
Inequality: the middle way – Michael Roberts
“In the 21st century, inequality of wealth has risen significantly. Indeed, the wealth of the 50 richest people on earth increased by 9% a year between 1995 and 2021, with the wealth of the richest 500 rising by 7% a year. Average wealth grew by less than half that rate, at 3.2% over the same period. Since 1995 the top 1% took 38% of all additional global wealth in the last 25 years, whereas the bottom 50% captured just 2% of it. The rise of the so-called middle class income group in the graph below is mostly due to China’s reduction of poverty levels. The top 0.01% of adults increased their share of personal wealth from 7.5% in 1995 to 11% now. And the billionaire population increased their share from 1% to 3.5%.
“Tony Atkinson was the founding father of modern research into inequality – somebody who clearly should have got a Nobel (Riksbank) prize in economics before he died. In an address, Where is inequality headed?”, Atkinson pointed out that the biggest rises in inequality took place before globalisation and the automation revolution got underway in the 1990s.
“Atkinson pinned down the causes of inequality to two. The first was the sharp fall in direct income tax for the top earners under neoliberal government policies from the 1980s onwards. But the second was the sharp rise in capital income (i.e. income generated from the ownership of capital rather than from the sale of labour power). The rising profit share in capitalist sector production that most OECD economies generated since the 1980s was translated into higher dividends, interest and rent for the top 1-5% who generally own the means of production.”
BTW, home mortgages, which most people need to become homeowners, are assets generating $$ on the books of banks, whose profits flow to people at the top of the pyramid. So it goes.