Income Inequality is Exploding: How Dangerous is it?

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Income Inequality is Exploding: How Dangerous is it?

We've all heard about income inequality and how the recent Great Recession of 2008 has made it even more dramatic.

We also know that the rich in America have recovered several years before unemployment started to finally budge (slightly) downwards.

By 2010, fully three years ahead of everyone else, the ultra rich were okay again and enjoying life.

We live with that knowledge without fully realizing the extent of the inequality. Here's an amazing video that really brings it home:

Don't think this is an American story. What's happened in America has happened around the world. Here's the case of the UK:

And here's an attempt to look at the problem globally:

When reading the many comments to the videos on YouTube, what strikes me most are three things:

1. the idea expressed by many that envy is driving some rabid leftist people to put false information together when that is not the case at all. The data is based on cold, unemotional income/population statistics, things like the Gini coefficient.

2. The surprising fact, rarely pointed out though it deserves to be, that inequality is getting worse: at the time of the Industrial Revolution, the richest countries were (roughly) three times as rich as the poorest. By the time the colonial period was over (in the 1960s), the richest countries were 35 times richer, and now they are 80 times richer. The trend towards more inequality worldwide is obvious.

3. Linked to this, is the idea put forth by many that income inequality, if talked about
too much, will cause social unrest. So better keep mum, don't rock the
boat.

To be honest, I'm surprised that social unrest has been so muted. Where have all the Occupy Wall Streeters gone? Sure, there are recurrent explosions of discontent in Southern Europe caused by austerity programs imposed by the infamous "troika", the IMF, the European Commission and the European Central Bank. A series of International Policy Digest articles gives you a good overview of this (click here).

Can we expect our world to be permanently divided so that social unrest becomes the norm? That the streets of our cities will be the scene of recurring civil war?

Quite frankly, I don't think so. The ultra rich have already learned to be discreet about their wealth and that is certainly something they will keep doing in future, perhaps even more so than now. And many already live in gated communities and walk around with bodyguards...

Also, consider that a truly unequal society is likely to face economic stagnation.There will come a time when consumption will stop driving the economy because there is only so much that the ultra rich can spend on their own consumption. What will they do with their extra money? Why, they will spend it on technical gadgets and fancy innovations and they will play on Wall Street, the more derivatives, the better!

Hum, I wonder whether much of all this hasn't already happened? Yet we haven't had a truly bloody revolution in the 1789 French style...

My bet is that we won't have it. Some skirmishes? Yes. A revolution? No.

And the ultra rich will eventually become the only ones to enjoy the full benefits from technical advances in the green, rural comfort of their protected homes while the rest of us sink in the miasma of polluted, over-crowded cities...That, at least, is my vision of the future 200 years from now - that future I describe in my soon-to-be published novel "Forever Young".

What do you think? Are we headed for a full revolution or sporadic and limited social unrest?

PS: My thanks go to one of my readers who pointed me to the video about income inequality in America.

(Source of image: Wikimedia)

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