Income Inequality Is Growing In Most Developed Nations

Anyone who has been paying attention has to know that the United States has, in the last 30 years or so, developed a huge gap between the income of the richest Americans and the rest of America -- a gap that rivals that of the 1920's which spurred the Great Depression. The "trickle-down" policies of the Republican Party has favored the rich so much that the top 1% has seen their income climb by over 240% since 1979. Meanwhile, the income of the top 20% (minus the 1%) has done good just to stay ahead of inflation, and the income of the bottom 80% has not kept up with inflation (and this group has significantly less buying power than they did in 1979).

This huge and growing gap in income between the rich and the rest of America is what spurred the demonstrations of the Occupy Wall Street movement -- a movement which has spread across the nation. But one thing that surprised some was that the OWS movement did not stop at the borders of the United States. It spread around the world, and was especially strong in other developed nations. Why did this happen? That question is answered by a new report released by the Organization for Economic Cooperation & Development (OECD).


The OECD report shows that the United States is not the only developed nation where the gap between the rich and poor is growing. On average, the OECD nations have seen a 10% growth in that gap -- and the top 10% now makes 9 times as much in income as the bottom 10%. Some of the nations still do better than that 9-1 ratio. Germany, Denmark, and Sweden have a 6-1 ratio (although that has risen from 5-1 in the 1980's.

Other nations do worse than the 9-1 ratio. Italy, Japan, South Korea, and the United Kingdom all have a 10-1 ratio. But even that pales in comparison to the 14-1 gap ratio of the United States (along with Israel and Turkey). Mexico and Chile have the worst rates at 25-1, but the gap is starting to decrease in both those countries, unlike the United States (and others) where the gap continues to grow larger.

OECD Secretary-General Angel Gurria said, "The social contract is starting to unravel in many countries. This study dispels the assumptions that the benefits of economic growth will automatically trickle down to the disadvantaged and that greater inequality foster greater social mobility. Without a comprehensive strategy for inclusive growth, inequality will continue to rise." The report goes on to blame both tax cuts and benefit cuts for much of the growing inequality, saying:

Tax and benefit systems play a major role in reducing market-driven inequality, but have  become less effective at redistributing income since the mid-1990s. The main reason lies on the benefits side: benefits levels fell in nearly all OECD countries, eligibility rules were tightened to contain spending on social protection, and transfers to the poorest failed to keep pace with earnings growth. As a result, the benefit system in most countries has become less effective in reducing inequalities over the past 15 years. Another factor has been a cut in top tax rates for high-earners. 

A reasonable person would have thought the United States (and other nations) would have learned a valuable lesson from the Great Depression which resulted from the last great gap in income (and wealth). But our politicians have either very short memories or an extreme deficiency in reasoning ability, because they have initiated policies that created the very same gap in income, bringing on what is now called the Great Recession -- and they still haven't learned their lesson. Our politicians, especially the Republicans, want to increase the same mistakes that caused this economic mess. They want more tax cuts for the rich and more benefit cuts for the disadvantaged.

It is now obvious that they only way to end this recession, create jobs, and re-institute a fairer and more equal distribution of income is to vote enough Republicans out of office so that they can no longer block efforts to fix the economy. They care only for the rich, and as long as they retain some power, only the rich will benefit.