The richest 1% of are set to control as much as two-thirds of the world’s wealth by 2030, highlighting the challenges policy makers face in curbing growing global income inequality.
Inequality Fuels Anger and Distrust
The analysis has led to a cross-party call for action as world leaders are warned that the continued accumulation of wealth at the top of society will fuel anger and distrust unless they take action to redress the divide.
The figures were produced by the UK’s House of Commons library and they suggest that the top 1% of the world’s wealthiest will control 64% of it in the next roughly two decades. That is despite the effects of the global financial crisis in 2008, which contributed to heavy financial losses in all sections of society.
Wealthy 1% Would Hold $305 Trillion
Since 2008, the 1%’s wealth has been growing at an average of 6% each year — double the 3% wealth growth rate that the remaining 99% of the planet’s population has experienced. If those trends were to continue, the wealthy 1% would hold $305 trillion — up from $140 trillion today.
Danny Dorling, professor of geography at the University of Oxford, said: “Even if the income of the wealthiest people in the world stops rising dramatically in the future, their wealth will still grow for some time.
“The last peak of income inequality was in 1913. We are near that again, but even if we reduce inequality now it will continue to grow for one to two more decades.”
Experts put the growing wealth pile of the world’s elite down to rising income inequality — exacerbating the wealth gap — and savvy saving among the wealthy, including higher interest rates in recent years and the accumulation of assets.
The wealthiest people have also invested a large amount of money via equity stakes in stocks, companies directly and other financial assets, which have risen in value.
Voters Fear Corruption and Unfair Policy Influence
Global inequality is a growing problem for the world’s governments because recent surveys suggest that voters perceive the influence exerted by the super wealthy to be a problem.
When asked by Opinium, a pollster, who would have the most power in 2030, the largest proportion — 34% — said the mega-rich, higher than the 28% who thought national governments would be the most powerful.
The survey highlighted the growing distrust of those at the top of society, as 41% believed wealth inequality would contribute to rising corruption levels, while 43% said the super-rich would enjoy unfair influence on government policy.
Liam Byrne, the former Labour cabinet minister who commissioned the research, said: “If we don’t take steps to rewrite the rules of how our economies work, then we condemn ourselves to a future that remains unequal for good.
“That’s morally bad, and economically disastrous, risking a new explosion in instability, corruption and poverty.”
Cross-Party Support for Policies to Curb Inequlaity
The research comes as MPs, business heads, academics and trade unions all warn of the need to address global income inequality.
The problem is of such importance that it has garnered the support of a coalition of cross-party UK parliamentarians.
Possible mooted solutions to wealth inequality include boosting productivity to ensure that wages rise, and the reform of capital markets to promote greater equality across class, ethnicity, gender and religion.
George Freeman, a Tory MP and former head of the prime minister’s policy board, said: “While mankind has never seen such income inequality, it is also true that mankind has never experienced such rapid increases in living standards. Around the world billions of people are being lifted out of poverty at a pace never seen before.
“But the extraordinary concentration of global wealth today — fueled by the pace of technological innovation and globalization — poses serious challenges.
“If the system of capitalist liberal democracy which has triumphed in the west is to pass the big test of globalization — and the assault from radical Islam as well as its own internal pressures from post-crash austerity — we need some new thinking on ways to widen opportunity, share ownership and philanthropy. Fast.”