• Mon. Jan 17th, 2022

Persistent global inequalities, a social time bomb – La Tribune

Byeditorial

Dec 7, 2021

Health inequalities, populism, growing number of billionaires … the pandemic has once again thrown harsh light on the major challenges of the 21st century. This umpteenth wave, which set off the world economy in the spring of 2020, continues to cause a stir all over the planet. Soaring energy prices and global warming on all continents could cause major social tensions in the years to come.

In this health context once again troubled by the Omicron variant, the laboratory co-directed by the famous economist Thomas Piketty has just published a vast and particularly damning report on global inequalities.

According to the researchers, the people in the poorest 50% own 2% of the world’s wealth, while the wealthiest 10% monopolize 76% of the planetary wealth. Between the two categories, the 40% represent about 22% of the total wealth.

After four years of work, this network, made up of around 100 researchers from all over the world, has drawn up a highly documented panorama of more than 230 pages. “We remain in a world where there is a persistence of global inequalities in the 20th and 21st century” Lucas Chancel, the lead author, summed up in a meeting with reporters.

In terms of income, “the richest 10% earned 18 times more than the poorest 50% in 1820. This ratio will drop to 40 in 1910, to 53 in the 1980s and 38 times in 2020, he adds.

This historical perspective over two centuries shows that, if there has been progress, the income differences between the top 10% and the poorest 50% have returned to their level of a little earlier. more than a century: “Inequalities between countries and within countries are as great in 1910 as in 2020”, say the researchers.

Asked a few days ago by The gallery about his latest work “A brief history of equality”, Thomas Piketty said:

“Both on internal inequalities within the country and on inequalities at the international level, we are still very far from the score in terms of equality. The march towards equality is still underway. The society of privileges still exists. . “

And the extended pandemic should not fix this alarming finding. “Wealth inequalities have increased during the pandemic”, continued Lucas Chancel. For Nobel-winning economists Esther Duflo and Abhijit Banerjee, this report “arrives at an extremely opportune time”:

“Since wealth is a major source of power, influence, but also … money, this portends future increases in inequality. Indeed, at the heart of this explosion lies the extreme concentration of power economy in the hands of a small group of the super-rich, “write the two researchers in their foreword to the report.

Esther Duflo

[Esther Duflo et Abhijit Banerjee au Massachussets Institute of Technology (MIT) en 2019 aux États-Unis. Crédits : Reuters.]

The richest 10% get half of the world’s gross income

One of the important lessons of this copious planetary report is that the richest 10% of the world population receives 52% of global income, while the poorest half earns around 8.5% of gross world income.

(see graph above).

On average, an individual in the Top 10% of the planet earns around 87,000 euros, or $ 122,000 each year, while a person in the bottom 50% earns 2,800 euros each year, or $ 3,920. The 40% in the middle takes in about 40% of the total gross income. Behind this average lie spectacular disparities at the extremes.

The crazy growth of high incomes

The deregulation and financialization of capitalism over the past forty years has led to a maddening expansion of the growth of high incomes on the globe. In this regard, economists from the Paris-based research center calculated the annual growth rate of wealth by population category between 1995 and 2021. It appears that the 500 richest individuals on earth record their income growth of around 7% each year, while the poor 50% experience an average annual increase in their income between 3% and 4% over this period. The researchers took over the work of former World Bank chief economist Branko Milanovic in updating the data for the world’s population. In his work “Global inequalities”

become a classic, the teacher at New York University had drawn the now famous

Elephant curve

“Globalization contributes to the powerlessness of politics” (Branko Milanovic)

The Middle East and North Africa, the most unequal regions in the world

On the globe, the Middle East and North Africa are the most unbalanced regions. The top of the pyramid takes nearly 60% of income while the bottom collects crumbs, less than 10% of income. Among the other poor performers, appear sub-Saharan Africa, Latin America and South Asia.

At the other end of the spectrum, Europe is a good student. The Old Continent is indeed the least unequal region on the planet. The big difference with other regions is that the middle 40% get around 45% of the income. Then came East Asia and North America.

Across the rich countries as a whole, however, there are profound disparities. Between the United States, a very unequal society, and Sweden for example, the gap is immense. This is also visible in low-income and middle-income countries.

Inequalities increased within countries, but decreased between countries

The other particularly striking lesson from this international report is that overall inequalities have continued to increase within countries, but have instead fallen between states. Between countries, “the gap between the average incomes of the richest 10% and the poorest 50% has decreased by 10 points since the year 2000”,

explain the experts.

At the same time, income disparities have increased significantly within states: “The gap between the richest 10% and the poorest 50% has almost doubled over the same period”,

add the statisticians. Despite the economic catch-up and strong growth in emerging countries, “the world remains particularly unequal today”.

In Brazil or India, for example, the differences in wealth within large cities are startling.

Still persistent gender inequalities The road to achieving parity between women and men is far from over. “In the world, women receive only between 25% and 30% of income from work. In France, this share is around 36%. There is still a lot of work to be done to reach 50%”, Lucas Chancel said in an exchange with reporters. The participation of women in the labor market has greatly increased during the 20th century, but this increase has not necessarily been accompanied by a more equitable sharing of labor income. In 30 years, “Progress has been very slow globally and the dynamics are really different between countries, when some are making progress while in others, the share of labor income going to women is declining”,

specify the rapporteurs. Suffice to say that the challenges remain immense.

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FRAMED

Inequalities: where is France? A few months before the presidential election, the publication of this report should ignite the debates between the candidates for the supreme office. While the LREM majority has redoubled its efforts in recent months to take off the image of “president of the rich” which is attributed to Emmanuel Macron, the economists of the laboratory on global inequalities emphasize that

“the inequalities at the top have increased due to the drop in taxation concentrated on the richest income groups (abolition of the ISF, Flat tax, …)”. Asked byThe gallery , Lucas Chancel stated that,

“between the end of 2017 and 2021, inequalities increased in France. The latest study by the Institute of Public Policies (IPP) shows this very clearly and clearly. When we take into account all the tax reforms and social, those who were already doing very well before earned much more than those who were not. “

On the other hand, over several decades, income inequalities have stabilized in France. The average income is 36,300 euros in purchasing power parity (PPP) in 2021. Behind this average, disparities remain. While the bottom 50% of the distribution earn on average 16,500 euros, the Top 10 earns about 7 times more, or 117,000 euros. The gap between the bottom 50% and the top 10% is lower than in Germany (10) and comparable to others like the UK (8.8). The difference is much more limited than in the United States (17) or China (14).On the heritage front, the gap is much larger. THEThe capital held by the bottom 50% amounts to 228,000 euros compared to 6.12 million euros for the wealthiest 10%, i.e. assets 26 times greater . [..] “Over the whole of the 20th century, inequalities have fallen significantly After 1983 (the turn of austerity under François Mitterrand), a wave of deregulation and liberalization policies partly turned this downward trend “,

indicates the report.

Budget 2022: the wealthiest households, big winners from Macron reforms

___ the gross world income (RMB) is gross domestic product (GDP) plus net income received from abroad for compensation of employees, property, and net taxes and subsidies on production,