Time for the U.S., China, and Rest of the G-20 to Address Rising Income Inequality


In advance of the World Economic Forum meeting on January 25, 2011, Oxfam published a report noting the rising disparity among the G-20 nations from 1990 to 2010. What is curious about the report is the fact that many of the poorer developing and least economically developed states have managed to improve the relative state of equality within their own nations when the Gini Index numbers are analyzed in aggregate. The G-20 seem to be in a jam when it comes to grappling with the less well-off whose fortunes seem to be going downwards, but there is some hope as leaders are showing signs that they, at the very least, know they need to reverse this trend.

The evidence of the disparity can be seen in the social restlessness of the nations whose level of inequality has risen (seen in the streets of these nations). This sends one clear message to these countries' governments: Address the rising inequality, and address it fast. Widespread protests in the streets of Russia are perhaps the prime example as Russia’s inequality has risen by more than 20% in the past twenty years.

As the country's December protests suggest, rising inequality poses a threat can for any G-20 government. In China, where the inequality has risen by some 12-13% villagers from Wukan temporarily overthrew their local government in protest of unfair dealings with the their land and widespread dissatisfaction with the rising disparity between the ultra-rich profiting from China’s economic boom and poor workers who pave the way for China’s good times. This suggests China needs to implement serious socioeconomic remedies if the Chinese Communist Party wants to have a “harmonious society.” To be sure, these protests are not solely rooted in the economic disparity in these authoritarian states, but the wealth gap seems to be the catalyst for current social woes.

The Occupy Movement, which originated in the U.S. and spread across the developed and developing nations across the world, is yet another sign that the dissatisfaction is not limited to authoritarian members of the G-20. Inequality has risen by approximately 3% in the U.S., 4% in Canada, 6% in South Africa, and 7-8% in Japan. At the root of the Occupy protests is dissatisfaction with the gap between the wealthiest and poorest.

The time for action is coming to a head for the governments of the G-20. Will they meet this problem with the necessary policies or allow the tide to swallow them up?

Now there at least seems to be awareness of this inequitable and unsustainable trend, but action and results are still lacking. In the U.S., President Obama has started off his election year with a State of the Union address geared toward a commitment to undertake policy aimed at redressing the inequality between the wealthy and the poor. The issue of disparity was a centerpiece of discussion at the CCP’s Fifth Plenary Session of the 17th CPC Central Committee in October 2011. Japan seems to be mired at present with internal debate, though the issue is on the table. The message has been received by the G-20, but only time can tell if the governments of the G-20 are up to the task at hand.

Photo Credit: Wikimedia Commons