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Inequality and Economics: Peaks and Troughs

In by Sam, Crossing the pond, International on October 9, 2010 at 17:53

n the eve of the publication of the Equality and Human Rights Commission’s report into discrimination and disadvantage in British society (How Fair is Britain?) it is worth looking back at one of the oft unnoticed effects of inequality in society.

In the US wealth inequality reached its highest peak in 70 years immediately prior to the 2007/2008 economic crash. In 2007 33.8% of the nation’s wealth was in the pockets of the richest 1% while the richest 10% horded a massive 70.5% between them. The bottom 50% of the nation meanwhile (that’s 151 million people) had only 2.5%.

This could all be coincidental of course. Except the last time inequality reached it’s peak in the US was 1928 – maybe coincidentally – the year of the Great Depression.

But why is equality and economics in the US relevant to us? Well with the huge effect the American economy has on the rest of the world it is clearly in everyone’s interest we live in a more equal world. And, after all, it was the USA, Singapore, Portugal AND the UK named this year as the most unequal nations in a book by Danny Dorling.

Click Below To Keep Reading…

When times are fiscally tough it is often agreed that initiatives to alleviate the problems of the bottom 50% must take a hit – this couldn’t be more wrong. If we, as a nation, are going to grow our way out of the recession and avoid ever taking such a huge economic plummet again we need to solve our equality issues once and for all.

I have paraphrased a report by the Working Group on Extreme Inequality (Download the full report at http://extremeinequality.org/)
References:
  • Arthur B. Kennickell, “Ponds and Streams: Wealth and Income in the U.S., 1989 to
    2007,” Federal Reserve Board Working Paper, January 7, 2009, Figure A3a, p. 63.
  • Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913-
    1998,” Quarterly Journal of Economics, 118(1), 2003. Updated to 2007 at
    http://emlab.berkeley.edu/users/saez.
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