What happens to society where economic power is becoming concentrated in the hands of the few? The present might provide an unsettling answer. A tiny global elite is experiencing a great flourishing; the masses below them are, at varying rates, being left behind. Last week the landmark World Inequality Report, a data-rich project maintained by more than 100 researchers in more than 70 countries, found that the richest 1% reaped 27% of the world’s income between 1980 and 2016. The bottom half of humanity, by contrast, got 12%. While the very poorest people have benefited in the last 40 years, it is the extremely rich who’ve emerged as the big winners. China’s economic rise has lifted hundreds of millions out of poverty but the wealth share held by the nation’s top 1% doubled from 15% to 30%. Such has been the concentration of wealth in India and Russia that inequality not seen since the time of the Raj and the tsar has reappeared. By 2030, the report warns, just 250 people could own 1.5% of all the wealth in the world.
In the west the prevailing ideology of the last 40 years has been of privatisation, deregulation and most recently austerity. This was grounded in rules that served to hold in check the collective power of electorates. The result was higher profits and dividends, lower personal taxes and – for the richest – a higher share of national income. A culture has embedded the perpetual making and lavish expenditure of wealth. However, this came at the expense of almost everyone else: the age of globalisation has seen the pay of lower- and middle-income groups in North America and Europe stagnate. The toxic afterburn of these policies – moulded by domestic choices as much as global pressures – has poisoned politics. Support for anti-establishment parties is now at its highest level since the 1930s. At the same time, mainstream parties have either been radicalised or considerably weakened.
There are legitimate grievances of citizens that need to be addressed. But they have been stoked often by the worst among us. In Brexit Britain, anti-system resentment is being channelled by an extraordinary set of opportunists whose doublespeak claims that watering down workers’ rights will lead to an “overtime boom”. Donald Trump taps white working-class anger in the United States but is backing a plan to make the country virtually a tax haven for the richest 0.1%, who will face the lowest tax rates since the Gilded Age. If reactionary nationalists are talking about revolution but in fact entrenching a plutocratic status quo, then the same unfortunate trait can be found in progressive globalism. Emmanuel Macron’s desire to tax wages more than business income in France is a bad sign that he privileges mobile wealth-creators over immobile workers.
There is nothing inevitable about how much economic liberty the rich are afforded or how long stagnant incomes last. To its credit, Europe shows the way: if the world follows its path, global inequality will decline. The continent is by no means perfect: there should be EU-wide taxes on the richest companies and individuals because they benefit the most from its tariff-free zone. Citizens must recover the idea that politics offers democratic protection, rooted in an egalitarian tradition. In the UK, it is bewildering to see a housebuilding company pay its chief executive £110m when the firm reaped the benefits of a large government subsidy and share prices that bounced back from post-crash lows. Why are ministers not asking for him to publish his tax return to show he will pay £45m back to the Treasury? A laissez-faire approach has for too long subdued democracy and fostered a hyper-exploitative political economy.
The US supreme court justice Louis Brandeis once correctly observed: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” Politicians need to make the case for a more equitable settlement: advocating more progressive taxes and a global financial register to stop wealth being shielded in offshore havens. Government spending on health, education and wellbeing is required for the meaningful exercise of citizenship. The rich must share the burden of common challenges – not just sail away in their tax-haven-registered yachts. The mutinous mood among voters will only deepen when they begin paying carbon taxes, and the rich don’t even pay taxes. Contemporary life rests on a fragile consensus that governance works because people believe it does. This faith rests on the rich pulling their weight. Which is why they should.