Shortly before the French revolution of 1789, the top 10% of the population held roughly 90% of the nation’s wealth, with the top 1% holding 60%. According to a report by Oxfam, the richest 1% have accumulated close to two-thirds of all the wealth created in the world since 2020. The report concludes that “A billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90 per cent”. The world economic system is reaching the point at which something must be done to address increasing inequality. The following two-part article discusses the causes and consequences of this increasing inequality.
The G20 nations, comprising the world’s largest economies, have been grappling with the issue of income inequality for several years now. Income inequality refers to the unequal distribution of income among a population, where some individuals or groups earn substantially more than others. The trend of income inequality has been on the rise in most G20 nations over the last 20 years. In this analysis, we will examine the causes and consequences of income inequality, as well as the policies that G20 nations have implemented to address this issue.
Causes of Income Inequality
Income inequality can be attributed to several factors, including globalisation, technological advancements, and government policies. One of the most significant contributors to income inequality is globalisation. Globalisation has led to the integration of economies and the free flow of goods and services across borders. However, this integration has also resulted in the displacement of jobs in developed countries as corporations move to low-cost regions. This has left many workers in developed countries unemployed or with low-paying jobs, which has widened the income gap.
Technological advancements have also contributed to income inequality. With the rise of automation and artificial intelligence, many low-skilled jobs have become obsolete, leaving workers in these fields unemployed or with low wages. On the other hand, highly skilled workers who can operate and maintain these technologies are in high demand, leading to an increase in their wages and exacerbating income inequality.
Government policies also play a significant role in income inequality. Policies such as tax cuts for the wealthy, reduced social spending, and weakened labor laws have all contributed to the widening of the income gap. These policies benefit the rich at the expense of the poor and middle class, who are left with fewer resources and opportunities.