Worldwide inequality grows as richest 0.1% grab more wealth
The 2018 World Inequality Report shows the dramatic rise in inequality in recent decades caused by unequal ownership of capital, privatisation of public assets and limp tax policies.
Income inequality has increased in almost all world regions in recent decades although at different speeds.
The top 1% of highest earners have captured twice as much grown as the bottom half since 1980, even though the poorest 50% of the global population has seen a rise in its income thanks to the growth in Asia -- China and India in particular.
National policies and institutions have had a crucial role in shaping inequality given the fact that even countries that are similarly developed show very different results.
In all regions around the world, the 10% richest account for at least 30% of total national income, with Europe having the lowest figure at 37%, followed by 41% in China, 46% in Russia, 47% in USA and Canada,55% in sub-Saharan Africa, Brazil and India and 61% in the Middle East.
Privatisation of capital limits the government's ability to regulate inequality and furthermore in some cases this reduction of government involvement has been highlighted with the implementation of weak tax systems.
The UK has been one of many rich countries where there has been a general rise in net private wealth in recent decades, from 200-350% of national income in 1970 to 400-700% today.
The World Inequality Report, which is produced by the World Wealth and Income Database, which aims to provide open and convenient access to the most extensive available database on the historical evolution of the world distribution of income and wealth, both within countries and between countries.
WIR also made certain forecasts regarding inequality assuming that “business stays as usual”. Their predictions are that the middle class will be squeezed under and income inequality will increase even with economic growth in the respective countries.
To tackle the problem of inequality the report recommends countries implement progressive tax regimes, reducing post-tax inequality and also diminishing pre-tax inequality because top earners are given less incentives for wealth accumulation.
They also recommend a global financial register to deal with tax evasion and money laundering. This would put an end to tax havens which now hold more than 10% of the global GDP.
Their last advice is to provide equal access to all education and well-paying jobs to reduce the gap of inequality existing nowadays. To do this there must be a high degree of public investments needed in education, health and environmental protection.