Has The World Run Out Of Food?

The World Economic Forum ranks inequality as one of the greatest risks to the global economy 71% of the world’s adults own just 3% of the world’s wealth

846% of global wealth is owned by only 81% of the population The people at the very top – the 07% of humanity who are millionaires – own almost half of the world’s wealth

Is this the natural order of things? Can the gap be closed? This is a big question to answer Luckily, Libby and Brogan from Bloom are here to help me! Let’s see if our brains and Brogan’s pencan answer the question! Firstly, it is important to acknowledge that there is a division in wealth As you can guess, there is a direct correlation between capitalist industrialisation and the concentration of wealth The very richest people in society – the super rich, who own at least $50 million in assets – are concentrated in the West Between them, the USA and the UK have over half the world’s millionaires

The USA has by far the most billionaires Unsurprisingly, it also has the worst disparity of wealth in the industrial world The richest 5% of American households each have more than 90 times the wealth of the typical American family The second biggest national wealth gap in the world is half the size of America’s According to a study by Emmanuel Saez and Gabriel Zucman from the University of California, Berkeley, these statistics are part of a long-term trend

After the Great Depression, the economy saw a slow reduction in the share of wealth owned by the richest 1% There was still great inequality, but the gap was closing Since the rise of neoliberalism under Ronald Reagan and Margaret Thatcher, the USA and Britain have seen an increasingly uneven distribution of wealth, with the very richest taking more and more In the last 17 years alone the net worth of the poorest American households has decreased by an average $6,000 Meanwhile the net worth of the very richest has grown by another $70,000, even after the Great Recession of 2008

This is partly because the recession affected the most significant assets owned by the poor – their houses When it comes to incomes, the pattern is the same The top 01% of earners take home more than 184 times the income of the bottom 90% According to a study by NPR, if the level of inequality had stayed the same since 1979, then millionaire households would have over $800,000 less than they do today

Every other household in America would have between $3,000 and $17,000 more than they currently do So how do we close the wealth gap? The most effective way to redistribute wealth is through taxation This isn’t as simple as governments taking money from the richest and giving it directly to the poor Governments also provide services and protections like healthcare, transport and housing, that ordinary people can’t afford However, the current tax code is so complicated that corporations and wealthy individuals can exploit loopholes to pay as little tax as possible

The IRS estimates that, every year, $460 billion is lost through tax evasion Incidentally, over a third of the money diverted for corporate tax avoidance goes through the UK and the Netherlands This raises the problem of globalisation: how do you tax companies and people who operate in many different countries, each with its own laws? Nobel Prize-winning economist Joseph Stigler says the super rich and corporations must pay their taxes and stop using tax havens Even so, the tax code is designed to be progressive and put the burden on the wealthy It does this by putting higher tax rates on higher earners, and offering tax exemptions to the poorest

In Britain and America nearly half the population pay no income tax; whereas one quarter of income tax revenue comes from the richest 1% This system leads many right-wing politicians to say the tax code is unfair They have the support of the public A 2017 Pew Research survey found 56% of Americans think the tax code is unfair But unlike the Republican party, 60% of Americans believe corporations and the wealthy aren’t paying their fair share

Not everyone believes wealth inequality is a problem, though Political theorist John Tamny argues that wealth inequality is essential for capitalism to work It’s the basis of the American Dream Individuals are inspired to work hard and take risks in order to better themselves Moreover, Tamny argues that the super rich are necessary to spread wealth around

American Enterprise Institute Scholar Edward Conard agrees, saying wealth inequality allows entrepreneurs to create new industries and drive innovation According to Tamny and Conard, the super rich can invest in expensive new technologies that allow economies to grow For instance, in the early 1980s, the first cell phone cost $4,000 Today, you can buy them for $40 Would smartphones be available to the poor without the rich? In fact, people expect there to be inequality

A study by behavioral scientists Michael Norton and Dan Ariely found that people are perfectly happy with wealth inequality – provided the richest people have just three times as much as the poorest This obviously does not reflect reality The problem is, that some wealth is inherited, and not all of it is earned proportionally to our work Since 1948, the average American’s productivity has risen by 243% But their hourly wage has grown by 108% – tens of times slower than CEO salaries

In general, wage growth has stalled 92% of American children born in 1940 went on to earn more than their parents; only 50% of children born in 1980 will earn more than their parents Wealth inequality is more pronounced by race and gender This is because opportunities are limited for people who have been historically repressed In the West, this means the average woman earns just three quarters of what the average man earns; and ethnic minorities typically own one hundred times less than white people

Opportunities are also denied to the poor as a whole, and this reinforces the wealth gap For instance, a 2017 study by the National Bureau of Economic Research found that, adjusted for inflation, private school fees are five times higher than they were 30 years ago As a result, the number of middle and lower class children going to private school has halved Consequently, less than a quarter of college degrees are given to students from low-income backgrounds But by 2020, two thirds of new jobs will require a degree, forcing lower income families further into poverty

Social mobility is therefore decreasing If opportunities were improved for these sectors of society – like affordable access to a good education – then social mobility would be increased With this in mind, billionaires like Bill Gates, Warren Buffet and Nick Hanauer say we need to strengthen welfare capitalism They advocate government that ensures minimum wages reflect living costs, that puts the tax burden on the wealthy and provides opportunities for people at the bottom of the ladder to climb to the top – through affordable services like education, healthcare and loans Workers are also consumers, so if they have more wealth, they will buy more goods, which will help the economy grow

The super rich can stay rich – just not as rich as they are

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