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The figures are showing a stark truth: the levels of income inequality all around the world remain on the rise. In several countries, especially the largest and richest ones, the rich get richer while poverty becomes worse day after day. While it is a common argument that a degree of inequality is necessary for motivating people to work harder, it is also true that such extreme levels of it can be detrimental to the economy. As a result, this trend is proving to be a concern to economists and political figures everywhere.
The nation most notorious for income inequality is none other than the United States. Recent research has shown that 95% of the States' gains from the economic recovery all went to the highest-earning 1% of the population. The U.S. also has a post-tax-and-transfer Gini coefficient of 0.42, the highest in the world. However, the problem is not limited to the U.S. Countries such as Israel, the UK, Canada, Greece, Spain, and Australia also all report high Gini coefficients of 0.38 and above. It does not stop at just this, however. Inequality has been changing at drastic paces in some of the world's biggest countries: Ireland and Spain both showed Gini coefficient increases of over 6 from 2007-2011. This all goes to show that income inequality has more of global presence now than ever before. Indeed, looking at global wealth distribution, it is found that 68.7% of the world's overall income belongs to 3.0% of the global population, while 0.7% of total wealth is shared among the bottom 41.0% of the world population.
The growth of inequality in recent years can be seen as a result poor government regulation of banking institutions, advancement of technology, and globalization. In turn, inequality has been viewed as the cause of lower economic growth, political unrest, and the potential long-term effect of lower equality of opportunity in future generations.
Despite all this, there have not been many major measures created to combat income inequality, although there have been several solutions suggested. Ideas include revising national budgets to reduce favors for the rich, increasing concentration on early education, and adopting universal social policies. How do you think global income inequality can be reduced?
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