This “news” has been all over my public radio news and programs since it broke. I have simply been calling what we’ve been and continue going through the Second Great Depression. Pretty much as I finally gave in and came to accept what the Pope said last fall: WW3 has already begun – in the MENA, the Far East, Ukraine.

    “Interesting times,” indeed.
    .

  • http://Smilejamaicakrcl.com Bobbylon
  • http://Smilejamaicakrcl.com Bobbylon

    He has the votes. This was all a charade. Notice the timing? Thursday PM before a 3 day weekend. The fix is in. Has been from day one of his Presidency. Trojan Horse with Cold War II. Nice.

  • http://Smilejamaicakrcl.com Bobbylon

    Ron Wyden is a four letter word that rhymes with other trucker. Go bloviate with Bernie on MS-DNC you fake.

  • http://mosquitocloud.net/ aprescoup

    I’m wondering whether we should not consider obliging globalized monopoly capitalism to proceed in delegitimizing the source of its own power – the nation-state – and thus let it find itself confronted by a mass of humanity seeking to regain control over their shared destiny by first jettisoning the enablers of its deconstruction (governments) and then, by reconstituting new “states” based in lessons learned.

    Let’s, perhaps, consider to let them have the noose on which we can then; sooner than later, boiling frogs and all that…permanently hang them?

  • mulp

    Given Republicans obstruct all good health care, why aren’t people voting in every damn election for progressives, switching to Republican to elect, and even run as progressives for the Republican nomination.

    Progressives were in the Republican Party, not the Democratic Party, until LBJ signed the voting rights law. Liberals were in the Democratic Party, and liberals are not progressives or socialists, but more capitalist than the conservatives are, and especially the current Republicans who are pillage and plunderers of capital.

    But in any case, why haven’t progressives defeated the opponents of good health care inn the States and Congress a few at a time in 2010, 2012, 2014? If you think the US is a dictator and only one vote every four years matters, you end up not liking the result.

  • mulp

    Yeah, you are the realist because you believe blocking TPP will reopen all the closed factories and undo the past decades of layoffs.

  • jane24

    Hear you, Bluedot, on your grandson’s situation with that “just under forty hours.” So many employers using this ploy now.

  • http://mosquitocloud.net/ aprescoup

    What do you think TPP will accomplish for humanity, shyster?

  • http://mosquitocloud.net/ aprescoup

    Can you plesae add an app to translate your ravings into english?!

  • FukTheArmy

    Tax the rich
    feed the poor
    tax the rich
    until they’re rich no more

  • FukTheArmy

    My employer’s health care plan has a $5000 deductible. I think that will probably skyrocket from there in the near future.

  • FukTheArmy

    Rethugs keep the low-information voters in line with “God, guns, & the gays”

  • Bluedot

    Two things. If this is so good why is it so secret? And we are talking about future layoffs here. Lets keep what we got and not give more away.

  • Bluedot

    And that is all you need to know.

  • Bluedot

    There are some deductibles and over $10000. What is that good for?

  • Bluedot

    What in the world are you talking about?

  • http://Smilejamaicakrcl.com Bobbylon

    Wyden is point man for the Dem’s on TPP

  • http://Smilejamaicakrcl.com Bobbylon

    http://www.zerohedge.com/news/2015-05-22/why-us-consumer-about-be-crushed-obamacare-inflationary-deluge-arrives

    This is the true intent and affect of Obamacare. Higher expenditures for Joe Sixpack and Sally Housecoat for health care.

    Obama was brilliant in convicing people that “Affordable” or subsidized Insurance = affordable care. This article above shows that is certainly not the case.

    “US inflation finally spiked the most since 2013 driven by a 0.7% monthly surge in medical care service costs: the highest since 2007!”

  • http://Smilejamaicakrcl.com Bobbylon

    Democrats obstructed all good health care. Pelousy and Cyclops Reid made sure that Medicare For All could not come for a vote.

    Pelousy’s famous quote: We have to pass Obamacare to find out what is in the bill.

    Worked for her. Her net worth has doubled since she became Speaker in 2006.

    Dems are to blame not Republicans. They had the votes. We got Obamacare instead. Peddle this shit on Daily Kos.

  • Istherenonamethatdoesntexist

    The maples cried “Inequality”
    And demanded equal rights

    ‘The oaks are just too greedy
    We will make them give us light’

    Now there’s no more oak oppression
    For they passed a noble law

    And the trees are all kept equal
    By hatchet, axe, and saw

  • Bluedot

    Got it.

  • http://Smilejamaicakrcl.com Bobbylon

    Since FDL doesn’t appear to do open threads. I love the new site. It read well on my Imac and Ipad. Praise Jah you got rid of the full page hijack ads. That was killing my reading time spent on FDL.

    I haven’t seen some of my faves like ecahn, Sarah B and TammanyTiger yet

    There is no more conspiracy theorist* than I. I have used Disqus nicely at Truthdig. Be glad FDL didn’t use Viafoura. That has made commenting on SFgate nigh impossible. Please come back regulars. The comments are as important as the stories in new media

    *we prefer to be called conspiracists, thank you very much!

    I don’t know what happened to Just Say Now with Jon Walker. It would be nice to see a branded take on that with 2016 and perhaps 10 states going for the green (pun intended)

    Even though some of Jon’s extrapolations on his polling were a tad askew, with 2016 barreling down, some sort of poll pundit would be nice.

    But truly, CTut, DS, Kevin, everyone else is doing just terrific stuff. New site makes me spend more time. If I get the payraise I anticipate, I hope to be able to contribute soon

    Thanks to all

  • dubinsky

    were it only that simple

  • jane24

    My own deductible is similar and aware of many same. As you, I’m not expecting costs to go down any time soon.

  • jane24

    “Disasters” only…