UN: Rising worldwide income inequality produces political turmoil

NEW YORK—Income inequality is increasing worldwide and within specific nations, and that’s producing political turmoil, too, a recent United Nations report says.

“Rising inequality creates discontent, political dysfunction and can lead to violent conflict,” the report warns, in a statement buried deep in its 218 pages.

But the same forces that produce the widening gap between the rich and the rest of us can be harnessed, by governments and by international cooperation, to start to close the chasm, UN Secretary-General António Guterres adds. But only if they want to, he notes. So far, they don’t, he warns.

The World Social Report 2020: Inequality In A Rapidly Changing World, by the UN’s Department of Economic and Social Affairs, paints a gloomy picture of the widening income gap. It warns of the negative political impact, too. The report is available on the UN website.

“Without appropriate policies and institutions in place, inequalities concentrate political influence among those who are already better off, which tends to preserve or even widen opportunity gaps,” the report says. “Growing political influence among the more fortunate erodes trust in the ability of governments to address the needs of the majority.”

“This lack of trust, in turn, can destabilize political systems and hinder the functioning of democracy. Today, popular discontent is high even in countries that have fully recovered from the 2008 financial and economic crisis and have benefited from steady growth in recent years.”

And the rich seize political processes to their advantage, worldwide, the report adds – just like in the U.S. That leads to mistrust of institutions and growing unrest.

“In principle, rising inequality should become a rallying cry for greater redistribution through progressive taxation and more comprehensive public service provision. However, this is often not the case. People in positions of power tend to capture political processes, particularly in contexts of high and growing inequality.”

“Without strict checks and balances to prevent it, big corporations and the wealthy may use their position and resources to lobby in support of their interests, raise legal challenges to progressive tax legislation, or promote communications and media campaigns to influence, for example, public perceptions of redistribution.”

“A strong middle class can act as a counterbalance to the interests of wealthier groups by demanding better and more accessible public services, infrastructure and social protection. Where the middle class is small or shrinking, it exerts insufficient political pressure.”

The report says 71% of the world’s people live in nations where income inequality is increasing. That group includes the two nations with the largest economies, the U.S. and China, and the two with the largest populations, China and India.

There are also widening gaps within nations, principally between cities and the surrounding countryside. There are growing income gaps between cities within individual countries, too. That’s important, the UN notes, because, for the first time in human history, most of the world’s people live in urban areas.

The UN report about inequality and its warnings about resulting global turmoil reinforce warnings AFL-CIO President Richard Trumka repeatedly utters – warnings borne out by political developments both in the U.S. and in other developed nations, notably in Western Europe, the report notes.

The report does not, however, say anything about the impact of union density, or lack of it, on the gap between the rich and the rest of us, a point the federation makes.

Trumka repeatedly cites an academic study showing a majority of U.S. younger people, who have grown up in a time of income stagnation or worse, have lost faith in democracy as a positive engine economically and politically.

And while he does not explicitly say so, the widening U.S. gap between the rich and the rest of us also feeds the fires of resentment, racism, xenophobia, and prejudice fanned by GOP President Donald Trump. The report, without using those words, makes that link to Trump – and citing the same factors which led to the “Brexit” referendum success, extends the analogy.

“We confront the harsh realities of a deeply unequal global landscape. In North and South alike, mass protests have flared up, fueled by a combination of economic woes, growing inequalities, and job insecurity. Income disparities and a lack of opportunities are creating a vicious cycle of inequality, frustration, and discontent across generations,” UN Secretary-General António Guterres says in the introductory summary.

The report “documents deep divides within and across countries despite an era of extraordinary economic growth and widespread improvements in living standards. The report also underscores how gender, along with ethnicity, race, place of residence and socioeconomic status, continue to shape the chances people have in life,” he adds.

“In some parts of the world, divides based on identity are becoming more pronounced. Meanwhile, gaps in newer areas, such as access to online and mobile technologies, are emerging. Unless progress accelerates, the core promise” the UN laid out in 2005, “to leave no one behind,” will stay distant and miss the agency’s 2030 target date.

Rapid technological change, individual access to it and benefit from it, is not the only contributor to the growing gap between the rich and the rest. Discrimination based on age, sex, race, ethnicity, religion, disability, country of origin and socio-economic status widens the gap.

And increasing urbanization widens the chasm between city and countryside. Rural areas have declined to 45% of the globe’s population, but they have 80% of its poor. Forced migration of people displaced by conflict or job loss due to change doesn’t help. And the climate crisis also makes things worse, Guterres says.

“In many places, the growing tide of inequality could further swell under the force of these megatrends,” Guterres adds. Key report points include:

“Income inequality increased in most developed countries and in some middle-income countries, including China and India, since 1990.” Inequality is decreasing, however, “in most countries of Latin America and the Caribbean and in several African and Asian countries over the last two decades.”

“Despite progress in some countries, income and wealth are increasingly concentrated at the top. The share of income going to the richest 1% of the population increased in 59 out of 100 countries with data from 1990 to 2015.1 Meanwhile, the poorest 40% earned less than 25% of income in all 92 countries with data.”

Income inequality is growing within nations, but not between them. There, the UN says, it’s shrinking, mainly due to China’s strong growth over the last quarter of a century. That doesn’t mean it’s gone, though. “The average income of people living in Northern America is 16 times higher than that of people in sub-Saharan Africa, for example.”

“While high and growing income inequality is fueling polarized political debates around the globe, a consensus has emerged that all should enjoy equal access to opportunity – that one’s chances to succeed in life should not be determined by circumstances beyond an individual’s control,” the report says. But the UN report offers no evidence for the “consensus” it cites.

The report says solutions to income inequality exist but admits inaction to reduce the gap between the rich and the rest of us is due to a combination of corporate and class clout, weakened opposition and lack of political will.

“Mobilizing support for many of the policy responses to inequality can be an uphill battle. Depending on how they are designed and implemented, efforts to reduce inequality will inevitably challenge the interests of certain individuals and groups,” the UN says.

Improved child health and more access to primary education helped lessen the income gap between the developed nations and the developing nations. But after the primary grades, progress stalls.

“Disparities in secondary school attendance by ethnic group, wealth quintile and educational level of the household head increased since the 1990s in developing countries with data. Gaps in learning outcomes are large and persistent as well,” the report says.

“Such inequalities have historical roots, but often continue even after the conditions that generated them change. Ethnic minorities, for instance, often remain disadvantaged even in countries where special efforts are made to promote their inclusion. Members of groups that suffered from discrimination in the past start off with fewer assets and lower levels of social and human capital than other groups. While prejudice and discrimination are decried around the globe, they remain pervasive obstacles to equal opportunity.”

The more unequal a country or society is, the more slowly it grows – and the harder it is for downtrodden and disadvantaged groups to break out of the cycle of poverty there.

The report also cites specific factors that add to the U.S. income gap. A big one is “income hoarding” by the economic elite. That hoarding features practices which leave everyone else out:

The hoarding includes exclusionary zoning, such as gated communities and zoning only for large single-family homes, though the report does not cite those specific practices. It also includes local schools’ reliance on property tax revenues – which helps rich districts stay richer for school kids and harms the other kids – and high tuitions and “legacy preference” at elite universities. It faults the for-profit college industry which takes financial advantage of students from low-income families while producing dubious or unusable education, and few jobs.

“Real or perceived inequality among social groups in access to economic resources, public services, political processes, and power, along with other aspects of civic and cultural life, has been closely associated with intense grievances that, in turn, have often been mobilized to fuel violent conflict,” the UN says.

Research revealed in a 2016 study “suggests that when the distribution of income and wealth clearly falls along distinct ethnic or religious lines, it can be particularly harmful to social cohesion, inspiring hatred, envy and a sense of unfairness. The recent resurgence of populism in some countries has also been presented as a direct consequence of rising inequality.

And while the UN does not cite declining union density as a cause for rising income inequality, it does cite another top bugaboo for workers – corporate-crafted “free trade” pacts backed by the political and economic elite.

“It is possible the pursuit of a free-trade agenda in the 2000s – supported by high-income groups – left low- and middle-income groups feeling unrepresented by traditional political parties,” the UN says, citing Thomas Piketty’s famous and influential 2018 book.

“In the United States, for instance, counties with greater global trade exposure shifted towards the conservative Republican Party – and its populist candidate, Donald Trump – in the 2016 presidential election. In the United Kingdom, greater exposure to trade with China resulted in regions voting more strongly in favor of leaving the European Union.”

“In both countries, however, the most consistent single predictor of how people voted was educational levels. In this context, tackling inequality is only one of several social and economic policy imperatives to ensure fairer, more sustainable globalization.”