Will We Be Poorer and Less Equal?
Over three years ago, I blogged about the inevitability that Western democracies will become poorer, and more unequal. I’ll pat myself on the back for being at least a little prescient about an issue that is now getting a lot of attention.
In his celebrated book Capital in the Twenty-First Century published last year, Thomas Piketty provided detailed evidence that inequality is happening, and offered an economic theory to explain why—involving the relative growth rates of economic growth and growth of capital. Two other things in the past week reminded me of this phenomenon.
First were news reports of reduced global growth forecasts by the International Monetary Fund, driven largely by slowing growth in China. The Asian superpower, which remains the biggest engine of global growth, is also one of the world’s most unequal countries. Growing inequality is not just a problem in the West.
Second, I attended a lecture in London by former Harvard president and Deputy Secretary of the US Treasury Lawrence Summers. His thesis was that Western democracies cannot remain stable without the promise of growing middle class incomes and opportunity, and he questioned whether Europe is taking the steps needed to promote continued prosperity.
I find myself wondering whether we are too late. The global elite who seem to be in control hardly seem likely to willingly give up their increasingly privileged position—Oxfam has just reported that the top 1% now own more assets than the bottom 99%. I work with such people often, and it’s generally not out of malice that they hold onto power and assets—indeed I see a lot of philanthropy. It’s just that the people who control a system stacked in their favor have no incentive to change it. And the challenges of resources—especially the global climate and the need to feed a global population that continues to grow rapidly—make the problem all the more intractable.
There are reasons for hope that a better path forward will emerge. Lawrence Summers predicted in his lecture that the solutions will lie in technological change, and others like Peter Thiel (Zero to One: Notes on Startups, or How to Build the Future) and Amory Lovins (Reinventing Fire: Bold Business Solutions for the New Energy Era) have suggested the same. I hope they are right. And while we wait to find out, I hope that people will increasingly pay attention to the increasingly clear messages that growth is not an absolute good, and that wealth must be shared.
In his celebrated book Capital in the Twenty-First Century published last year, Thomas Piketty provided detailed evidence that inequality is happening, and offered an economic theory to explain why—involving the relative growth rates of economic growth and growth of capital. Two other things in the past week reminded me of this phenomenon.
First were news reports of reduced global growth forecasts by the International Monetary Fund, driven largely by slowing growth in China. The Asian superpower, which remains the biggest engine of global growth, is also one of the world’s most unequal countries. Growing inequality is not just a problem in the West.
Second, I attended a lecture in London by former Harvard president and Deputy Secretary of the US Treasury Lawrence Summers. His thesis was that Western democracies cannot remain stable without the promise of growing middle class incomes and opportunity, and he questioned whether Europe is taking the steps needed to promote continued prosperity.
I find myself wondering whether we are too late. The global elite who seem to be in control hardly seem likely to willingly give up their increasingly privileged position—Oxfam has just reported that the top 1% now own more assets than the bottom 99%. I work with such people often, and it’s generally not out of malice that they hold onto power and assets—indeed I see a lot of philanthropy. It’s just that the people who control a system stacked in their favor have no incentive to change it. And the challenges of resources—especially the global climate and the need to feed a global population that continues to grow rapidly—make the problem all the more intractable.
There are reasons for hope that a better path forward will emerge. Lawrence Summers predicted in his lecture that the solutions will lie in technological change, and others like Peter Thiel (Zero to One: Notes on Startups, or How to Build the Future) and Amory Lovins (Reinventing Fire: Bold Business Solutions for the New Energy Era) have suggested the same. I hope they are right. And while we wait to find out, I hope that people will increasingly pay attention to the increasingly clear messages that growth is not an absolute good, and that wealth must be shared.
No comments have been added yet.
