Inequality, according to the Despite such high-status condemnation, the income gap has continued to widen through the global economic crisis. It is higher among the world's richest nations than before the financial crash.
Such levels of inequality should be economic red alerts. They make economies much more prone to crisis. The great surge in inequality since the 1980s not only blew us over the cliff in 2008; it also prolonged and deepened the downturn. It is sowing the seeds for the next crisis.
The clearest sign of the risks ahead is to found in what the
The world is awash with spare capital: a mix of corporate surpluses and privately-owned liquid wealth. In the
Before the crash, these surpluses were spent in ways that destabilised economies, distorting incentives and fuelling a boom in financial engineering that enriched the few while undermining the productive economy. During the crisis, and at present, these surpluses could have been used to launch a sustained investment and job-creating boom.
Even a portion could have raised
Now that recovery is belatedly under way, the risk is that these surpluses will be used again, not for much-needed investment, but to feed another round of high-risk self-enriching financial activity. Investment banks are already promoting a new version of the lucrative collateralized debt obligation, the financial product that wreaked so much havoc in the build-up to 2008.
Despite the lofty speeches, the lessons of 2008 have yet to be learned. Economies built around poverty wages and huge corporate and private surpluses are unsustainable. As
Creating a more equal distribution of the cake, with firms using these surpluses to finance a pay rise, is an economic imperative. Until we correct for these great imbalances, today's artificially created recovery will prove very short-lived.
Inequality, according to the
Despite such high-status condemnation, the income gap has continued to widen through the global economic crisis. It is higher among the world's richest nations than before the financial crash.