We Income inequality rises in 2021 For the first time in a decade, according to Census Bureau data released in September 2022.
This may sound surprising, because the most accurate measurement of The poverty rate declined during the same period,
but for development experts like meThis apparent contradiction makes perfect sense.
This is because what has been driving income inequality—in the United States—and around the world for years—is that the very rich are getting even richer, rather than the poor.
Bret Arends: a reason for the rich to be rich
In every major region of the world outside Europe, excessive wealth is becoming concentrated in a handful of people.
This common measure of income inequality is calculated by estimating the relative share of national income derived by the proportion of the population.
In a society with perfect equality – meaning that everyone gets an equal share of pi – the Gini coefficient would be 0. In the most unequal society possible, where an individual pooled every penny of that nation’s wealth, the Gini coefficient would be 1.
The census found that the Gini index in the US rose 1.2% to 0.494 in 2021, from 0.488 a year earlier. in many Other CountriesConversely, the Guinea is decreasing, while covid-19 pandemic-and the deep recession and weak economic recovery triggered by it- worsened global income inequality.
inequality is high developing countries compared to the rich. United States of america There is an exception. The American Gini coefficient is much higher than in similar economies, like Denmarkwhose Gini coefficient was 0.28 in 2019, and France, where it was 0.32 in 2018, according to the World Bank.
In 2021, richest 1% Americans owned 34.9% of the nation’s wealth, while the average Americans in the bottom half had only $12,065-less money compared to their counterparts in other industrialized countries. By comparison, the richest 1% in the United Kingdom and Germany had only 22.6% and 18.6% of their country’s wealth, respectively.
Globally, the richest 10% of people now own about 76% of the world’s wealth. Meanwhile, the bottom 50% have just 2%, according to 2022 World Inequality Reportwhich analyzes the data and work of more than 100 researchers and inequality experts.
driver of excessive income and wealth
Contributing to higher levels of major increases in executive pay Income inequality,
Take typical corporate CEO, Back in 1965, he-all CEOs were white men than more most are still– Earned about 20 times the amount of an average employee in the company he headed. In 2018, the typical CEO earned 278 times that of their typical employees.
His wealth grows in large part because there is a waterfall of Corporate and personal tax breaks, instead of the salaried salary paid by the shareholders. When to make money from the rich in the United States capital gainThe highest tax rate they pay is 20%, while the highest-paid are on the hook for 37% on every additional dollar they earn.
This count doesn’t even count effects of tax breaksWhich often slashes real-world capital gains tax to a much lower level.
SpaceX and Twitter CEO Elon Musk Currently the richest person in the world who has the fortune $174 billionAccording to Bloomberg estimates. The $383 million he earned in one day in 2020 made it possible for him to buy enough Tesla Model 3 cars cover almost all of manhattan Did he want to do this?
Musk’s wealth accumulation is extreme. But, he Founder of several tech companiesAlphabet including GOOG,
and Amazon AMZN,
Everyone has made several billion dollars in just a few years. The average person can never earn that much money through salary alone.
Another day, another billionaire
a A new billionaire is created every 26 hoursAccording to Oxfam, an international aid and research group where I used to work.
Oxfam has calculated that inequality on a global scale is so extreme that the world’s 10 richest people have more wealth than the 3.1 billion poorest people.
Economists who study global inequality have found that the wealthy in large English-speaking countries, along with India and China, have seen dramatic increases in their incomes. from the 1980s, inequality rose as regulation, economic liberalization Programs and other policies created opportunities for the rich to become richer.
Why inequality matters
The rich spend their money less than the poor. As a result, excessive concentration of money can slow down whose pace? Economic Development,
Extreme inequality can also increase political laxity And undermine the faith in political and economic systems. It can also destroy the principles of Fairness and democratic norms of sharing power and resources,
the richest people have more wealth than the whole country, Such extreme power and influence in the hands of a select few who face little accountability raise concerns Which are part of a strong debate on whether and how to address extreme inequality.
voters in Massachusetts In November 2022 it approved a tax increase on income earned by its richest residents. supporters of these initiatives It is claimed that the revenue raised will lead to funding for public services such as education and infrastructure. President Joe Biden There is also a proposal to almost double the top capital gains tax for those making more than $1 million.
Although society likes to act, I believe change is needed.
Fatima Jade SummaryExecutive Director of the Center for International Development, Harvard Kennedy School
This commentary was originally published by The ConversationWhy is inequality increasing in the US and around the world?
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The average CEO salary is now 399 times the salary of a typical employee – and a third of that increase has happened in the past three years
Credit: www.marketwatch.com /