The wealthy 1% own almost twice as much of the new global wealth as the remaining 99%, putting us in a severe economic inequality crisis. Social stress brought on by this imbalance is resulting in increased rates of drug misuse, obesity, homicide, jail, newborn mortality, COVID-19 fatalities, teenage pregnancy, and poorer public trust, social mobility, and child well-being.
The homicide and incarceration rates in the United States and Norway, respectively, are over 11 times greater. A more equitable distribution of income would help everyone, including the wealthy, as it would improve their mental health, lower their risk of violence, and lower their children’s chance of drug usage. Government expenses associated with inequality are also considerable. According to estimates from the Equality Trust, the UK could save more than £100 billion annually if its disparity lowered to the average of the five nations with the smallest income differences. Reducing unhealthy and excessive spending, fostering more solidarity, and improving societal resilience to calamities like climate change all depend on addressing inequality.
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The United States is among the nations most impacted by inequality, which is a major component in the worldwide economic scene. Research has indicated that those residing in more unequal societies tend to spend more on prestige items such as vacation houses, swimming pools, vacations, designer clothing, and luxury automobiles. This is because people purchase products associated with high social standing and improve their appearance to others because they believe that riches and self-worth are related.
Environmental measures are also more difficult to execute when there is inequality because people believe that the burden is not being distributed properly. For instance, when President Emmanuel Macron attempted to impose an “eco-tax” on petrol by raising the price at the pump by a few percentage points, the result was the gilets jaunes protests that broke out throughout France in 2018. The administration abandoned the plan in 2019. Similar to this, in 2018 Brazilian truck drivers blocked roadways and supply networks in protest over increases in gasoline taxes.
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Inequalities in society, however, are more detrimental to the environment. Levels of equality in wealthy, developed nations strongly correlated with scores on an index of performance developed in five environmental areas: international cooperation (ratifying UN treaties and avoiding unilateral coercive measures), air pollution, recycling of waste materials, carbon emissions of the rich, and progress towards the Sustainable Development Goals of the UN. This association persists when socioeconomic and health issues taken into account.
Societies with greater degrees of equality have stronger bonds among members of the community and a greater degree of trust. Furthermore, 10–20% of people in nations with greater equality believe that environmental preservation should take precedence over economic expansion. Societies with greater equality also score higher on the Global Peace Index and give out more foreign aid. The UN recommends that nations pay 0.7% of their gross national income (GNI) to foreign aid; the US gives 0.2%, the UK gives 0.5%, while Sweden and Norway each give about 1% of their GNI.
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To stop decades of increasing inequality and limit the richest earnings, policymakers must move swiftly. Progressive taxation, which transfers financial obligations from low-income individuals to high-income individuals, is the best option for governments looking to alleviate inequality and finance the infrastructure required for the change to sustainability and carbon neutrality. Close international tax havens and loopholes are imperative, as corporate tax evasion is predicted to cost developing nations $100 billion annually.
The benefits of a consumption tax, which is based on personal income less savings and hasn’t been attempted yet, should also be taken into account to reduce spending. Incentives and legislation will also required to guarantee more equitable management of big businesses. The degree of income and wealth disparity typically lessened by business strategies including employee ownership, representation on corporate boards, share ownership, mutuals, and cooperatives.
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While it is not a cure-all for social, health, or environmental issues, reducing economic inequality is essential to finding solutions for each of them. The nations with the most diverse approaches will advance the fastest.
