tag:theconversation.com,2011:/au/topics/wealth-inequality-9161/articlesWealth inequality – The Conversation2023-05-31T12:38:48Ztag:theconversation.com,2011:article/2053532023-05-31T12:38:48Z2023-05-31T12:38:48ZMost super rich couples have breadwinning husbands and stay-at-home wives, contrasting sharply with everyone else<figure><img src="https://images.theconversation.com/files/528142/original/file-20230524-15-8jribu.jpeg?ixlib=rb-1.1.0&rect=484%2C0%2C6776%2C4671&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Uber wealthy couples are rather traditional when it comes to who works and who doesn’t. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/business-pasion-royalty-free-image/186565267?adppopup=true">EXTREME-PHOTOGRAPHER/E+ via Getty Images</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em> </p>
<h2>The big idea</h2>
<p>Men are the sole breadwinners in over half of super rich heterosexual couples – defined as those in the top 1% of households – while the women are not employed, according to <a href="https://doi.org/10.1093/sf/soad061">our new peer-reviewed study</a>. That’s twice the rate of less affluent heterosexual couples.</p>
<p>Our finding is based on 30 years of data, from 1989 to 2019, from the Federal Reserve’s <a href="https://www.federalreserve.gov/econres/scfindex.htm">Survey of Consumer Finances</a>. We examined how couples divide work, focusing on three different wealthy groups – the super rich, the just plain rich and the upper middle class, as defined by their wealth percentile, and compared them with those of less affluent couples. </p>
<p>To get a better sense of how much money we’re talking about and the extreme differences among these groups, super rich couples in the U.S. had a median net worth of US$17.6 million in 2019. That compares with $2.3 million for rich couples – those in the next 9% of the wealth distribution – and $796,000 for the upper middle class, who were in the 10% after that. Our fourth group comprised everyone below the 80% threshold, with median wealth of just $67,000. </p>
<p>We found that, in 2019, 53% of super rich heterosexual couples had arrangements in which the woman was not gainfully employed, compared with 27% of rich couples, 20% of upper-middle-class couples and 26% of less affluent couples. </p>
<p>On the flip side, just 28% of super rich couples had both the man and woman working full time. In rich, upper-middle-class, and less affluent households, that figure was 51%, 61% and 50%, respectively. </p>
<p>Looking at the data over time is revealing. Whereas the share of couples in which only the man worked has modestly declined over the last 30 years for the other groups, it remained high among the super rich. </p>
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<h2>Why it matters</h2>
<p>The uniquely high prevalence of sole male-breadwinner arrangements among the super rich is a symptom of stark class and gender inequalities in the U.S. economy. </p>
<p>Rising class inequality between the super rich and all others <a href="https://doi.org/10.1177/0003122418820702">has been driven</a> by a handful of men’s incomes and wealth rising exponentially compared with everyone else’s. </p>
<p>And even though <a href="https://doi.org/10.15195/v9.a6">women have made progress</a> in entering professional jobs that pay $100,000 or more, the glass ceiling – or perhaps more appropriately, the <a href="https://doi.org/10.1177/0003122418820702">diamond ceiling</a> – is still firmly intact. </p>
<p>Accordingly, a woman’s objectively high income may seem less consequential to the overall household finances when her husband earns an exorbitantly high income of a million or more. Or, it may seem trivial when the couple has massive amounts of wealth exceeding $10 million.</p>
<p>The absence of women at the top of the economic ladder has many implications. </p>
<p>The super rich are inordinately powerful in the <a href="https://doi.org/10.1146/annurev-soc-020321-031544">workplace</a> and in <a href="https://press.princeton.edu/books/paperback/9780691162423/affluence-and-influence">politics</a>. If the majority of the wealthiest married women are not in the workforce, it is unlikely they have the same degree of public influence as their husbands. So men continue to exercise the majority of societal power associated with the super rich. </p>
<p>We also know that family structure shapes people’s worldviews and behaviors. Previous research shows that men with stay-at-home wives <a href="https://doi.org/10.1177/0001839214528704">are less supportive of women</a> in their own workplaces, including being less likely to promote them. This suggests that the most powerful leaders in the workplace and in politics may not be as eager to support women’s career advancement or family-friendly workplace policies as some might hope.</p>
<h2>What we still don’t know</h2>
<p>We don’t know what exactly drives super rich couples’ work-family decisions. </p>
<p>We believe that at least some of the women in these couples exit the labor force after their partner achieves economic success – and their incomes are no longer needed to maintain their lifestyle.</p>
<p>It’s also possible that some super rich men’s wealth accumulation was made possible, in part, by their wives’ unpaid labor throughout their careers. </p>
<p>The most highly compensated jobs in the U.S. economy tend to require <a href="https://doi.org/10.1111/jomf.12596">long hours</a>, frequent travel and the ability to be on call 24/7 – all of which tend to be incompatible with raising children and managing a household.</p>
<p>Men may have been able to meet these intense job demands and become financially successful because they have wives who stepped back from their own careers, freeing them from the majority of household responsibilities – a dynamic that few women have access to.</p><img src="https://counter.theconversation.com/content/205353/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While most heterosexual couples are dual-earners, super rich couples continue to have gender-traditional arrangements in which the man is the sole breadwinner.Jill Yavorsky, Assistant Professor of Sociology, University of North Carolina – CharlotteSarah Thebaud, Associate Professor, Sociology, University of California, Santa BarbaraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2038142023-05-14T11:19:12Z2023-05-14T11:19:12ZTaxing the wealthy to the hilt would make us all much better off<figure><img src="https://images.theconversation.com/files/524960/original/file-20230508-221323-dokyrv.jpg?ixlib=rb-1.1.0&rect=0%2C166%2C5044%2C2778&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Levying substantial taxes on the super-rich would lead to far more societal benefits than harms. What's taking us so long?</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/taxing-the-wealthy-to-the-hilt-would-make-us-all-much-better-off" width="100%" height="400"></iframe>
<p>In Canada today, one person — media magnate David Thomson — possesses roughly <a href="https://www.forbes.com/profile/david-thomson/?sh=200798055628">CA$73 billion</a> while <a href="https://www150.statcan.gc.ca/n1/pub/82-003-x/2021001/article/00002-eng.htm">more than 235,000 people are homeless</a>. In Toronto alone, <a href="https://www.toronto.ca/news/toronto-public-health-releases-2022-data-for-deaths-of-people-experiencing-homelessness/">187 homeless people died</a> on the streets in 2022.</p>
<figure class="align-left ">
<img alt="A shaggy-haired blonde man with a microphone in front of him." src="https://images.theconversation.com/files/524993/original/file-20230508-242259-mfeiu4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/524993/original/file-20230508-242259-mfeiu4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/524993/original/file-20230508-242259-mfeiu4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/524993/original/file-20230508-242259-mfeiu4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/524993/original/file-20230508-242259-mfeiu4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/524993/original/file-20230508-242259-mfeiu4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/524993/original/file-20230508-242259-mfeiu4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">David Thomson answers questions during a news conference in Winnipeg in 2011.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/David Lipnowski</span></span>
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<p>What can be done to address these kinds of disparities?</p>
<p>Though most people naturally dislike inequality, <a href="https://www.bostonreview.net/forum_response/karl-smith-wealth-tax-will-hurt-economy-not-help/">it’s often argued that raising taxes on the rich</a> will do more harm than good by damaging incentives and investment, thereby slowing economic growth and ultimately hurting us all.</p>
<p>“Given five fat sheep and ninety-five thin, how [to] induce the ninety-five to resign to the five the richest pasture and shadiest corners?” the famous British philosopher <a href="https://archive.org/details/in.ernet.dli.2015.275419/mode/2up">R.H. Tawney</a> once asked. He continued: </p>
<blockquote>
<p>“By convincing them, obviously, that, if they do not, they will die of rot, be eaten by wolves, and be deprived in the meantime of such pasture as they have. Nor, indeed, hitherto has it been difficult to convince them, for there is nothing which frightens thin sheep like the fear of being thinner.”</p>
</blockquote>
<p>But is it really true that high taxes — even very high ones — are detrimental to societal well-being?</p>
<p>The last few years have witnessed an explosion of new evidence from economists, sociologists, political scientists and ecologists that suggests they’re not.</p>
<h2>Exaggerated concerns</h2>
<p>It’s accurate that high taxes on the wealthy bring real risks. But in general, the downsides are highly overblown. </p>
<p>For instance, a common worry is that rich people will respond to high taxes by working less. But there’s essentially <a href="https://www.aeaweb.org/articles?id=10.1257/jel.50.1.3">zero empirical support</a> for this claim. In fact, there is now close to consensus among researchers that while the rich do frequently try to avoid taxes, <a href="http://dx.doi.org/10.2139/ssrn.1136210">they don’t do so by working less</a>.</p>
<p>The most serious potential cost of high taxes is the reduction of private investment. This is <a href="https://www.nber.org/papers/w6374">definitely possible</a>.</p>
<p>But the key point to keep in mind is that such a reduction is only half the picture. It’s wrong to think of taxes as simply reducing investment, because states do not simply collect taxes — they also spend them.</p>
<p>Therefore it’s more accurate to regard taxes not as reducing investment but as rearranging it — from the private sector to the public. </p>
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<img alt="A sign reads Burn Capitalism during a protest. A woman wearing a mask stands next to the sign." src="https://images.theconversation.com/files/524955/original/file-20230508-266123-6zjfix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/524955/original/file-20230508-266123-6zjfix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/524955/original/file-20230508-266123-6zjfix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/524955/original/file-20230508-266123-6zjfix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/524955/original/file-20230508-266123-6zjfix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/524955/original/file-20230508-266123-6zjfix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/524955/original/file-20230508-266123-6zjfix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An environmental group takes part in a three-day demonstration against what they call France’s inaction on climate issues in Paris in April 2022.</span>
<span class="attribution"><span class="source">(AP Photo/Francois Mori)</span></span>
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<p>Whether this is a good or bad thing depends entirely on the details. In many cases, levying high taxes on the rich will mean money is no longer invested in foreign stock markets or spent on unproductive things like private jets and multiple mansions, but is rather spent on productivity-enhancing entities like schools, hospitals, roads, public research grants and so on.</p>
<p>Indeed, <a href="https://doi.org/10.1007/s10887-017-9150-2">critical research</a> shows that, all things considered, high inequality actually tends to reduce an economy’s overall growth rate.</p>
<p>The most sensible and cautious conclusion is that high taxes — very high taxes, in particular — could somewhat reduce economic growth, but these costs are likely to be only mild or moderate.</p>
<p>What about the other side of the ledger? What are the social and economic benefits from high taxes and reduced inequality? In my book <a href="https://global.oup.com/academic/product/against-inequality-9780197670408?cc=us&lang=en&"><em>Against Inequality: The Practical and Ethical Case for Abolishing the Superrich</em></a>, I note that five stand out:</p>
<h2>1. The environment</h2>
<p>It’s well-known that <a href="https://www.ledevoir.com/documents/pdf/chancelpiketty2015.pdf">the rich emit far more</a> carbon than the rest of us. <a href="https://oxfamilibrary.openrepository.com/bitstream/handle/10546/621341/bp-inequality-kills-170122-en.pdf">The wealthiest 20 people in the world emit 8,000 times more carbon than the poorest billion people on Earth combined</a>. </p>
<p>So imposing high taxes on the rich would be doubly effective from an environmental perspective. It would directly reduce the copious emissions of the rich. And it would provide the necessary resources to build the new <a href="https://www.versobooks.com/en-ca/products/2546-a-planet-to-win">low-carbon infrastructure</a> — including public transit, green energy grids, etc. — that we desperately need. That would indirectly help the rest of us reduce our emissions too.</p>
<h2>2. Our democracy</h2>
<p>The evidence is overwhelming that <a href="https://www.journals.uchicago.edu/doi/pdf/10.1086/714930?casa_token=Y28Akco8IIYAAAAA:L1uApOgMwzDv2W_IFi5pioNLRqaF5LX4yujtPuj56-ZO-yqWrv5f3HJBMQiW4gbUjpZy0GI2wv9L">inequality erodes democracy</a>. For instance, American scholars <a href="https://doi.org/10.1017/S1537592714001595">Martin Gilens and Benjamin Page examined</a> 1,779 public policy debates between 1981 and 2002 to see whose voices actually mattered in deciding important issues.</p>
<p>They found that:</p>
<blockquote>
<p>“The majority does not rule — at least not in the causal sense of actually determining policy outcomes. When a majority of citizens disagrees with economic elites or with organized interests, they generally lose.”</p>
</blockquote>
<p>Such evidence demonstrates that significant inequality can actually break a democracy, transforming it into oligarchy, <a href="https://www.thenation.com/article/society/cbo-american-wealth-inequality/">as has arguably already transpired in the United States.</a></p>
<h2>3. Opportunity for all</h2>
<p>Inequality makes a mockery of the cherished aspiration of equal opportunity. To take one particularly egregious example, the poorest residents of Chicago today face a life expectancy <a href="https://www.theguardian.com/us-news/2019/jun/23/chicago-latest-news-life-expectancy-rich-poor-inequality">30 years shorter</a> than their richer neighbours down the street. </p>
<p>High redistributive taxes could reverse this most brutal of disparities. </p>
<p>We also know that countries with more equality <a href="https://www.aeaweb.org/articles?id=10.1257/jep.27.3.79">tend to have greater social mobility too</a>.</p>
<p>Richard Wilkinson, the famous British epidemiologist and inequalities scholar, <a href="https://www.ted.com/talks/richard_wilkinson_how_economic_inequality_harms_societies">likes to quip</a> that if Americans want to live the American dream and not just dream it, they should move to high-tax Denmark.</p>
<h2>4. Reduced xenophobia and racism</h2>
<p>Though right-wing populism has many complex causes, <a href="https://doi.org/10.1111/spsr.12332">research clearly demonstrates</a> that one of its main drivers is economic insecurity. That’s likely because insecurity increases fear that one’s already precarious position will be worsened by competition from “immigrants” and “others.”</p>
<p>The evidence shows that right-wing populism <a href="https://doi.org/10.1111/jcms.12310">can be effectively reduced</a> by enhancing economic security — for instance by taxing the rich to fund free public services — a stronger safety net and perhaps even a guaranteed basic income. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/a-guaranteed-basic-income-could-end-poverty-so-why-isnt-it-happening-182638">A guaranteed basic income could end poverty, so why isn’t it happening?</a>
</strong>
</em>
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<p>As <a href="https://www.france24.com/en/europe/20230508-french-police-under-fire-for-allowing-neo-nazi-rally-in-paris-on-ve-day">neo-Nazis once again march</a> in the streets, <a href="https://www.splcenter.org/news/2019/02/19/hate-groups-reach-record-high">hate crimes rise</a>, far-right political parties receive <a href="https://www.bloomberg.com/graphics/2017-europe-populist-right/">more public support</a> than any time since the 1930s, the benefits of reducing such terrifying threats are hard to overstate.</p>
<h2>5. Reduced social friction</h2>
<p>Reducing inequality also builds <a href="https://doi.org/10.1016/j.rssm.2012.06.002">community health and cohesion</a>. </p>
<p>It encourages greater levels of <a href="https://doi.org/10.1016/j.socscimed.2011.03.046">agreeableness</a> and <a href="https://doi.org/10.1111/j.1540-5907.2008.00352.x">tolerance</a>, better <a href="https://doi.org/10.1002/wps.20492">mental health</a> and <a href="https://www.longdom.org/open-access/income-inequality-and-crime-a-review-and-explanation-of-the-timeseries-evidence-2375-4435.1000103.pdf">reduces crime</a>. </p>
<p>All in all, the costs of high taxes and low inequality are likely to be only moderate. But the benefits are truly enormous — a different order of magnitude entirely.</p><img src="https://counter.theconversation.com/content/203814/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Malleson has received funding from the Social Sciences and Humanities Research Council. </span></em></p>The costs of high taxes on the rich are likely only to be moderate. But the democratic, environmental, and health benefits are truly enormous and could transform society and dramatically.Tom Malleson, Associate Professor of Social Justice & Peace Studies, Western UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1954142023-01-04T18:59:39Z2023-01-04T18:59:39ZHow the philosophy of the past can help us imagine the economy of the future<figure><img src="https://images.theconversation.com/files/502486/original/file-20221221-13-u2pgfg.jpg?ixlib=rb-1.1.0&rect=8%2C8%2C5542%2C3692&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's more necessary than ever before to re-examine the fundamentals of our economic order.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>The economy keeps making headlines for all the wrong reasons — stories about <a href="https://www.cbc.ca/news/business/food-price-report-1.6670597">rising prices</a>, <a href="https://www.cbc.ca/player/play/2041999427744">supply shortages</a> and a looming <a href="https://www.theguardian.com/business/2022/sep/23/unprecedented-events-creating-extremely-severe-risk-of-global-recession-economist-adam-tooze">recession</a> have been frequently making the front page these days. </p>
<p>The <a href="https://www.brookings.edu/blog/future-development/2022/03/18/inflation-could-wreak-vengeance-on-the-worlds-poor/">current economic crisis is deepening the long-standing issue of social inequality,</a> widening the gap between the rich and poor — a problem that was already accelerated by the <a href="https://www.penguinrandomhouse.com/books/301357/crashed-by-adam-tooze/">Great Recession of 2008</a> and the <a href="https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-economys-effects-on-food-housing-and">economic shock brought on by the COVID-19 pandemic</a>. </p>
<p>The richest country in the world, <a href="https://www.cbo.gov/system/files/2021-08/57061-Distribution-Household-Income.pdf">the U.S.</a>, is among the most drastic examples of this trend. <a href="https://www.cfr.org/backgrounder/us-inequality-debate">Today, American CEOs earn 940 per cent more than their counterparts did in 1978</a>. A typical worker, on the other hand, only goes home with 12 per cent more money than workers from 1978 did.</p>
<p>As a <a href="https://www.epi.org/publication/ceo-compensation-2018/">report by the Economic Policy Institute</a> demonstrates, rising CEO pay does not reflect a change in the value of skills — it represents a shift in power. Over decades, American politics has undermined the bargaining power of workers by <a href="https://www.usatoday.com/story/money/cars/2014/02/20/no-south-carolina-union-jobs/5642031/">discouraging</a> and <a href="https://www.fastcompany.com/90775158/anti-union-bills-bubble-up-in-congress-despite-growing-voter-support-for-organized-labor">obstructing</a> self-organizing efforts, such as <a href="https://dx.doi.org/10.1111/j.1467-8543.2006.00518.x">unionization</a>. </p>
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<img alt="A man speaks into a megaphone in front of a crowd of protesters holding signs" src="https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Amazon Labor Union protested at the site of the DealBook Summit in New York on Nov. 30, 2022, accusing Andy Jassy, the CEO of Amazon, of union-busting.</span>
<span class="attribution"><span class="source">(AP Photo/Seth Wenig)</span></span>
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</figure>
<p>The growing wealth of a minority at the expense of the majority means power is concentrated in the hands of a few people, <a href="https://inequality.org/facts/gender-inequality/#gender-wealth-gaps">mostly men</a>. It’s not surprising that figures such as <a href="https://www.cnn.com/specials/politics/january-6-insurrection">Donald Trump</a>, <a href="https://www.theguardian.com/technology/2019/mar/17/the-cambridge-analytica-scandal-changed-the-world-but-it-didnt-change-facebook">Mark Zuckerberg</a> and <a href="https://www.brookings.edu/blog/how-we-rise/2022/11/23/why-is-elon-musks-twitter-takeover-increasing-hate-speech/">Elon Musk</a> have a disproportional impact on our communities — sometimes with devastating consequences that threaten our democratic institutions.</p>
<h2>Economics with a human face</h2>
<p>It’s more necessary than ever before to re-examine the fundamentals of our economic order. The search for alternative economic models, however, is made difficult by conventional thinking patterns.</p>
<p>Many believe <a href="https://education.nationalgeographic.org/resource/socialism">we are facing a stark choice</a> between a capitalist market economy on the one hand and a socialist-planned economy on the other. </p>
<p>Although we live in a world that defines economic models in absolutist terms, it doesn’t have to be this way. We argue that the psychological and social perspectives on economy that were developed by 19th-century philosophers such as <a href="https://plato.stanford.edu/entries/hegel/">Georg Wilhelm Friedrich Hegel</a>, <a href="https://www.mqup.ca/john-stuart-mill--socialist-products-9780228005742.php">John Stuart Mill</a> and <a href="https://www.thoughtco.com/georg-simmel-3026490">Georg Simmel</a> can help us re-imagine economics with a human face. </p>
<p>These thinkers were convinced that a good economic order had to incorporate elements of classic capitalism (such as a <a href="https://www.britannica.com/topic/free-market">free market</a> in goods and services) with elements of classic socialism (such as <a href="https://democracycollaborative.org/programs/cwb">collective ownership</a> of the <a href="https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100145887">means of production</a>). This is what we call <a href="https://economicpluralism.com/">economic pluralism</a>. </p>
<h2>Hegel and the problem of affluence</h2>
<p>Hegel is a good example of an economic pluralist thinker. In his <a href="https://www.cambridge.org/highereducation/books/hegel-elements-of-the-philosophy-of-right/09AE6110FE96266A206924435BAF85C5#overview">1820 <em>Philosophy of Right</em></a>, he presented an <a href="https://doi.org/10.1111/ejop.12336">extensive reflection on the modern economy</a>. He discussed the market and its operating principles, social inequality and even the formation of desires through advertisements and consumer culture. </p>
<figure class="align-right ">
<img alt="An oil painting of an older white man with grey hair wearing a white cravat and a fur coat" src="https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=781&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=781&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=781&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=982&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=982&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=982&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Georg Wilhelm Friedrich Hegel was a German philosopher and one of the founding figures of modern western philosophy.</span>
<span class="attribution"><span class="source">(Jakob Schlesinger)</span></span>
</figcaption>
</figure>
<p>Among the many topics he examined was the <a href="https://doi.org/10.1017/apa.2021.7">problem of affluence</a>. Hegel was not just worried about the poverty created by the modern market economy, but also about the concentration of extreme wealth in few hands.</p>
<p>Writing hundreds of years before modern multi-billionaires arrived on the scene, <a href="https://www.worldcat.org/title/philosophie-des-rechts-die-vorlesung-von-181920-in-einer-nachschrift/oclc/885459313">Hegel already argued that</a> “both of these sides, poverty and affluence, represent the scourge (Verderben) of Civil Society.”</p>
<p>Hegel’s analysis is even more prescient: He believed affluence created the counter-intuitive tendency among the affluent to feel victimized and disenfranchized by society. As a result, the affluent perceived all social demands, like taxes, as unjustified incursions into their personal freedom. </p>
<p>Hegel thought this sense of victimization could lead to an unexpected bond between those at the very top of the economic pyramid and those at the bottom — a bond that overcame differences in lifestyle and mutual antipathy to form an alliance that attacks civil society from both sides. The phenomenon of <a href="https://www.politico.com/news/2020/09/22/donald-trump-union-support-snub-joe-biden-418329">Trump’s MAGA alliance</a> is an interesting modern example of this.</p>
<h2>Re-imagining the economy</h2>
<p>Unlike some later socialists, Hegel did not think problems of affluence were best rectified by introducing a planned economy that enforces wealth equality. Instead, his approach was pluralistic. </p>
<p>He made a case for a free market exchange paired with co-operative modes of production, which are — in some respects — similar to <a href="https://www.newyorker.com/business/currency/how-mondragon-became-the-worlds-largest-co-op">modern-day worker co-operatives</a>. </p>
<p>If most economic production in society was organized co-operatively, Hegel believed, wealthier subjects would be embedded in economic decision-making with others, replacing the detrimental “bond of victimization” between the rich and poor with a collective identity based on shared economic agency.</p>
<figure class="align-center ">
<img alt="A group of people, some holding constriction hats, standing around a whiteboard having a discussion" src="https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Worker co-operatives could help us imagine a more just and human-centric economic future.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>When reimagining our current economic order, we can take a page out of Hegel’s handbook by focusing on <a href="https://www.mondragon-corporation.com/en/about-us/">worker co-operatives</a>: economic ventures that are <a href="https://institute.coop/what-worker-cooperative">co-owned by workers</a> that make productive decisions together, often — albeit not always — in a democratic manner.</p>
<p>Under what conditions are such co-operative modes of production successful? How can the state incentivize these forms of production within the existing market economy? And are these worker co-operatives really a way to achieve economic justice? These are the questions that, inspired by the past, might help us imagine a new, pluralist, more equal and human-centric economic future.</p><img src="https://counter.theconversation.com/content/195414/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This article is an output of our project "Economic Pluralism: Past and Present" which received funding from SSHRC (Social Sciences and Humanities Research Council). </span></em></p><p class="fine-print"><em><span>.</span></em></p>Psychological and social perspectives on economy that were developed by 19th-century philosophers can help us re-imagine economics with a human face.Johannes Steizinger, Associate Professor of Philosophy, McMaster UniversityHelen McCabe, Assistant Professor in Political Theory, University of NottinghamThimo Heisenberg, Assistant Professor of Philosophy, Bryn Mawr CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1956752022-12-01T14:06:51Z2022-12-01T14:06:51ZJiang Zemin propelled China’s economic rise in the world, leaving his successors to deal with the massive inequality that followed<figure><img src="https://images.theconversation.com/files/498354/original/file-20221130-22-odddv.jpg?ixlib=rb-1.1.0&rect=9%2C551%2C2809%2C1485&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Jiang Zemin oversaw the economic transformation of China.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/chinese-pres-jiang-zemin-at-state-visit-arrival-ceremony-on-news-photo/50410308?phrase=jiang%20zemin&adppopup=true">Diana Walker/Getty Images</a></span></figcaption></figure><p>By the summer of 1989, a series of problems were threatening China’s stability. <a href="https://www.marketplace.org/2019/06/05/economics-helped-spur-tiananmen-square-protests/">Soaring inflation</a> was undermining the economy at home while the <a href="https://www.bbc.com/news/world-asia-48445934">violent suppression of Tiananmen Square demonstrations</a> had left it largely a pariah state abroad. Yet within a few years the nation rebounded – beginning two decades of high economic growth, <a href="https://www.wto.org/english/thewto_e/countries_e/china_e.htm">membership in the largest trading club in the world</a> and <a href="https://www.reuters.com/article/us-china-tiananmen-timeline-landmarks/timeline-chinas-post-tiananmen-re-emergence-onto-the-world-idUSKCN1SX0IE">international acceptance on the global stage</a>.</p>
<p>That transition came thanks in no small part to an underestimated, Soviet-trained electrical engineer – former Chinese President Jiang Zemin, who <a href="https://www.cnn.com/2022/11/30/china/jiang-zemin-china-president-obit-intl-hnk/index.html">died on Nov. 30, 2022, at the age of 96</a>.</p>
<p>I <a href="https://www.hks.harvard.edu/faculty/edward-cunningham">first traveled to and studied</a> in China in 1992. At that time, the still powerful former leader Deng Xiaoping was publicly criticizing Jiang’s more conservative approach to the economy in a <a href="https://doi.org/10.2307/2645086">series of visits and talks he gave</a> during what became known as Deng’s “Southern Tour.” Eventually Jiang fell in line and supported Deng’s liberalization measures and the idea of economic transformation. Yet while Jiang’s subsequent policies laid a strong foundation for China’s growth, they also likely sowed the seeds of excess that set the stage for current President Xi Jinping’s rise.</p>
<h2>The grand experiment</h2>
<p>Jiang <a href="https://www.nytimes.com/2022/11/30/world/asia/jiang-zemin-dead.html">was picked to lead the country</a> as general secretary in June 1989, after the ouster of former leader Zhao Ziyang for Zhao’s conciliatory approach towards the Tiananmen Square protesters.</p>
<p>Within three years Jiang embarked on a grand experiment together with Deng and then-Vice Premier Zhu Rongji, which required Jiang to do what others had been unable or unwilling to do: force the <a href="https://www.brookings.edu/opinions/zhu-rongjis-promise/">restructuring of inefficient state-owned enterprises</a> in a wide range of sectors. This resulted in the <a href="https://www.ft.com/content/a9796c68-e108-11e5-9217-6ae3733a2cd1">laying off of millions of workers</a> who had expected such jobs to be lifelong “iron rice bowls.”</p>
<p>From 1998 to 2002, approximately <a href="https://www.reuters.com/article/iduskbn2o106c">34 million people were fired</a> as China privatized hundreds of state-owned enterprises and shuttered thousands more.</p>
<p>This concerted effort proved an important and necessary step toward <a href="https://www.iatp.org/sites/default/files/China_and_the_WTO_The_Politics_Behind_the_Agre.htm">preparing Chinese companies for more direct market competition</a> and integration with the world economy by the turn of the century.</p>
<h2>Ascending on the world stage</h2>
<p>Jiang’s real influence began upon <a href="http://www.cnn.com/WORLD/9702/19/deng.obit/">Deng’s death</a> in February 1997.</p>
<p>In July of that year, he presided over the <a href="https://www.washingtonpost.com/world/interactive/2022/hong-kong-handover-25-anniversary-photos/">handover of Hong Kong</a> to the mainland. He then proved an able leader during the macroeconomic storm of the Asian financial crisis that began that same month. China quickly recovered and by 2001 had both <a href="https://www.brookings.edu/testimonies/issues-in-chinas-wto-accession/">acceded to the World Trade Organization</a> and won the <a href="https://www.nytimes.com/2001/07/14/sports/olympics-beijing-wins-bid-for-2008-olympic-games.html">bid to host the 2008 Summer Olympic Games</a>.</p>
<figure class="align-center ">
<img alt="Two men in suits shake hands" src="https://images.theconversation.com/files/498484/original/file-20221201-6668-q3l6s5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/498484/original/file-20221201-6668-q3l6s5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=460&fit=crop&dpr=1 600w, https://images.theconversation.com/files/498484/original/file-20221201-6668-q3l6s5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=460&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/498484/original/file-20221201-6668-q3l6s5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=460&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/498484/original/file-20221201-6668-q3l6s5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=578&fit=crop&dpr=1 754w, https://images.theconversation.com/files/498484/original/file-20221201-6668-q3l6s5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=578&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/498484/original/file-20221201-6668-q3l6s5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=578&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Under Jiang, China was embraced by the international community.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/chinese-president-jiang-zemin-greets-us-president-bill-news-photo/1245223707?phrase=jiang%20zemin%20WTO&adppopup=true">AFP via Getty Images</a></span>
</figcaption>
</figure>
<p>By 2002 China’s economy had <a href="https://www.nationalbanken.dk/en/publications/Documents/2003/12/2003_MON4_china61.pdf">grown to represent over 4% of the global economy</a>. Jiang sought to reinforce such economic dynamism through more formal means, and revised the constitution that same year to formally <a href="https://doi.org/10.1016/j.chieco.2020.101431">allow corporate elite and private business entrepreneurs</a> into the Chinese Communist Party.</p>
<h2>Growing inequality</h2>
<p>This economic liberalization was paired with <a href="https://www.lincolninst.edu/sites/default/files/pubfiles/china-housing-reform-and-outcomes-chp.pdf">housing privatization policies</a>. Combined, they spurred the <a href="https://www.jstor.org/stable/10.7864/j.ctt6wpd8c">creation of a burgeoning middle class</a> and large-scale private wealth generation.</p>
<p>What was missing, though, was adequate regulation to provide a check on the often-wild results of unbridled growth. <a href="https://www.reuters.com/breakingviews/jiang-zemin-made-china-richer-more-unequal-2022-11-30/">Economic inequalities grew dramatically</a> in the 1990s and on through 2005, when Jiang formally relinquished his final title as the head of the military. </p>
<p>This created large social fissures, as rampant corruption began to permeate central and local governments, crime rates rose, and even the <a href="https://doi.org/10.1017/S0305741004000670">military itself got into business schemes</a>. Local governments resorted to rafts of arbitrary and extra-budgetary fees levied on citizens to pay for critical public goods and services, as well as infrastructure, which had eroded over time.</p>
<h2>Return of the state</h2>
<p>Jiang’s successors needed to respond to the problems his policies created. They did so by elevating the role of the state in social and economic life, promoting what they described as a more “<a href="https://www.nottingham.ac.uk/iaps/documents/cpi/briefings/briefing-1-chinas-11th-five-year-plan.pdf">balanced development</a>” model.</p>
<p>Hu Jintao, who succeeded Jiang, <a href="https://doi.org/10.1080/00927670903355196">focused resources and policy priorities</a> on transferring more resources to the poorer regions of China, shoring up a weak medical and social insurance system and promulgating more egalitarian measures as part of a “putting people first” program. In just five years, the <a href="https://doi.org/10.1017/S0305741019000377">percentage of China’s population covered by health insurance</a> more than doubled, from 43% in 2006 to 95% in 2011.</p>
<p>Hu also <a href="https://www.bloomberg.com/news/features/2018-12-15/president-xi-jinping-s-next-moves-dictate-china-s-economic-future">moderated Jiang’s growth at any cost focus</a>, pushing through policies that provided assistance to groups who had not benefited as much from China’s economic reforms, such as <a href="https://doi.org/10.1017/S0305741019000377">migrants, the rural poor and laid-off urban workers</a>.</p>
<p>Xi has provided a <a href="https://www.npr.org/sections/parallels/2017/10/24/559004647/what-is-the-motivation-behind-chinese-president-xi-jinpings-anti-corruption-driv">more pointed response</a> to what he likely views as the costs of Jiang’s governance. While continuing the shift toward greater centralization, he has deepened and widened the state’s role in not only the economy but other spheres of Chinese life, such as society and the military.</p>
<h2>A smooth transition?</h2>
<p>But Jiang’s legacy is more than just soaring economic growth and staggering inequality. It is also important to note that the end of his leadership marked China’s <a href="https://thechinaproject.com/2021/09/22/jiang-zemin-and-the-prcs-first-orderly-transfer-of-power/">first orderly transition of political power</a> since the founding of the People’s Republic of China in 1949. </p>
<p>That precedent was, and continues to be, important. While he initially maintained some influence for several years after formally stepping down as general secretary, Jiang’s most singular legacy may be showing the world – and the Chinese people – that smooth transitions of power were indeed possible. Whether they still are possible remains an open question.</p><img src="https://counter.theconversation.com/content/195675/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Edward Cunningham does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Jiang oversaw China’s reemergence on the global stage, and sustained growth at home. But his policies also set the scene for excess and the growth of President Xi Jinping.Edward Cunningham, Director of Ash Center China Programs, Harvard Kennedy SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1916422022-11-01T12:45:40Z2022-11-01T12:45:40ZWhy inequality is growing in the US and around the world<figure><img src="https://images.theconversation.com/files/489381/original/file-20221012-19-s56oyg.jpg?ixlib=rb-1.1.0&rect=0%2C191%2C3538%2C1928&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Elon Musk is the world's wealthiest person.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/elon-musk-attends-the-2022-met-gala-celebrating-in-america-news-photo/1395371342?phrase=elon%20musk&adppopup=true"> Dimitrios Kambouris/Getty Images for The Met Museum/Vogue</a></span></figcaption></figure><p>U.S. <a href="https://www.census.gov/library/publications/2022/demo/p60-276.html">income inequality grew in 2021</a> for the first time in a decade, according to data the Census Bureau released in September 2022.</p>
<p>That might sound surprising, since the most accurate measure of the <a href="https://www.census.gov/library/publications/2022/demo/p60-277.html">poverty rate declined during the same time span</a>. </p>
<p>But for <a href="https://www.hks.harvard.edu/centers/cid/about-cid/people/staff/fatema-z-sumar">development experts like me</a>, this apparent contradiction makes perfect sense.</p>
<p>That’s because what’s been driving income inequality in the United States – and around the world for years – is that the very rich are getting even richer, rather than the poor getting poorer. </p>
<p>In every major region of the world outside of Europe, extreme wealth is becoming concentrated in just a handful of people.</p>
<p><iframe id="ZGK9X" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/ZGK9X/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Gini index</h2>
<p>Economists and other experts track the gap between the rich and the poor with what’s known as the <a href="https://www.census.gov/library/stories/2022/09/income-inequality-increased.html">Gini index</a> or <a href="https://www.investopedia.com/terms/g/gini-index.asp">coefficient</a>.</p>
<p>This common measure of income inequality is calculated by assessing the relative share of national income received by proportions of the population.</p>
<p>In a society with perfect equality – meaning everyone receives an equal share of the pie – the <a href="https://www.census.gov/topics/income-poverty/income-inequality/about/metrics/gini-index.html">Gini coefficient</a> would be 0. In the most unequal society conceivably possible, where a single person hoarded every penny of that nation’s wealth, the Gini coefficient would be 1. </p>
<p>The Gini index rose by 1.2% in the U.S. in 2021 to 0.494 from 0.488 a year earlier, the Census found. In many <a href="https://data.worldbank.org/indicator/SI.POV.GINI?locations=BR-IN-GB-ZA-FR&most_recent_year_desc=false">other countries</a>, by contrast, the Gini has been declining even as the <a href="https://blogs.worldbank.org/developmenttalk/global-income-inequality-and-covid-19-pandemic-three-charts">COVID-19 pandemic</a> – and the deep recession and weak economic recovery it triggered – worsened global income inequality.</p>
<p>Inequality tends to be greater in <a href="https://worldpopulationreview.com/country-rankings/wealth-inequality-by-country">developing countries</a> than wealthier ones. The <a href="https://www.bbc.com/news/world-us-canada-47456308">United States</a> is an exception. The U.S. Gini coefficient is much higher than in similar economies, <a href="https://data.worldbank.org/indicator/SI.POV.GINI?locations=FR-DK">such as Denmark</a>, which had a Gini coefficient of 0.28 in 2019, and France, where it stood at 0.32 in 2018, according to the World Bank.</p>
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<h2>Wealth inequality</h2>
<p>The inequality picture is even bleaker when looking beyond what people earn – their income – to what they own – their assets, investments and other wealth.</p>
<p>In 2021, the <a href="https://wir2022.wid.world/www-site/uploads/2022/03/0098-21_WIL_RIM_RAPPORT_A4.pdf">richest 1%</a> of Americans owned 34.9% of the country’s wealth, while average Americans in the bottom half had only US$12,065 – <a href="https://inequality.org/facts/global-inequality/#us-wealth-concentration">less money</a> than their counterparts in other industrial nations. By comparison, the richest 1% in the United Kingdom and Germany owned only 22.6% and 18.6% of their country’s wealth, respectively.</p>
<p>Globally, the richest 10% of people now possess nearly 76% of the world’s wealth. Meanwhile, the bottom 50% own just 2%, according to the <a href="https://wir2022.wid.world/www-site/uploads/2022/03/0098-21_WIL_RIM_RAPPORT_A4.pdf">2022 World Inequality Report</a>, which analyzes data and the work of more than 100 researchers and inequality experts. </p>
<h2>Drivers of extreme income and wealth</h2>
<p>Large increases in executive pay are contributing to higher levels of <a href="https://doi.org/10.1257/aer.p20171014">income inequality</a>.</p>
<p>Take a <a href="https://www.cfr.org/backgrounder/us-inequality-debate">typical corporate CEO</a>. Back in 1965, he – <a href="https://fisher.osu.edu/blogs/leadreadtoday/a-brief-history-female-fortune-500-ceos">all CEOs were white men</a> then, and <a href="https://www.weforum.org/agenda/2022/03/ceos-fortune-500-companies-female">most still are today</a> – earned about 20 times the amount of an average worker at the company he led. In 2018, the typical CEO earned 278 times as much as their typical employees.</p>
<p>But the world’s roughly <a href="https://www.npr.org/2022/04/06/1091141947/forbes-billionaires-wealth-shrunk-russia">2,700 billionaires</a> make most of their money not through wages but through <a href="https://wir2022.wid.world/www-site/uploads/2022/03/0098-21_WIL_RIM_RAPPORT_A4.pdf">gains in the value of their</a> stocks and other investments.</p>
<p>Their assets grow in large part because of a cascade of <a href="https://itep.org/billionaires-should-pay-taxes-on-their-income-every-year-like-the-rest-of-us/">corporate and individual tax breaks</a>, rather than salaried wages granted by shareholders. When the wealthy in the United States earn money from <a href="https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates">capital gains</a>, the highest tax rate they pay is 20%, whereas the highest income earners are on the hook for as much as 37% on every additional dollar they earn. </p>
<p>This calculation does not even count the <a href="https://www.taxpolicycenter.org/briefing-book/how-are-capital-gains-taxed">effects of tax breaks</a>, which often slash the real-world capital gain tax to much lower levels. </p>
<p>Tesla, SpaceX and Twitter CEO <a href="https://www.insider.com/how-elon-musks-extreme-wealth-compares-to-everything-2021-5">Elon Musk</a> is currently the world’s richest man, with a fortune <a href="https://www.cbsnews.com/news/elon-musk-net-worth-how-did-elon-musk-get-so-rich/">of $240 billion</a>, according to a Bloomberg estimate. The $383 million he made per day in 2020 made it possible for him to buy enough Tesla Model 3 cars to <a href="https://www.insider.com/how-elon-musks-extreme-wealth-compares-to-everything-2021-5">cover almost the whole of Manhattan</a> had he wished to do so.</p>
<p>Musk’s wealth accumulation is extreme. But the <a href="https://www.washingtonpost.com/technology/2021/03/12/musk-bezos-zuckerberg-gates-pandemic-profits/">founders of several tech companies</a>, including Google, Facebook and Amazon, have all earned many billions of dollars in just a few years. The average person could never make that much money through a salary alone.</p>
<h2>Another day, another billionaire</h2>
<p>A <a href="https://oxfamilibrary.openrepository.com/bitstream/handle/10546/621341/bp-inequality-kills-170122-summ-en.pdf">new billionaire is created every 26 hours</a>, according to Oxfam, an international aid and research group where I used to work.</p>
<p>Globally, inequality is so extreme that the world’s 10 richest men possess more wealth than the 3.1 billion poorest people, Oxfam has calculated.</p>
<p>Economists who study global inequality have found that the rich in large English-speaking countries, along with India and China, have seen a dramatic rise in their earnings <a href="http://www.doi.org/10.1257/jel.49.1.3">since the 1980s</a>. Inequality boomed as <a href="https://wir2022.wid.world/www-site/uploads/2022/03/0098-21_WIL_RIM_RAPPORT_A4.pdf">deregulation, economic liberalization</a> programs and other policies created opportunities for the rich to get richer.</p>
<h2>Why inequality matters</h2>
<p>The rich tend to spend less of their money than the poor. As a result, the extreme concentration of wealth can slow the pace of <a href="https://doi.org/10.1111/1467-923X.12237">economic growth</a>.</p>
<p>Extreme inequality can also exacerbate <a href="https://www.hup.harvard.edu/catalog.php?isbn=9780674980822">political dysfunction</a> and <a href="https://ideas.ted.com/the-4-biggest-reasons-why-inequality-is-bad-for-society/">undermine faith</a> in political and economic systems. It can also erode principles of <a href="https://doi.org/10.1007/s11245-020-09697-z">fairness and democratic norms of sharing power and resources</a>. </p>
<p>The richest people have <a href="https://www.lovemoney.com/galleries/103043/the-billionaire-people-who-are-richer-than-entire-countries?page=1">more wealth than entire countries</a>. Such extreme power and influence in the hands of a select few who face little accountability is <a href="https://www.aeaweb.org/articles?id=10.1257/jel.20171419">raising concerns</a> that are part of a robust debate on whether and how to address extreme inequality.</p>
<p>Many <a href="https://doi.org/10.1257/aer.p20161006">proposed solutions</a> call for new taxes, regulations and policies, along with <a href="https://www.fordfoundation.org/news-and-stories/videos/how-the-ford-foundation-uses-grants-to-tackle-inequality/">philanthropic strategies </a> like using grants and community-based investments to dismantle inequality.</p>
<p>Voters in some states, like <a href="https://www.wbur.org/news/2022/01/13/millionaires-tax-report-massachusetts">Massachusetts</a>, voted to raise taxes on the income earned by their richest residents in ballot initiatives in November 2022. <a href="https://www.cbpp.org/blog/massachusetts-ballot-measure-would-raise-billions-for-education-infrastructure">Proponents of these initiatives</a> claim the revenue raised would boost funding for public services, such as education and infrastructure. <a href="https://smartasset.com/taxes/biden-capital-gains-tax">President Joe Biden</a> is also proposing to almost double the top capital gains tax for those making over $1 million.</p>
<p>However societies choose to act, I believe change is needed.</p><img src="https://counter.theconversation.com/content/191642/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Fatema Z. Sumar previously worked as the Vice President of Global Programs at Oxfam America. </span></em></p>The United States has more economic inequality than other wealthy nations.Fatema Z. Sumar, Executive Director of the Center for International Development, Harvard Kennedy SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1906412022-10-05T15:55:29Z2022-10-05T15:55:29ZOn the brink: Global crises ranging from climate to economic meltdown demand radical change<figure><img src="https://images.theconversation.com/files/486904/original/file-20220927-24-wjzum5.JPG?ixlib=rb-1.1.0&rect=0%2C135%2C8235%2C5387&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Buildings sit in the water along the shore following Hurricane Fiona in Rose Blanche-Harbour Le Cou, Nfld. Fiona left a trail of destruction across much of Atlantic Canada.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Frank Gunn</span></span></figcaption></figure><p>We have damaged our planet through destructive exploitation of fossil fuels and the insatiable demand for things we don’t need. We are cooking ourselves to death and <a href="https://www.rfi.fr/en/international-news/20220910-un-chief-says-world-paying-horrific-price-for-fossil-fuels-folly">it may already be too late to do anything about it</a>.</p>
<p>Multiple and intersecting crises — the pandemic, a changing climate, wars in Ukraine and elsewhere and associated economic sanctions — have produced real hardship for millions of people. The effects include food shortages, hunger, inflation, recessions and soaring energy costs that undermine climate action as coal-fired generation resumes. </p>
<p>Economically, wealth inequality is unprecedented. <a href="https://wir2022.wid.world/executive-summary/">The poorest half of the global population hardly owns any wealth</a>, just two per cent of the total. The richest 10 per cent of the global population own 76 per cent. </p>
<p>Yet we continue to believe that the marketplace, left mainly to self-regulate, will naturally stabilize economies. That belief has led to <a href="https://digitallibrary.un.org/record/3847753?ln=en">unlimited growth and minimal intervention by governments to resolve staggering inequity</a> or even to manage the economy at all.</p>
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<img alt="A blonde woman shouts to the crowd. A sign above her reads 'where are we supposed to go?'" src="https://images.theconversation.com/files/486917/original/file-20220927-26-s7fkmh.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/486917/original/file-20220927-26-s7fkmh.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/486917/original/file-20220927-26-s7fkmh.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/486917/original/file-20220927-26-s7fkmh.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/486917/original/file-20220927-26-s7fkmh.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/486917/original/file-20220927-26-s7fkmh.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/486917/original/file-20220927-26-s7fkmh.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A woman addresses the crowd during a protest against Vancouver’s removal of a homeless encampment in August 2022.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
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<h2>Existential crises</h2>
<p>These are genuine existential crises. Climate change could end human life on Earth. Wars and conflicts, as bad as they already are, could swiftly escalate.</p>
<p>Any of these crises could trigger a horrible spill of dominoes. For example, war accelerates climate change, which pulls down the economy and potentially accelerates the death of democracy. I explore such possibilities in my new book <a href="https://bristoluniversitypress.co.uk/escaping-dystopia"><em>Escaping Dystopia</em></a>.</p>
<p>Few have confidence that existing political leaders and institutions will find solutions. There is enormous and often unarticulated dissatisfaction with how things are going and who is making decisions. </p>
<p>Voting and participation in politics are down. <a href="https://toronto.ctvnews.ca/ontario-records-lowest-voter-turnout-in-election-history-1.5931440">The 2022 election in Ontario</a>, for example, saw just 18 per cent of eligible voters electing a two-thirds majority government. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1532863966275178497"}"></div></p>
<p>In <a href="https://www.ipsos.com/en/populist-and-nativist-views-still-prevail">an Ipsos survey</a> covering 27 countries, more than 70 per cent of respondents said they believed their economies were controlled by the wealthy and more than 50 per cent said their own countries were broken. </p>
<p>Often considered the world’s most stable democracy, the United States is teetering badly, up to its neck in lies, manipulation, hypocrisy and greed. Its institutions are paralyzed by toxic partisanship, the streets are awash with combat weapons and racism has again reached levels so poisonous that <a href="https://doi.org/10.1017/S0007123419000590">some feel emboldened to express abhorrent views openly</a>.</p>
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Read more:
<a href="https://theconversation.com/canada-should-be-preparing-for-the-end-of-american-democracy-176930">Canada should be preparing for the end of American democracy</a>
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<p>Equally troubling is that in the neoliberal era, many decisions are taken out of politics and moved into the realm of agencies that are at arm’s length from governments or embedded in remote international organizations like <a href="https://jacobin.com/2022/05/eu-perry-anderson-ever-closer-union-book-review">the European Union</a>, or in trade treaties.</p>
<p>What’s left for governments to manage is not unimportant, but it’s a minor part of what they should be dealing with in democratic societies.</p>
<h2>Glimmers of hope</h2>
<p>All this points to a lack of representation and accountability, as well as the need for radical changes to our institutions and politics. </p>
<p>Avoiding catastrophe must involve devising new institutional structures that can achieve the goals of representation and accountability in new and effective ways based on the roles people play in society — whether they’re workers, farmers, business owners or caregivers, for example — and on their lived experiences.</p>
<p>But can the resistance of the privileged be overcome?</p>
<p>Before you start building an off-grid home in the woods, there are some causes for hope.</p>
<p>Consider the last century or so. As we look back, it’s clear that change is constant. Sometimes, it’s incremental. Other times it’s dramatic and radical. Although there are no guarantees about what direction change will take, things can change for the better, even when they seem lost. </p>
<p>Examples include the <a href="https://www.britannica.com/topic/Western-colonialism/Decolonization-from-1945">post-Second World War process of decolonizing European empires</a>, achieving <a href="https://socialprotection.org/discover/publications/universal-social-protection-country-cases">universal social programs in many countries</a> and important <a href="https://crossculturalsolidarity.com/the-global-context-of-the-civil-rights-movement/">gains in civil rights</a>.</p>
<p>People potentially have more power than they might realize. Expressions of specific discontent could expand into demands for more comprehensive change.</p>
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<img alt="Police spray water at protesters. They are barely visible amid the jet sprays of water." src="https://images.theconversation.com/files/486908/original/file-20220927-24-2rcud8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/486908/original/file-20220927-24-2rcud8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/486908/original/file-20220927-24-2rcud8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/486908/original/file-20220927-24-2rcud8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/486908/original/file-20220927-24-2rcud8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/486908/original/file-20220927-24-2rcud8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/486908/original/file-20220927-24-2rcud8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Anti-government protesters are jet-sprayed by a police water cannon during clashes in Santiago, Chile, in March 2020 that began over an increase in subway fares and led to wider uprisings about inequality.</span>
<span class="attribution"><span class="source">(AP Photo/Esteban Felix)</span></span>
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<p>In Chile, for example, a popular protest <a href="https://www.nytimes.com/2019/11/03/world/americas/chile-protests.html">against higher subway fares led to demands for an entirely new constitution</a>. Although the draft of a new constitution was defeated in a referendum, constitutional change remains on the agenda. The process continues. </p>
<p>And while the final result of the Brazilian presidential election remains to be determined, <a href="https://www.npr.org/2022/10/02/1126461515/lula-bolsonaro-runoff-election-brazil">the first round victory of the left candidate shows a strong desire for change</a>.</p>
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<strong>
Read more:
<a href="https://theconversation.com/another-stress-test-for-democracy-the-imminent-election-crisis-in-brazil-191492">Another stress test for democracy: The imminent election crisis in Brazil</a>
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<h2>Returning to ‘normal’ not an option</h2>
<p>What should change look like? The desire to return to pre-pandemic “normal” is powerful, but “normal” is what got us where we are today.</p>
<p>Various reforms have been proposed, such as the <a href="https://www.theguardian.com/us-news/2019/feb/11/green-new-deal-alexandria-ocasio-cortez-ed-markey">Green New Deal</a>, modelled on Franklin D. Roosevelt’s 1930s reforms that helped to end the Great Depression. Then, circumstances were sufficiently desperate to make reform possible.</p>
<p>Others argue that more radical reforms based on planning and a rejuvenated public domain are needed today.</p>
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<strong>
Read more:
<a href="https://theconversation.com/7-lessons-canada-should-use-from-ww2-to-fight-the-climate-emergency-145211">7 lessons Canada should use from WW2 to fight the climate emergency</a>
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<p>Are we there yet? Will climate and other crises be enough to prompt action? Have geopolitical and economic crises reached the stage where radical change is inevitable? We’ll see.</p>
<p>But getting back to normal and trusting existing institutions and markets to solve our problems is not a viable option.</p><img src="https://counter.theconversation.com/content/190641/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen McBride receives funding from the Social Sciences and Humanities Research Council and the Canada Research Chairs program.</span></em></p>Amid a number of major crises, the world clearly needs radical change. But what will it look like? The desire to return to pre-pandemic ‘normal’ is powerful, but ‘normal’ is what got us where we are today.Stephen McBride, Professor and Canada Research Chair in Public Policy and Globalization, McMaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1904862022-09-15T12:18:39Z2022-09-15T12:18:39ZUS is becoming a ‘developing country’ on global rankings that measure democracy, inequality<figure><img src="https://images.theconversation.com/files/484375/original/file-20220913-4673-1pyfbw.jpg?ixlib=rb-1.1.0&rect=7%2C43%2C4785%2C2687&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">People wait in line for a free morning meal in Los Angeles in April 2020. High and rising inequality is one reason the U.S. ranks badly on some international measures of development.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/homeless-people-wait-in-line-for-a-morning-meal-at-the-fred-news-photo/1210677779?adppopup=true">Frederic J. Brown/ AFP via Getty Images</a></span></figcaption></figure><p>The United States may regard itself as a “<a href="https://www.americanforeignrelations.com/E-N/Exceptionalism-The-leader-of-the-free-world.html">leader of the free world</a>,” but an index of development released in July 2022 places the country much farther down the list. </p>
<p>In its global rankings, the United Nations Office of Sustainable Development dropped the U.S. to <a href="https://dashboards.sdgindex.org/rankings">41st worldwide</a>, down from its previous ranking of 32nd. Under this methodology – an expansive model of 17 categories, or “goals,” many of them focused on the environment and equity – the U.S. ranks between Cuba and Bulgaria. Both are widely regarded as developing countries.</p>
<p>The U.S. is also now considered a “flawed democracy,” according to <a href="https://www.economist.com/graphic-detail/2022/02/09/a-new-low-for-global-democracy">The Economist’s democracy index</a>.</p>
<p>As a political historian who studies U.S. <a href="https://www.linkedin.com/in/kathleen-frydl-0406b21a5/">institutional development</a>, I recognize these dismal ratings as the inevitable result of two problems. Racism has cheated many Americans out of the health care, education, economic security and environment they deserve. At the same time, as threats to democracy become more serious, a devotion to “American exceptionalism” keeps the country from candid appraisals and course corrections.</p>
<h2>‘The other America’</h2>
<p>The Office of Sustainable Development’s rankings differ from more traditional development measures in that they are more focused on the experiences of ordinary people, including their ability to enjoy clean air and water, than the creation of wealth. </p>
<p>So while the gigantic size of the American economy counts in its scoring, so too does unequal access to the wealth it produces. When judged by accepted measures like the <a href="https://data.worldbank.org/indicator/SI.POV.GINI?locations=US">Gini coefficient</a>, income inequality in the U.S. has risen markedly over the past 30 years. By the <a href="https://data.oecd.org/inequality/income-inequality.htm">Organization for Economic Cooperation and Development’s measurement</a>, the U.S. has the biggest wealth gap among G-7 nations.</p>
<p>These results reflect structural disparities in the United States, which are most pronounced for African Americans. Such differences have persisted well beyond the demise of chattel slavery and the repeal of Jim Crow laws.</p>
<p>Scholar W.E.B. Du Bois first exposed this kind of structural inequality in his 1899 analysis of Black life in the urban north, “<a href="https://www.jstor.org/stable/j.ctt3fhpfb">The Philadelphia Negro</a>.” Though he noted distinctions of affluence and status within Black society, Du Bois found the lives of African Americans to be a world apart from white residents: a “city within a city.” Du Bois traced the high rates of poverty, crime and illiteracy prevalent in Philadelphia’s Black community to discrimination, divestment and residential segregation – not to Black people’s degree of ambition or talent.</p>
<p>More than a half-century later, with characteristic eloquence, Martin Luther King Jr. <a href="https://www.rev.com/blog/transcripts/the-other-america-speech-transcript-martin-luther-king-jr">similarly decried</a> the persistence of the “other America,” one where “the buoyancy of hope” was transformed into “the fatigue of despair.” </p>
<p>To illustrate his point, King referred to many of the same factors studied by Du Bois: the condition of housing and household wealth, education, social mobility and literacy rates, health outcomes and employment. On all of these metrics, <a href="https://theconversation.com/black-americans-mostly-left-behind-by-progress-since-dr-kings-death-89956">Black Americans fared worse</a> than whites. But as King noted, “Many people of various backgrounds live in this other America.”</p>
<p>The benchmarks of development invoked by these men also featured prominently in the 1962 book “<a href="https://www.simonandschuster.com/books/The-Other-America/Michael-Harrington/9780684826783">The Other America</a>,” by political scientist <a href="https://theconversation.com/how-socialism-stopped-being-a-dirty-word-for-some-voters-and-started-winning-elections-across-america-156572">Michael Harrington, founder</a> of a group that eventually became the Democratic Socialists of America. Harrington’s work so unsettled President John F. Kennedy that it reportedly <a href="https://www.smithsonianmag.com/history/how-a-new-yorker-article-launched-the-first-shot-in-the-war-against-poverty-17469990/">galvanized him</a> into formulating a “war on poverty.” </p>
<p>Kennedy’s successor, Lyndon Johnson, waged this metaphorical war. But poverty <a href="https://www.cbpp.org/poverty-and-place">bound to discrete places</a>. Rural areas and segregated neighborhoods stayed poor well beyond mid-20th-century federal efforts.</p>
<figure class="align-center ">
<img alt="Tents line a leafy park; some people can be seen chatting outside one tent" src="https://images.theconversation.com/files/484374/original/file-20220913-4701-2mulzv.jpg?ixlib=rb-1.1.0&rect=6%2C19%2C4275%2C2824&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/484374/original/file-20220913-4701-2mulzv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/484374/original/file-20220913-4701-2mulzv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/484374/original/file-20220913-4701-2mulzv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/484374/original/file-20220913-4701-2mulzv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/484374/original/file-20220913-4701-2mulzv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/484374/original/file-20220913-4701-2mulzv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Camp Laykay Nou, a homeless encampment in Philadelphia. High and rising inequality is one reason the US rates badly on some international development rankings.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/camp-laykay-nou-celebrated-a-stay-in-the-city-of-news-photo/1227676000?adppopup=true">Cory Clark/NurPhoto via Getty Images</a></span>
</figcaption>
</figure>
<p>In large part that is because federal efforts during that critical time accommodated rather than confronted the forces of racism, <a href="https://www.cambridge.org/us/academic/subjects/history/american-history-after-1945/gi-bill?format=HB&isbn=9780521514248">according to my research</a>. </p>
<p>Across a number of policy domains, the sustained efforts of segregationist Democrats in Congress resulted in an incomplete and patchwork system of social policy. Democrats from the South cooperated with Republicans to doom to failure efforts to <a href="https://www.nytimes.com/interactive/2019/08/14/magazine/universal-health-care-racism.html">achieve universal</a> <a href="https://www.theatlantic.com/politics/archive/2017/06/the-fight-for-health-care-is-really-all-about-civil-rights/531855/">health care</a> or <a href="https://www.salon.com/2018/06/07/big-business-and-white-supremacy-the-racist-roots-of-americas-right-to-work-laws/">unionized workforces</a>. Rejecting proposals for strong federal intervention, they left a checkered legacy of <a href="https://www.sc.edu/uofsc/posts/2022/04/conversation-jim-crow.php#.YyHMrOzMK8p">local funding for education</a> and <a href="https://www.healthaffairs.org/doi/10.1377/hlthaff.2021.01466">public health</a>. </p>
<p>Today, many years later, the effects of a welfare state tailored to racism is evident — though perhaps less visibly so — in the inadequate <a href="https://www.thelancet.com/journals/lanam/article/PIIS2667-193X(22)00081-3/fulltext">health policies</a> driving a <a href="https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm">shocking decline</a> in average American life expectancy.</p>
<h2>Declining democracy</h2>
<p>There are other ways to measure a country’s level of development, and on some of them the U.S. fares better. </p>
<p>The U.S. currently ranks 21st on <a href="https://hdr.undp.org/">the United Nations Development Program’s index</a>, which measures fewer factors than the sustainable development index. Good results in average income per person – $64,765 – and an average 13.7 years of schooling situate the United States squarely in the developed world.</p>
<p>Its ranking suffers, however, on appraisals that place greater weight on political systems. </p>
<p>The Economist’s <a href="https://www.economist.com/graphic-detail/2022/02/09/a-new-low-for-global-democracy">democracy index</a> now groups the U.S. among “flawed democracies,” with an overall score that ranks between Estonia and Chile. It falls short of being a top-rated “full democracy” in large part because of a fractured political culture. This growing divide is most apparent in the divergent paths between “red” and “blue” states.</p>
<p>Although the analysts from The Economist applaud the peaceful transfer of power in the face of an <a href="https://theconversation.com/the-sore-loser-effect-rejecting-election-results-can-destabilize-democracy-and-drive-terrorism-171571">insurrection intended to disrupt</a> it, <a href="https://www.eiu.com/n/campaigns/democracy-index-2021/?utm_source=economist&utm_medium=daily_chart&utm_campaign=democracy-index-2021">their report laments</a> that, according to a January 2022 poll, “only 55% of Americans believe that Mr. Biden legitimately won the 2020 election, despite no evidence of widespread voter fraud.”</p>
<p><a href="https://www.nytimes.com/2022/06/05/us/politics/america-first-secretary-of-state-candidates.html">Election denialism carries with it the threat</a> that election officials in Republican-controlled jurisdictions will reject or alter vote tallies that do not favor the Republican Party in upcoming elections, further jeopardizing the score of the U.S. on the democracy index. </p>
<p>Red and blue America also differ on access to modern reproductive care for women. This hurts the U.S. gender equality rating, <a href="https://www.guttmacher.org/gpr/2015/10/onward-2030-sexual-and-reproductive-health-and-rights-context-sustainable-development">one aspect</a> of the United Nations’ sustainable development index.</p>
<p>Since the <a href="https://www.npr.org/2022/06/24/1102305878/supreme-court-abortion-roe-v-wade-decision-overturn">Supreme Court overturned</a> Roe v. Wade, Republican-controlled states have enacted or proposed grossly <a href="https://today.westlaw.com/Document/I1ebf6cf01a6a11ed9f24ec7b211d8087/View/FullText.html%22%22">restrictive</a> <a href="https://www.guttmacher.org/state-policy">abortion laws</a>, to the point of <a href="https://www.nytimes.com/2022/09/10/us/abortion-bans-medical-care-women.html">endangering a woman’s health</a>. </p>
<p>I believe that, when paired with structural inequalities and fractured social policy, the dwindling Republican commitment to democracy lends weight to the classification of the U.S. as a developing country.</p>
<h2>American exceptionalism</h2>
<p>To address the poor showing of the United States on a variety of global surveys, one must also contend with the idea of <a href="https://www.washingtonpost.com/sf/national/2015/06/03/obama-and-american-exceptionalism/">American exceptionalism</a>, a belief in American superiority over the rest of the world. </p>
<p>Both political parties have long promoted this belief, at home and abroad, but “exceptionalism” receives a more formal treatment from Republicans. It was the first line of the Republican Party’s national platform of <a href="https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwiukdmw2pT6AhU6FVkFHRpPDLUQFnoECAsQAQ&url=https%3A%2F%2Fprod-cdn-static.gop.com%2Fmedia%2Fdocuments%2FDRAFT_12_FINAL%255B1%255D-ben_1468872234.pdf&usg=AOvVaw0ZlBtj2Rrovr9mA9DZJCOy">2016</a> and <a href="https://ballotpedia.org/The_Republican_Party_Platform,_2020">2020</a> (“we believe in American exceptionalism”). And it served as the organizing principle behind Donald Trump’s vow to restore “<a href="https://www.politico.com/news/2020/08/31/trump-patriotic-education-406521">patriotic education</a>” to America’s schools. </p>
<p>In Florida, after <a href="https://www.orlandoweekly.com/news/florida-board-of-education-approves-new-curriculum-touting-american-exceptionalism-29639851">lobbying by Republican Gov. Ron DeSantis</a>, the state board of education in July 2022 approved standards rooted in American exceptionalism while barring instruction in <a href="https://www.edweek.org/leadership/what-is-critical-race-theory-and-why-is-it-under-attack/2021/05">critical race theory</a>, an academic framework teaching the kind of structural racism Du Bois exposed long ago.</p>
<p>With a tendency to proclaim excellence rather than pursue it, the peddling of American exceptionalism encourages Americans to maintain a robust sense of national achievement – despite mounting evidence to the contrary.</p><img src="https://counter.theconversation.com/content/190486/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kathleen Frydl does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The United States came in 41st worldwide on the UN’s 2022 sustainable development index, down nine spots from last year. A political historian explains the country’s dismal scores.Kathleen Frydl, Sachs Lecturer, Johns Hopkins UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1819362022-04-27T12:34:46Z2022-04-27T12:34:46ZElon Musk and the oligarchs of the ‘Second Gilded Age’ can not only sway the public – they can exploit their data, too<figure><img src="https://images.theconversation.com/files/459868/original/file-20220426-18-aesf0o.jpg?ixlib=rb-1.1.0&rect=0%2C231%2C5313%2C3337&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A new Gilded Age of media barons?</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/People-ElonMuskGrimes/277e1005c6aa4aafa63b2bdb963f3dca/photo?Query=elon%20musk&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1179&currentItemNo=66">Charles Sykes/Invision/AP</a></span></figcaption></figure><p>During the Gilded Age of the late 19th century, and the early decades of the 20th century, U.S. captains of industry such as <a href="https://www.ucpress.edu/book/9780520347878/the-anatomy-of-fake-news">William Randolph Hearst and Jay Gould</a> used their massive wealth to dominate facets of the economy, including the news media. They were, in many ways, prototype oligarchs – by <a href="https://www.google.com/search?q=oligarch">the dictionary definition</a>, “very rich business leaders with a great deal of political influence.”</p>
<p>Some have argued that the U.S. is in the midst of a <a href="https://www.cambridge.org/core/services/aop-cambridge-core/content/view/B014AEA559FC026265748E10E9DE78E9/S1537781419000616a.pdf/div-class-title-a-second-gilded-age-the-promises-and-perils-of-an-analogy-introduction-div.pdf">Second Gilded Age</a> defined – like the first – by vast <a href="https://www.history.com/news/second-gilded-age-income-inequality">wealth inequality</a>, <a href="https://www.history.com/news/second-gilded-age-income-inequality">hyper-partisanship, xenophobia</a> and a <a href="https://www.yahoo.com/video/15-richest-media-owners-world-105350162.html">new crop of oligarchs</a> using their vast wealth to purchase media and political influence. </p>
<p>Which brings us to the announcement on April 25, 2022, that Tesla billionaire <a href="https://www.cnbc.com/2022/04/25/twitter-accepts-elon-musks-buyout-deal.html">Elon Musk</a> is, barring any last-minute hitches, purchasing the social media platform Twitter. It will put <a href="https://www.forbes.com/real-time-billionaires/#37e8d8b63d78">the wealthiest man on the planet</a> in control of one of the most influential means of communications in world today.</p>
<p>As a <a href="https://www.csueastbay.edu/directory/profiles/hist/higdonnolan.html">media scholar</a>, I suspect Musk’s desire in buying Twitter goes beyond a desire to control and shape public discourse. Today’s equivalent of the Gilded Age oligarchs – the handful of <a href="https://theconversation.com/the-slippery-slope-of-the-oligarchy-media-model-81931">super-rich Americans gobbling up</a> increasing chunks of the media landscape – will have that, but they will also have access to a trove of personal data of users and news consumers.</p>
<h2>All the newspapers fit to buy</h2>
<p>Over the past decade, numerous American billionaires have purchased news media outlets such as the <a href="https://www.forbes.com/sites/briansolomon/2013/08/03/billionaire-red-sox-owner-john-henry-buys-boston-globe-for-70-million-from-new-york-times/?sh=56c451214daa">Boston Globe</a>, <a href="https://www.theatlantic.com/politics/archive/2015/12/why-did-sheldon-adelson-buy-nevadas-largest-newspaper/421035/">Las Vegas Review-Journal</a>, <a href="https://www.forbes.com/sites/noahkirsch/2020/05/21/journalists-are-angry-about-layoffs-at-the-atlantic-owned-by-billionaire-laurene-powell-jobs/?sh=691707c04b4b">The Atlantic</a> and the <a href="https://www.latimes.com/business/hollywood/la-fi-ct-patrick-soon-shiong-latimes-sold-20180616-story.html">Los Angeles Times</a>. Perhaps the most famous example is <a href="https://www.forbes.com/real-time-billionaires/#5c003c4d3d78">Jeff Bezos</a>, the founder and executive chairman of Amazon, who <a href="https://money.cnn.com/2013/08/05/news/companies/washington-post-bezos/index.html">spent US$250 million</a> of his roughly $170 billion net worth to purchase <a href="https://www.businessinsider.com/how-the-washington-post-changed-after-jeff-bezos-acquisition-2016-5">The Washington Post</a> in 2013. </p>
<p><a href="https://www.press.uillinois.edu/books/?id=c024481">Media</a> <a href="https://www.penguinrandomhouse.com/books/78912/manufacturing-consent-by-edward-s-herman-and-noam-chomsky/">scholars</a> have aired concern for decades that unfettered wealth and tepid government regulation have <a href="https://slate.com/news-and-politics/2004/08/the-media-monotony.html">enabled a handful</a> of corporations to dominate news media coverage in the U.S. Indeed, the companies that produce the majority of news media in the U.S. has dwindled from 50 in the <a href="https://www.penguinrandomhouse.com/books/206221/the-new-media-monopoly-by-ben-h-bagdikian/">1980s</a> to roughly <a href="https://www.fool.com/investing/stock-market/market-sectors/communication/media-stocks/big-6/#:%7E:text=Some%20estimates%20claim%20as%20much">six</a> today.</p>
<p>This <a href="https://theconversation.com/the-slippery-slope-of-the-oligarchy-media-model-81931">consolidation of the media industry in the hands of wealthy individuals</a> is, as media scholar <a href="https://www.press.uillinois.edu/books/?id=c024481">Robert McChesney</a> has argued, especially <a href="https://www.routledge.com/Lets-Agree-to-Disagree-A-Critical-Thinking-Guide-to-Communication-Conflict/Higdon-Huff/p/book/9781032168982">concerning for a healthy democracy</a>, which necessitates that the electorate has access to an abundance of diverse views and free-flowing information. </p>
<p>The public relies on journalists to relay stories that they can interpret to determine how they vote; if they will vote; and if they should organize and engage in civil disobedience. The negative consequences of this concentration of ownership are that it can enabled a handful of corporate news outlets to normalize baseless or false reporting that turns out to be misleading, such as the reporting on <a href="https://www.ucpress.edu/book/9780520347878/the-anatomy-of-fake-news">weapons of mass destruction</a> prior to the 2003 invasion of Iraq.</p>
<p>Just like the U.S. oligarchs of the 19th century and early 20th century, today’s billionaires recognize that by controlling the free flow of information they can control or shape the electorate’s democratic participation. For example, soon after casino mogul Sheldon Adelson purchased the Las Vegas Review-Journal <a href="https://www.politico.com/media/story/2016/02/sheldon-adelson-tightens-grip-on-review-journal-004384/">reports surfaced</a> that stories about the billionaire were being censored or altered so he could manage the public’s image of his businesses in the gambling-centric city.</p>
<p>Similarly, some critics have suggested that after Bezos purchased The Washington Post, the newspaper’s coverage became noticeably <a href="https://www.cjr.org/the_new_gatekeepers/washington-post-bezos-amazon.php">soft in its coverage of Amazon</a>, and <a href="https://fair.org/home/washington-post-ran-16-negative-stories-on-bernie-sanders-in-16-hours/">tough</a> on Bezos’ political opponents. The Washington Post <a href="https://www.washingtonpost.com/news/the-fix/wp/2016/03/08/has-the-washington-post-been-too-hard-on-bernie-sanders-this-week/">denies</a> <a href="https://www.poynter.org/ethics-trust/2016/washington-post-denies-jeff-bezos-sways-coverage/">both</a> of these claims. </p>
<h2>The user as a product</h2>
<p>With an estimated fortune of <a href="https://www.forbes.com/real-time-billionaires/#5c003c4d3d78">$268 billion</a> as of April 2022, Musk is just the latest and wealthiest to purchase a media platform. In opting to buy into social media rather than a traditional news outlet, the Tesla CEO is getting control of an important news delivery system. A <a href="https://www.pewresearch.org/journalism/2021/11/15/news-on-twitter-consumed-by-most-users-and-trusted-by-many/">2021 Pew survey</a> found that 23% of Americans use Twitter – and 7 in 10 Twitter users said they received news from the platform. </p>
<p>But the potential threats posed by an individual billionaire controlling Twitter are much more complicated and dangerous than that of earlier wealthy media proprietors, who primarily could only sway the news. </p>
<p>Even before Musk vied to buy Twitter, Silicon Valley was already controlled by <a href="https://www.forbes.com/sites/kenrickcai/2021/10/05/richest-us-tech-billionaires-2021-forbes-400-list/?sh=2af196966de9">billionaires</a> who operated a handful of companies known as the FAANGs – Facebook (now Meta), Amazon, Apple, Netflix and Google (now Alphabet). These companies’ profits are derived from a new economic order that Harvard Professor Shoshana Zuboff has dubbed “<a href="https://www.publicaffairsbooks.com/titles/shoshana-zuboff/the-age-of-surveillance-capitalism/9781610395694/">surveillance capitalism</a>.” Under surveillance capitalism, the user is the product – that is to say, companies collect and sell information about users to those interested in predicting, or in some cases nudging, <a href="https://www.publicaffairsbooks.com/titles/shoshana-zuboff/the-age-of-surveillance-capitalism/9781610395694/">human behavior</a>. </p>
<p>In this new economic order, tech companies constantly surveil users on and off their platforms for the purpose of collecting and analyzing data – which include audio, video, typed words, GPS or <a href="https://nyupress.org/9781479892822/the-rise-of-big-data-policing/">even</a> <a href="https://www.routledge.com/The-Future-of-Digital-Data-Heritage-and-Curation-in-a-More-than-Human/Cameron/p/book/9780367690588">DNA</a> – to open a window into a user’s thoughts and cognitive processes. </p>
<p>In order to keep the data pouring in, big tech companies rely on techniques from the <a href="https://www.publicaffairsbooks.com/titles/shoshana-zuboff/the-age-of-surveillance-capitalism/9781610395694/">gambling industry</a> to <a href="https://www.theatlantic.com/magazine/archive/2020/04/capitalisms-addiction-problem/606769/">keep people addicted</a> to their screen. Essentially, they keep users chasing the initial dopamine rush that comes from a “like” or “friend request” on Facebook, on a “retweet” or “new follower” on Twitter. Similar to the gambling industry, <a href="https://www.wsj.com/articles/the-facebook-files-11631713039">reports</a> have found that these <a href="https://www.publicaffairsbooks.com/titles/shoshana-zuboff/the-age-of-surveillance-capitalism/9781610395694/">techniques</a> are used with little regard for users’ <a href="http://www.jeantwenge.com/igen-book-by-dr-jean-twenge/">mental health</a>.</p>
<p>In 2022, for example, a <a href="https://www.wsj.com/articles/the-facebook-files-11631713039">Facebook whistleblower</a> revealed that the company was aware that its platform design was harming users, particularly young people, but refused to make any changes out of fear it would weaken profitability.</p>
<h2>A free speech enthusiast?</h2>
<p>In this context, Musk is not simply a modern version of a 19th century oligarch. His power goes beyond shaping public discourse with narrowly framed stories and the removal of select content. Yes, he may be able to do this. But in addition, he will have a vast amount of personal data under his discretion. For example, when using <a href="https://developer.twitter.com/en/docs/twitter-for-websites/privacy#:%7E:text=When%20you%20view%20Twitter%20content,operating%20system%2C%20and%20cookie%20information">Twitter content or products</a>, including those integrated into other websites, Twitter collects data and stores what web pages the user accessed, as well as their IP address, browser type, operating system and cookie information.</p>
<p>Musk has said his purchase of Twitter is motivated by his support of <a href="https://www.cnbc.com/2022/04/25/elon-musk-and-free-speech-track-record-not-encouraging.html">free speech</a>. But this runs counter to his <a href="https://www.businessinsider.com/tesla-elon-musk-ruthlessly-fired-anyone-who-disagreed-spacex-report-2021-8">reputation for actively seeking revenge</a> against those who criticize his businesses. Furthermore, under his <a href="https://www.cnbc.com/2022/04/25/elon-musk-and-free-speech-track-record-not-encouraging.html">leadership</a> Tesla has maintained contracts that prevented former employees from criticizing the company. </p>
<p>Moreover, as it has been argued by computer scientist and philosophy writer <a href="http://www.jaronlanier.com/tenarguments.html">Jaron Lanier</a> and free-expression activist and author <a href="https://www.versobooks.com/books/4034-silicon-values">Jillian York</a>, social media platforms such as Twitter are not conducive to “true” free speech, which is loosely defined as <a href="https://dictionary.cambridge.org/us/dictionary/english/free-speech">the right</a> to express one’s opinions without interference. </p>
<p>Moreover, by making decisions about what content users do and do not see, social media companies, it could be argued, are interfering with speech. Indeed, social media platofrms’ algorithms <a href="https://www.penguinrandomhouse.com/books/309214/the-filter-bubble-by-eli-pariser/">customize</a> news feeds with content that they believe the user will find the most engaging, to the exclusion to other content.</p>
<p>The era of surveillance capitalism has created new opportunities for billionaires to influence the electorate. Like his predecessors in the first Gilded Age, Musk can determine which reporting users see and do not see on his platform. Unlike his predecessors, he can also track and surveil users – collecting lucrative data that can be used to predict or nudge their behavior.</p><img src="https://counter.theconversation.com/content/181936/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nolan Higdon does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Media ownership has consolidated around a handful of billionaires – and that might not be great for democracy.Nolan Higdon, Lecturer of History and Media Studies, California State University, East BayLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1748532022-01-13T13:03:26Z2022-01-13T13:03:26ZInflation inequality: Poorest Americans are hit hardest by soaring prices on necessities<figure><img src="https://images.theconversation.com/files/440554/original/file-20220112-21-1y7fro3.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C2995%2C2002&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Not all baskets are created equally.
</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/janelle-myers-of-riverside-fills-her-arms-with-groceries-news-photo/517289220?adppopup=true">Gina Ferazzi/Los Angeles Times via Getty Images</a></span></figcaption></figure><p>The <a href="https://news.yahoo.com/us-inflation-rate-hits-near-135020097.html">fastest rate of inflation in 40 years</a> is hurting families across the U.S. who are seeing ever-higher prices for everything from <a href="https://www.washingtonpost.com/business/2021/09/15/food-inflation-faq/">meat and potatoes</a> to <a href="https://www.cnbc.com/2021/12/28/us-home-prices-surge-18point4percent-in-october.html">housing</a> and <a href="https://www.foxbusiness.com/economy/gas-prices-push-higher-as-oil-remains-stubbornly-strong">gasoline</a>. </p>
<p>But behind the <a href="https://apnews.com/article/consumer-prices-inflation-c1bfd93ed1719cf0135420f4fd0270f9?utm_campaign=SocialFlow&utm_source=Twitter&utm_medium=AP">headline number</a> that’s been widely reported is something that often gets overlooked: Inflation affects different households in different ways – and sometimes hurts those with the least, the most. </p>
<p>Inflation, as calculated by the <a href="https://www.bls.gov/cpi/">Bureau of Labor Statistics</a>, is designed to track the price increases in a typical U.S. household’s basket of goods. The problem is spending bundles differ across households. For example, a family in the lowest 20% of income typically spends around 15% of their budget on groceries – this is nearly <a href="https://jakeorchard.github.io/Written-Materials/Orchard_JMP_cyclical_ds.pdf">60% more than households in the top 20% of the income distribution</a>, according to my calculations.</p>
<h2>The widening inflation gap</h2>
<p>On Jan. 12, 2022, the BLS released figures showing that inflation <a href="https://www.bls.gov/news.release/cpi.nr0.htm">jumped by 7%</a> in December from a year earlier – the fastest pace since 1982. To see how this varied across households, I used the bureau’s own price data and factored in the typical spending habits of different income groups. </p>
<p>I calculate that inflation is running at 7.2% for the lowest income households – higher than for any other group. For the highest income families, the rate of change was 6.6%.</p>
<p>The difference between the two income groups steadily increased throughout 2021, starting the year at just 0.16 percentage point but ending at 0.6 percentage point – near the highest it has been since 2010.</p>
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<p>The reason for this widening rich-poor inflation gap, known by economists as <a href="https://www.annualreviews.org/doi/abs/10.1146/annurev-economics-091520-082042">inflation inequality</a>, comes down to the typical spending habits of people in each income group.</p>
<p>In times of economic uncertainty and recession, most households tend to hold back on buying <a href="https://jakeorchard.github.io/Written-Materials/Orchard_JMP_cyclical_ds.pdf">luxury goods</a>. But by and large, people can’t cut down on necessities such as groceries and heating – although wealthier consumers are better placed to stock up on these necessities when prices are cheap.</p>
<p>This shift of spending away from luxury items like vacations and new cars, and toward necessities, pushes inflation up for poorer families more than richer ones. This is because lower-income households dedicate a higher percentage of their income on <a href="https://jakeorchard.github.io/Written-Materials/Orchard_JMP_cyclical_ds.pdf">necessities</a>.</p>
<p>My data shows that this inflation gap tends to be widest in times of recession or in the early stages of economic recovery. In the aftermath of the <a href="https://www.federalreservehistory.org/essays/great-recession-of-200709">Great Recession</a> of 2008-2009, the gap in inflation rates between the lowest and highest income groups was close to 1 percentage point – higher than it is now.</p>
<p>By contrast, in times of economic growth – for example, from 2012 to 2018 – the gap narrows. It even inverted at one point in 2016; the inflation rate for poorer Americans was almost a half-percentage point lower than that of richer Americans.</p>
<p>The main driver of the growing gap in 2021 was the increases in groceries and gas prices. This has made inflation run hotter for all households. But given the greater proportion of household income that poorer families dedicate to food and energy costs, it has affected them more. </p>
<p>Take out gas and grocery prices, then the inflation gap is reduced significantly.</p>
<p>Going forward, I expect the inflation gap will follow a similar pattern as we saw after the Great Recession – as economic recovery turns into continued expansion, inflation will be lower for low-income households than high-income households. </p>
<p>[<em>More than 140,000 readers get one of The Conversation’s informative newsletters.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-140K">Join the list today</a>.]</p><img src="https://counter.theconversation.com/content/174853/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jacob Orchard received funding from the Washington Center for Equitable Growth in 2019. </span></em></p>The rising cost of groceries and gas is fueling the fastest increase in consumer prices in 40 years and widening the inflation gap between the rich and poor.Jacob Orchard, Doctoral Candidate in Economics, University of California, San DiegoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1720362021-12-09T13:36:25Z2021-12-09T13:36:25ZHow Elon Musk saved big on taxes by giving away a ton of his Tesla stock<figure><img src="https://images.theconversation.com/files/436379/original/file-20211208-137612-m784v2.jpg?ixlib=rb-1.1.0&rect=85%2C57%2C4688%2C2705&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Tesla CEO began to sell stock worth billions of dollars in late 2021.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/TeslaAnnualMeeting/edc300d7f2df4f8797f608b875c9762f/photo?boardId=37be9465fcce45d283d5431cccb20a6a&st=boards&mediaType=audio,photo,video,graphic&sortBy=&dateRange=Anytime&totalCount=205&currentItemNo=1">AP Photo/Jae C. Hong</a></span></figcaption></figure><p>Tesla CEO <a href="https://www.cnbc.com/2021/11/16/taxes-arent-the-only-reason-elon-musk-is-selling-tesla-stock-.html">Elon Musk liquidated Tesla shares</a>, starting in November 2021, that <a href="https://www.cnn.com/2022/01/02/investing/elon-musk-tesla-stock-sales-spacex-investment/index.html">totaled more than US$16 billion</a>. So far, he <a href="https://theconversation.com/should-elon-musk-try-to-solve-the-problem-of-world-hunger-with-6-billion-5-questions-answered-171187">hasn’t declared plans to donate</a> the proceeds from selling those shares to charity.</p>
<p>Instead, Musk <a href="https://www.cnn.com/2022/02/15/business/elon-musk-charity-donation/index.html">donated $5.7 billion in Tesla shares to one or more charities</a> in late 2021, according to paperwork <a href="https://www.sec.gov/Archives/edgar/data/0001318605/000089924322006240/xslF345X03/doc5.xml">filed with the Securities and Exchange Commission</a>. He has <a href="https://www.marketwatch.com/story/elon-musks-5-7-billion-secret-why-we-may-never-find-out-who-benefited-from-his-tesla-stock-donation-11645050146">not disclosed which charities they were</a>. But based on <a href="https://theconversation.com/the-50-biggest-us-donors-gave-or-pledged-nearly-28-billion-in-2021-bill-gates-and-melinda-french-gates-account-for-15-billion-of-that-total-175778">what’s known about the year’s biggest donors</a>, he is now among the nation’s most significant philanthropists.</p>
<p>As an <a href="https://scholar.google.com/citations?user=yG_t15YAAAAJ&hl=en">accounting scholar</a>, I’m not surprised that he went in this direction. It’s much better – from a tax perspective – to just donate stock directly to a cause a taxpayer supports. That is simpler to do than, say, selling Tesla shares and then donating the proceeds. Donating stock also more sharply <a href="https://www.schwabcharitable.org/non-cash-assets/public-traded-securities">reduced the taxes he owes</a>.</p>
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<h2>The mechanics of the charitable deduction</h2>
<p>Billionaire taxpayers are among the roughly <a href="https://econweb.ucsd.edu/%7Ejandreon/AndreoniDurnford20190715a.pdf">5%-10% of Americans</a> who can significantly trim their tax bills when they give money to charity. This is because they can <a href="https://theconversation.com/whats-the-charitable-deduction-an-economist-explains-162647">deduct the value of their donations</a> from their taxable income when they file their taxes – reducing what they owe Uncle Sam.</p>
<p>Before the tax reforms enacted during the Trump administration, a much bigger share of Americans could take advantage of this arrangement, known as the <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions">charitable deduction</a>. But because of those tax changes, many of those people now take the <a href="https://smartasset.com/taxes/standard-deduction">standard deduction</a> instead.</p>
<p>There are usually limits on how big the charitable deduction can be, however. Since 2018, the maximum amount of cash contributions that can be deducted has been 60% of total <a href="https://www.irs.gov/e-file-providers/definition-of-adjusted-gross-income">adjusted gross income</a>. Often called AGI, this is all of the income someone generates minus specific adjustments allowed by the tax code.</p>
<p>The government suspended this restriction in 2020 and 2021 because of the COVID-19 pandemic to encourage support for charities.</p>
<p>Similarly, the government let all taxpayers who didn’t itemize their returns to take a <a href="https://www.cnbc.com/2021/11/30/you-can-deduct-up-to-300-in-charitable-donations-this-year.html">$300 charitable deduction</a>, or $600 for couples who file jointly in 2021, as it did in 2020. However, both of these changes are currently scheduled to expire in 2022.</p>
<h2>Cash, stock, art and real estate</h2>
<p>Wealthy people usually donate cash, just like those of us who don’t have <a href="https://theconversation.com/5-ways-mackenzie-scotts-8-5-billion-commitment-to-social-and-economic-justice-is-a-model-for-other-donors-162829">billions of dollars</a>, <a href="https://milliondollarlist.org/data/donors/index.html">or even millions</a>, to spare.</p>
<p>But there are other ways affluent Americans can use their assets to support the causes of their choice. The law lets them donate any kind of property, as long as it’s with “<a href="https://www.pgdc.com/pgdc/story/rev-rul-86-63">disinterested generosity</a>.” Generally speaking, this means that donors may not obtain any substantial benefits in return for their charitable gifts. Donations may go to nonprofits or, in some cases, domestic or <a href="https://www.devex.com/news/big-concerns-over-gates-foundation-s-potential-to-become-largest-who-donor-97377">global</a> <a href="https://scholarship.law.duke.edu/faculty_scholarship/3731/">government agencies</a>.</p>
<p>The most common way to donate without giving money is by giving away stocks and other <a href="https://www.investopedia.com/terms/a/appreciation.asp">securities that have appreciated</a> – that is, grown in value. The benefit of giving away the stocks directly is that if they were to sell those appreciated investments instead, they would have to pay capital gains taxes on their profits before distributing any remaining cash to the charity. </p>
<p>The tax consequences depend on whether or not taxpayers have owned the stock for at least a year.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&rect=85%2C13%2C2910%2C1585&q=45&auto=format&w=1000&fit=clip"><img alt="Bill Gates, in a green sweater, smiles while Warren Buffett speaks" src="https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&rect=85%2C13%2C2910%2C1585&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=423&fit=crop&dpr=1 600w, https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=423&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=423&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=531&fit=crop&dpr=1 754w, https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=531&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/435182/original/file-20211201-21-9akkyb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=531&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Major donors like Bill Gates and Warren Buffett get bigger tax breaks when they give appreciated stock to charity.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/bill-gates-and-warren-buffett-speak-with-journalist-charlie-news-photo/632858944">Spencer Platt/Getty Images</a></span>
</figcaption>
</figure>
<h2>A hypothetical example</h2>
<p>Consider the following example:</p>
<p>Imaginary taxpayer Johnny Dollar owns 10 shares of the hypothetical company Veridian Inc. that he purchased for $10,000. This stock’s current market value is $100,000 and he wants to use it to make a donation to his favorite charity.</p>
<p>If Johnny sold the stock he would be taxed on a $90,000 gain. Assuming that he would have to pay a 15% tax rate for the gain, he would owe $13,500 in <a href="https://www.investopedia.com/terms/c/capital_gains_tax.asp">capital gains tax</a>, leaving only $86,500 left to give away.</p>
<p>If Johnny were to instead give that stock directly to the charity, he wouldn’t have to include any capital gain in his taxable income, and the charity would get a bigger boost. Plus, Johnny could deduct the $100,000 from his income at tax time.</p>
<p>This is how it would work if Johnny has owned the stock for longer than one year, which is what the government considers to be a <a href="https://www.investopedia.com/articles/personal-finance/101515/comparing-longterm-vs-shortterm-capital-gain-tax-rates.asp">long-term investment</a>. However, the IRS limits deductions tied to donations of stock and other forms of property to <a href="https://www.irs.gov/publications/p526#en_US_2020_publink100017780">30% of AGI</a>.</p>
<p>Things would work differently for Johnny if he were to give to charity assets he’s owned for less than a year. The authorities see the value of such property – which, if sold, would be subject to a higher tax rate – to be the asset’s purchase price. In this example, that would be $10,000 – even if the asset’s value has soared. The maximum deduction anyone can take for a gift of such assets is <a href="https://www.bkd.com/alert-article/2021/09/enhance-your-charitable-contributions-0">50% of their adjusted gross income</a>. </p>
<p>If instead the value of Johnny’s stock has declined, he would typically be better off if he were to sell first and donate the proceeds. That’s because he could deduct that loss against any other gains he might have from selling property, reducing his overall taxable income. He could then give away the money obtained by selling those shares – getting a <a href="https://www.cancer.org/involved/donate/more-ways-to-give/gifts-of-securities.html">tax deduction</a> that also reduces his taxable income.</p>
<p>There are, of course, other kinds of property that Americans can donate, including artwork, vehicles, real estate and even cryptocurrency. While there are some unique considerations for each of those, the general rules discussed in the example above still apply.</p>
<p>In short, whenever high-income people give away property that is worth more than when they got it, they avoid paying taxes on the gain and they get an income tax deduction for the contribution.</p>
<p>But when they hang on for longer than a year to property they purchased for a relatively low amount and that increased substantially in value, they will reap the <a href="https://www.fidelitycharitable.org/guidance/charitable-tax-strategies/reduce-taxable-income.html">biggest tax benefits</a>. </p>
<p>Should the gift be so large that it exceeds this maximum deductible amount in a given year, it’s possible to spread out this tax break for <a href="https://www.irs.gov/publications/p526#en_US_2020_publink1000229824">up to five more years</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Oprah Winfrey, speaking into a hand-held microphone against a blue backdrop." src="https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/435662/original/file-20211203-15-3lr1rm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Oprah Winfrey has given hundreds of millions of dollars to charity.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/oprah-winfrey-speaks-during-oprahs-2020-vision-your-life-in-news-photo/1211002146">Tom Cooper/Getty Images</a></span>
</figcaption>
</figure>
<h2>Taking advantage of big donations</h2>
<p>Timing tends to play a role in terms of how big a tax break donors can get from their charitable gifts. Because the government limits how much income-related tax liability the taxpayers can reduce through their use of the charitable deduction, wealthy donors benefit most in terms of tax reduction when they make large donations in years with especially high incomes.</p>
<p>Going that route avoids the risk of not being able to deduct the full amount of the donation from taxable income in a single year.</p>
<p>Although the taxpayer could carry the extra amount to be deducted into as many as five future years, there would be a risk that they might not have high enough income to make full use of that arrangement because what they earn <a href="https://taxfoundation.org/billionaires-tax-on-capital-gains/">can fluctuate</a> a great deal.</p>
<h2>How and why big donors do this</h2>
<p>There are good reasons that rich people can afford to give away most or even all of their official income. People like Oprah Winfrey and Elon Musk are likely to have other resources to finance their lifestyles, such as investment income, immense amounts of savings or even borrowing.</p>
<p>And to be sure, there are <a href="https://theconversation.com/a-window-into-the-hearts-and-minds-of-billionaire-donors-139161">many reasons wealthy Americans give away large sums</a> to charity that have nothing to do with tax breaks or accounting conventions.</p>
<p>Just like <a href="https://theconversation.com/5-reasons-why-people-give-their-money-away-plus-1-why-they-dont-87801">the rest of us</a>, they may be generous by nature and want to give back by supporting a given cause they care about, whether it’s helping low-income students finish college without piling up lots of debt or increasing <a href="https://www.artplaceamerica.org/">public access to the arts</a>.</p>
<p>[<em>Too busy to read another daily email?</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-toobusy">Get one of The Conversation’s curated weekly newsletters</a>.]</p>
<p><em>This article was updated on Feb. 18, 2022, with news about Musk’s 2021 SEC filings</em></p><img src="https://counter.theconversation.com/content/172036/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Eric James Allen does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Giving away stock that has soared and that the donor has owned for at least a year makes the biggest dent in what share the IRS takes.Eric James Allen, Assistant Professor of Accounting, University of California, RiversideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1693262021-10-06T16:30:18Z2021-10-06T16:30:18ZPaid millions to hide trillions: Pandora Papers expose financial crime enablers, too<figure><img src="https://images.theconversation.com/files/424838/original/file-20211005-25-gfjrt7.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3072%2C1825&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The world's wealthiest people wouldn't be able to shield their riches from tax authorities without enablers.</span> <span class="attribution"><span class="source">(Piqsels)</span></span></figcaption></figure><p>The <a href="https://www.icij.org/investigations/pandora-papers/about-pandora-papers-investigation/">Pandora Papers investigation</a> by the International Consortium of Investigative Journalists (ICIJ), a non-profit newsroom and network of journalists based in Washington, D.C., has revealed there are still some go-to havens for those looking to hide illicit wealth.</p>
<p>The people who don’t get mentioned as much in the media coverage of the Pandora Papers, however, are the enablers devoted to helping the richest people in the world get richer and to pass on their wealth while avoiding or evading taxes. These enablers help criminals and kleptocrats launder their ill-gotten gains.</p>
<p>They may not be as wealthy as their clients, but they are paid millions to hide trillions.</p>
<h2>The wealth defence industry</h2>
<p>For many years there has been a well-established “<a href="https://www.tandfonline.com/doi/full/10.1080/13563467.2020.1816947">wealth defence industry</a>” made up of a coalition of professionals — ranging from advisers and bankers to lawyers, accountants, notaries and estate agents — who use anonymous shell companies, family offices, offshore accounts and trusts to help the world’s richest people shield their wealth from tax collectors.</p>
<p>These highly compensated “enablers” are assisting oligarchs, dictators and criminals around the world. </p>
<p>There’s been <a href="https://www.bbc.com/news/world-58780561">a lot of mainstream reporting</a> on the actual crimes, abuses and financial misdeeds of malicious foreign states and wealthy individuals. But what about the intermediaries to the financial system who handle the details and provide the get-away mechanisms for the criminals?</p>
<figure class="align-center ">
<img alt="A group of men gather around a selection of newspapers, one of them reading one." src="https://images.theconversation.com/files/424852/original/file-20211005-25-44kucm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/424852/original/file-20211005-25-44kucm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=412&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424852/original/file-20211005-25-44kucm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=412&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424852/original/file-20211005-25-44kucm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=412&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424852/original/file-20211005-25-44kucm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=517&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424852/original/file-20211005-25-44kucm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=517&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424852/original/file-20211005-25-44kucm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=517&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Kenyans read the morning newspapers reporting a statement issued by President Uhuru Kenyatta following reports that he’s among more than 330 current and former politicians identified as beneficiaries of secret financial accounts in the Pandora Papers.</span>
<span class="attribution"><span class="source">(AP Photo/Brian Inganga)</span></span>
</figcaption>
</figure>
<p>Some elites pay respected professionals and businesses to open political doors, to lobby against sanctions, to fight legal battles and to launder money and reputations. In doing so, these institutions and individuals push the boundaries of the law and degrade the principles of our democracy.</p>
<p>According to the <a href="https://www2.deloitte.com/content/dam/Deloitte/in/Documents/finance/Forensic/in-forensic-AML-Survey-report-2020-noexp.pdf">Deloitte Anti-Money Laundering Preparedness Survey Report 2020</a>, the amount of money laundered in one year is estimated to be between two per cent and five per cent of global GDP, or from US$800 billion to US$2 trillion annually.</p>
<p>The ICIJ’s <a href="https://www.icij.org/investigations/fincen-files/">FinCEN Files</a> offer unprecedented insights into a secret world of international banking, anonymous clients and, in many cases, financial crime.</p>
<p>They show how banks blindly move cash through their accounts for people they can’t identify, failing to report transactions with all the hallmarks of money laundering until years after the fact, and even do business with clients enmeshed in financial frauds and public corruption scandals.</p>
<h2>The insidiousness of ‘dark money’</h2>
<p>Corruption and financial wrongdoing are by their nature secretive and often deeply complex. <a href="https://www.opensecrets.org/dark-money/basics">Dark money</a> — essentially spending meant to sway political outcomes with no information about the source of the money — buys <a href="https://www.opensecrets.org/news/2020/01/dark-money-10years-citizens-united/">access to courts and politicians</a>, consequently making society less fair and more inequitable.</p>
<p>What often distinguishes ordinary rich people <a href="https://www.nationalgeographic.org/encyclopedia/oligarchy/">from the oligarchy</a> is that all oligarchs invest in wealth defence. They use their power and wealth to amass more power and wealth, to lobby and to rig the rules around them.</p>
<p>One of the challenges in cracking down on financial crime is the global race to the bottom among tax havens that are trying to entice customers by offering more lucrative incentives and a higher degree of secrecy for companies. Enablers who are part of the wealth defence industry develop and market strategies, structures and schemes to avoid tax liabilities and regulatory scrutiny.</p>
<p><a href="https://www.openownership.org/blogs/modelling-beneficial-ownership-data/">Beneficial ownership databases</a> aimed at combating money-laundering have become an <a href="https://www.osler.com/en/blogs/risk/april-2021/canada-s-budget-introduces-long-awaited-beneficial-ownership-registry-to-combat-money-laundering">increasingly popular reform</a> around the world <a href="https://www.icij.org/investigations/panama-papers/five-years-later-panama-papers-still-having-a-big-impact/">in the aftermath of the Panama Papers</a>, which focused international attention on how corporate anonymity can enable a range of social ills. </p>
<p>As this trend continues, there’s hope that as more jurisdictions institute greater beneficial ownership initiatives and tax transparency, remaining “outlier” offshore destinations like Bermuda, <a href="https://www.caymancompass.com/2021/10/01/government-extends-beneficial-ownership-consultation/">the Cayman Islands</a> and Malta will be sanctioned into compliance by the threat of exclusion from the global financial system.</p>
<figure class="align-center ">
<img alt="Two tourists walk along a white-sand beach lined with trees and shrubs." src="https://images.theconversation.com/files/424855/original/file-20211005-20911-y7w6j9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/424855/original/file-20211005-20911-y7w6j9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424855/original/file-20211005-20911-y7w6j9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424855/original/file-20211005-20911-y7w6j9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424855/original/file-20211005-20911-y7w6j9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424855/original/file-20211005-20911-y7w6j9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424855/original/file-20211005-20911-y7w6j9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Tourists walk along the shore of Seven Mile Beach in Grand Cayman Island.</span>
<span class="attribution"><span class="source">(AP Photo/David McFadden)</span></span>
</figcaption>
</figure>
<h2>Promising signs</h2>
<p>In the meantime, many jurisdictions continue to evade law enforcement agencies that chase the secret money trails of tax dodgers and criminals.</p>
<p>Due to all the obvious regulatory and enforcement gaps, and to the seeming lack of political will to address those gaps actively and practically, there are some encouraging signs suggesting governments around the world are being forced to act. </p>
<p>There’s now a growing global demand for greater transparency and accountability, combined with <a href="https://www.aljazeera.com/economy/2021/3/19/bb-radicalchangeleaders-call-for-measures-to-tackle-inequality">calls to address the widening wealth inequity</a> as well <a href="https://hbr.org/2019/05/the-investor-revolution">as demands from investors for the adoption of ESG (environmental, social and governance) principles</a>. </p>
<p>While those factors play a role in getting the attention of senior political leaders, the cynical reality is that the probable primary motivation of these leaders is the serious and alarming trend of a <a href="https://www.oecd.org/tax/oecd-tax-revenues-fall-slightly-before-the-covid-19-pandemic-but-countries-face-much-larger-decreases-ahead-particularly-from-consumption-taxes.htm">reduction in tax revenues</a>. The endorsement of the concept of a <a href="https://www.reuters.com/business/countries-backs-global-minimum-corporate-tax-least-15-2021-07-01/">15 per cent minimum global tax rate</a> by G7 leaders at their June 2021 summit is a clear indication that the winds of change are coming.</p>
<figure class="align-center ">
<img alt="Boris Johnson stands with his arms raised in front of other G7 leaders on a beach." src="https://images.theconversation.com/files/424849/original/file-20211005-30173-ycuwu5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/424849/original/file-20211005-30173-ycuwu5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424849/original/file-20211005-30173-ycuwu5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424849/original/file-20211005-30173-ycuwu5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424849/original/file-20211005-30173-ycuwu5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424849/original/file-20211005-30173-ycuwu5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424849/original/file-20211005-30173-ycuwu5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Leaders of the G7 nations pose for a photo in Cornwall, England in June 2021.</span>
<span class="attribution"><span class="source">(Leon Neal/Pool Photo via AP)</span></span>
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</figure>
<p>The current model is not sustainable. Fiscal realities, along with political pressure and necessity, will force political leaders to act. They’ll soon have to do much more than pay lip service to wealth inequality and power imbalance, which allows the wealth defence industry and their clients to subvert the system and avoid paying their fair share. </p>
<p>Greater transparency and accountability are needed to expose the enablers and to reduce the loopholes that enable wealthy individuals and criminals, along with corporate entities, to operate with impunity.</p><img src="https://counter.theconversation.com/content/169326/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc Tassé does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Highly compensated ‘enablers’ such as financial experts, lawyers, accountants, notaries, estate agents and company service providers are assisting oligarchs, dictators and criminals around the world.Marc Tassé, Professor, Accounting, L’Université d’Ottawa/University of OttawaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1617382021-05-28T05:49:07Z2021-05-28T05:49:07ZThe AFR’s 2021 Rich List shows we’re not all in this together<figure><img src="https://images.theconversation.com/files/403246/original/file-20210527-23-1p8zcfx.jpg?ixlib=rb-1.1.0&rect=21%2C211%2C2396%2C1189&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia's wealthiest person, Gina Rinehart, at the Melbourne Cup in 2016.</span> <span class="attribution"><span class="source">Julian Smith/AAP</span></span></figcaption></figure><p>While the financial well-being of everyday Australians has been hit hard by COVID-19, it’s quite the opposite at the top end of town.</p>
<p>“Australia’s billionaires have thrived during the pandemic year”, is <a href="https://www.afr.com/rich-list/australia-s-10-richest-people-revealed-20210526-p57vfr">how the AFR puts it</a>. But let’s not laud this as an achievement. </p>
<p>It’s a glaring signal the system is stacked. Through the worst economic crisis in a generation, the elite got richer while millions of Australians just hung on, or saw their slim assets evaporate.</p>
<h2>COVID-19 inequalities</h2>
<p>In 2020, as lockdowns were enforced across the country, unemployment and underemployment soared. Even for those in stable jobs, wages growth was stagnant. </p>
<p>To cope, more than 3 million Australians <a href="https://www.ato.gov.au/Super/Sup/COVID-19-Early-release-of-super-report-(20-April---31-December-2020)/?anchor=Monthlyapprovalsandaccumulatedvalue#Monthlyapprovalsandaccumulatedvalue">withdrew more than $37 billion</a> from their superannuation.</p>
<p>Collectively the Australian people also took on a debt of <a href="https://www.icaew.com/insights/viewpoints-on-the-news/2021/may-2021/chart-of-the-week-australia-budget-202122">A$311 billion</a> through federal government spending to mitigate the effects of the pandemic. National debt is expected to grow to <a href="https://www.afr.com/policy/economy/budget-deficits-are-about-more-than-money-20210513-p57rky">$1 trillion</a> by the mid-2020s. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/covid-19-how-rising-inequalities-unfolded-and-why-we-cannot-afford-to-ignore-it-161132">COVID-19: how rising inequalities unfolded and why we cannot afford to ignore it</a>
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<h2>Who’s got the loot?</h2>
<p>Meanwhile the wealthiest Australians got wealthier. </p>
<p>Again in top spot is mining heiress Gina Rinehart (net worth $31.06 billion, up from $28.9 billion). Second is iron ore magnate Andrew “Twiggy” Forrest (net worth $27.25 billion, up from $23 billion). </p>
<p>Their <a href="https://www.smh.com.au/business/axe-the-tax--mining-magnates-see-red-20100609-xvqj.html">campaign a decade ago</a> against the resources profits super tax has proved to be most profitable. </p>
<p>Clive Palmer is in seventh spot (A$13.01 billion, up from $9.8 billion).</p>
<p>Wealth from privatising the value of land, either by digging it up or building on it, accounts for almost half of the wealth of the top 200 – $107.8 billion for the resources sector and $105 billion for property. </p>
<p>Next comes the technology sector ($78.4 billion). The two co-founders of collaboration software company Atlassian accounted for half of that. Mike Cannon-Brooks is third spot with $20.18 billion and Scott Farquhar fifth with $20 billion. </p>
<p>Atlassian has courted controversy over how little tax it pays in Australia, with the AFR’s own columnist Joe Aston calling Cannon-Brooks an “<a href="https://www.afr.com/rear-window/mike-cannon-brookes-doesn-t-merit-being-listened-to-20200223-p543in">epic freeloader</a>” in February 2020 over Atlassian’s aggressive approach to tax avoidance. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/swollen-executive-pay-packets-reveal-the-limits-of-corporate-activism-123988">Swollen executive pay packets reveal the limits of corporate activism</a>
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</p>
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<h2>The pandemic has been good for the rich</h2>
<p>The <a href="https://www.afr.com/rich-list">2021 rich list</a> shows the extent of economic inequality in this country, as well as the increasing prevalence of the wealthiest Australians. Internationally, Australia is the country with the <a href="http://povertyandinequality.acoss.org.au/inequality/">fifth-highest number</a> of “ultra-high-wealth” citizens. </p>
<p>The good fortune of Australia’s ultra-rich follows the same pattern elsewhere in the world. </p>
<p>A study by the US progressive think tank the <a href="https://inequality.org/wp-content/uploads/2020/04/Billionaire-Bonanza-2020-April-21.pdf">Institute for Policy Studies</a> has called 2020 a “billionaire bonanza”, with the long trend in growth in the ultra-rich uninterrupted by the pandemic. The Biden administration has proposed <a href="https://www.cnbc.com/2021/04/29/how-biden-tax-plan-would-hit-the-wealthy.html">increasing taxes on the wealthy</a> as a way of funding services such as child care and education. </p>
<p>In Australia, the Morrison government has no such plans. </p>
<p>But if COVID-19 has taught us anything, it is that with real political will governments have the power to intervene in the economy at a fundamental level. Lockdowns, border controls, wage subsidies and massive borrowing and expenditure to stimulate the economy have all been bold and unprecedented policies.</p>
<p>Yet when it comes to demanding that the ultra-rich pay a little more and address economic inequality, the same level of political will is nowhere to be seen. </p>
<p>If we really are all in this together, it’s time for that to change.</p><img src="https://counter.theconversation.com/content/161738/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Carl Rhodes does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The wealth of the top 200 Australians has risen by A$56 billion to a staggering $480 billion.Carl Rhodes, Professor of Organization Studies, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1590342021-05-04T14:23:13Z2021-05-04T14:23:13ZThe Bank of Canada must seize the pandemic moment and do more for Canadians<figure><img src="https://images.theconversation.com/files/398428/original/file-20210503-19-1f00981.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3751%2C2645&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A woman walks past the Bank of Canada building in Ottawa in September 2017. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Adrian Wyld</span></span></figcaption></figure><p>The <a href="https://www.bankofcanada.ca/">Bank of Canada</a>, like central banks around the world, is currently facing enormous upheaval and uncertainty due to the enduring COVID-19 pandemic. </p>
<p>Will its leadership seize the moment as an opportunity to innovate and respond to the challenges ahead, including rising inequality and climate change? Or will it treat the present crisis as a temporary exception, hoping to return to business as usual once the pandemic recedes?</p>
<p>This spring, the bank released the <a href="https://www.bankofcanada.ca/toward-2021-renewing-the-monetary-policy-framework/toward-2021-outreach/lets-talk-inflation/consultations-with-canadians/">results of its consultations with Canadians</a> as part of its ongoing mandate review. This is an historic opportunity for our central bank and the federal government to make the bank work better for the Canadian people.</p>
<p>As academics specializing in philosophy and economics, and politics, respectively, we’d like to highlight two key themes that emerged in the Bank of Canada’s consultations with Canadians.</p>
<h2>Wealth inequality, climate action</h2>
<p>First, many Canadians are deeply concerned about the increasingly unequal distribution of wealth in this country — particularly by the way it has been driven by <a href="https://www.cbc.ca/news/canada/photos/canada-real-estate-prices-scroller-1.6004260">skyrocketing house prices.</a> Second, some Canadians would like to see the Bank of Canada take the threat of climate change seriously as it plays its key role in ensuring price and financial stability.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/climate-action-job-creation-are-top-post-pandemic-priorities-for-canadians-156739">Climate action, job creation are top post-pandemic priorities for Canadians</a>
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</p>
<hr>
<p>How could the bank do better in tackling these two core problems — the scourge of rising inequality and the future shocks of climate change?</p>
<p>On inequality, there are many useful models around the world. Although Canadians like to think we’re more progressive than our neighbour to the south, American are actually well ahead of us in rethinking the role of their central bank. </p>
<p><a href="https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm">The United States Federal Reserve’s recent shift towards what’s known as average inflation targeting,</a> a strategy that seeks to balance inflation and growth over the medium term, gives it more flexibility to boost employment.</p>
<figure class="align-center ">
<img alt="'The Bank of Canada' is etched onto a stone wall." src="https://images.theconversation.com/files/398426/original/file-20210503-19-1joypcg.jpg?ixlib=rb-1.1.0&rect=0%2C533%2C5476%2C3009&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/398426/original/file-20210503-19-1joypcg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/398426/original/file-20210503-19-1joypcg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/398426/original/file-20210503-19-1joypcg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/398426/original/file-20210503-19-1joypcg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=486&fit=crop&dpr=1 754w, https://images.theconversation.com/files/398426/original/file-20210503-19-1joypcg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=486&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/398426/original/file-20210503-19-1joypcg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=486&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Bank of Canada in Ottawa in December 2020.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Sean Kilpatrick</span></span>
</figcaption>
</figure>
<p>Such a strategy, if combined with a dual mandate of price stability and employment, would allow the Bank of Canada to pay more attention to the needs of all Canadians. The bank’s public consultations suggest there’s in fact considerable support for such a move.</p>
<p>While this would be a first and important step in modernizing the Bank of Canada’s mandate, we need to go further and take a more careful look at some of the policy tools that the central bank has been using in the last year. </p>
<h2>Quantitative easing</h2>
<p>Since the COVID-19 crisis took hold, the Bank of Canada joined other central banks in engaging in what’s called <a href="https://www.bankofcanada.ca/2020/12/how-quantitative-easing-works/">quantitative easing</a>, initiating massive purchases of financial assets. As a result, its <a href="https://www.bankofcanada.ca/2019/08/bank-canada-balance-sheet/">balance sheet has increased by close to 500 per cent since March 2020</a>.</p>
<p>Such liquidity injections by central banks are clearly necessary. The question is <em>how</em> this liquidity should be injected.</p>
<p>Suppose your doctor prescribes you a drug that is known to have serious side effects. Wouldn’t you want her to look into alternative treatments? The experience with quantitative easing since 2008 shows that it has two serious side effects, both of which pertain to some of the core concerns of Canadians.</p>
<p>First, it exacerbates inequality. While the central bank may want to see a good portion of the injected liquidity used to stimulate real economic activity, this is not something it can control. Instead, a lot of the liquidity has ended up in stock markets and housing markets, benefiting wealthy asset owners and helping to push the cost of owning a house beyond the means of many Canadians.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Mark Carney gestures." src="https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=370&fit=crop&dpr=1 600w, https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=370&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=370&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=465&fit=crop&dpr=1 754w, https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=465&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/398463/original/file-20210503-15-1llm6fr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=465&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Mark Carney, then the governor of the Bank of England, speaks at a news conference in December 2019.</span>
<span class="attribution"><span class="source">(AP Photo/Kirsty Wigglesworth)</span></span>
</figcaption>
</figure>
<p>As Mark Carney, then governor of the Bank of England, acknowledged in 2014, “<a href="https://www.bis.org/review/r140528b.htm">the distributional consequences of the response to the financial crisis have been significant</a>.” The same is true today.</p>
<p>Second, when quantitative easing includes buying corporate bonds, it facilitates access to capital markets for the firms in question. Central banks appeal <a href="https://www.cepweb.org/central-bank-market-neutrality-is-a-myth/">to the idea of “market neutrality”</a> and claim that an asset purchase that reflects current bond volumes on capital markets does not favour anyone in particular.</p>
<p>But in countries like Canada, when you <a href="https://www.investopedia.com/articles/investing/062813/why-companies-issue-bonds.asp">buy a collection of corporate bonds</a> compared to <a href="https://www.reference.com/business-finance/outstanding-bonds-836fc7a1b6253cbf#:%7E:text=Outstanding%20bonds%20are%20those%20bonds,the%20company%20to%20the%20investor.&text=Interest%20is%20to%20be%20returned,those%20bonds%20are%20considered%20paid.">the outstanding bonds on the market</a>, you inevitably reinforce the status quo with its many companies that have large carbon footprints. That slows the transition to a more sustainable economy.</p>
<h2>Politics comes with the territory</h2>
<p>Some will caution that independent central banks should not get involved with such deeply political issues. The answer to this is simply: It’s too late for that. Political decisions come with the territory of central banking today, and we’d better develop innovative policy instruments to reflect this reality.</p>
<p>Other central banks are adapting already. In December, the <a href="https://www.snb.ch/en/mmr/speeches/id/ref_20201217_tjn/source/ref_20201217_tjn.en.pdf">Swiss National Bank announced</a> that its asset purchases will exclude all companies primarily active in coal mining. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Christine Lagarde addresses European lawmakers" src="https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/398465/original/file-20210503-15-caex5k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Christine Lagarde, European Central Bank president, addresses European lawmakers in Brussels in February 2021.</span>
<span class="attribution"><span class="source">(AP Photo/Olivier Matthys)</span></span>
</figcaption>
</figure>
<p>Perhaps more significantly, the <a href="https://www.ecb.europa.eu/home/html/index.en.html">European Central Bank</a> has vowed to take a more active stance on climate change since Christine Lagarde has taken over as president.</p>
<p>Unconventional policies can also be used to alleviate — instead of exacerbate — inequality. One idea is to transfer money to citizens through <a href="https://www.investopedia.com/articles/personal-finance/082216/what-difference-between-helicopter-money-and-qe.asp">so-called helicopter money</a> rather than rely on institutional investors to transform quantitative easing measures into economic stimulus initiatives. The policy response to COVID-19, particularly <a href="https://www.cbc.ca/news/politics/cerb-ei-benefits-covid19-1.5743537">the Canadian Emergency Response Benefit (CERB)</a>, actually provides an interesting blueprint for this.</p>
<p>The overall tone of the Bank of Canada’s consultations report seems to suggest that the institution is more comfortable with the status quo than with serious innovation. </p>
<p>But our central bank actually has <a href="https://www.bankofcanada.ca/2000/10/can-a-bank-change/">a history of being an innovator in monetary policy</a>. In 1975, it was among the first central banks to <a href="https://www.imf.org/external/pubs/ft/fandd/2014/03/basics.htm">adopt monetarism</a>, the practice of controlling the money supply to stabilize the economy. And it was the second to adopt <a href="https://www.bankofcanada.ca/2020/08/understanding-inflation-targeting/#:%7E:text=After%20trying%20a%20few%20different,in%20good%20overall%20economic%20performance.">inflation targeting</a> in 1991, when it was still an untested approach. </p>
<p>To confront today’s many challenges, the Bank of Canada needs to rediscover that innovative zeal.</p><img src="https://counter.theconversation.com/content/159034/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Dietsch receives funding from the Social Sciences and Humanities Research Council of Canada. He is a member of the advisory board of the Council on Economic Policies. </span></em></p><p class="fine-print"><em><span>Jacqueline Best receives funding from the Social Sciences and Humanities Research Council of Canada.</span></em></p>Unconventional policies can be used to alleviate — instead of exacerbate — inequality, something Canadians are clamouring for. The Bank of Canada needs to rediscover its former innovation zeal.Peter Dietsch, Professor, Département de Philosophie, Université de MontréalJacqueline Best, Professor of Political Studies, L’Université d’Ottawa/University of OttawaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1565342021-03-12T13:43:16Z2021-03-12T13:43:16ZVaccine passports may be on the way – but are they a reason for hope or a cause for concern?<figure><img src="https://images.theconversation.com/files/389141/original/file-20210311-22-z3xj75.jpg?ixlib=rb-1.1.0&rect=20%2C0%2C6910%2C4676&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Israeli diners with a 'green pass' get to enjoy a meal with friends</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/people-sit-at-cafe-terraces-in-jerusalem-on-march-9-after-news-photo/1231612020?adppopup=true">Emmanuel Dunand/AFP via Getty Images</a></span></figcaption></figure><p>After a year of <a href="https://liveforlivemusic.com/news/covid-19-concert-cancellation-tracking/">canceled concerts</a>, <a href="https://www.nytimes.com/2020/08/19/sports/empty-stadiums-live-fans.html">closed-door sporting events</a> and <a href="https://www.iatatravelcentre.com/world.php">restricted air travel</a>, <a href="https://www.washingtonpost.com/business/what-are-vaccine-passports-and-how-would-they-work/2021/03/09/925e9f98-814f-11eb-be22-32d331d87530_story.html">vaccine passports</a> are being touted as a way to quicken the route back to normalcy.</p>
<p>The <a href="https://www.nytimes.com/2021/02/04/travel/coronavirus-vaccine-passports.html">premise</a> is straightforward: A digital or paper document will indicate whether individuals have received a COVID-19 vaccination or, in some cases, recently tested negative for the coronavirus. This could allow them to travel more freely within their communities, enter other countries or engage in leisure activities that have largely been closed off during the pandemic.</p>
<p>Vaccine passports seem like a desirable alternative to continuing lockdowns until herd immunity – estimated to occur at about a <a href="https://www.npr.org/sections/health-shots/2021/02/03/963373971/a-rocky-road-on-the-way-to-herd-immunity-for-covid-19">70%-85% vaccination rate</a> – is achieved. </p>
<p>As a <a href="https://ccie.ucf.edu/profile/yara-asi/">global health management researcher</a>, I can certainly see the benefits of vaccine passports. But I’m also aware of the pitfalls. While vaccine passports may open the world to many, they may lead to discrimination – especially against the poor.</p>
<h2>Return to the skies</h2>
<p>Undoubtedly there is a desire to get back to normality as quickly as possible. </p>
<p>For the tourism industry, which is estimating <a href="https://www.un.org/sites/un2.un.org/files/sg_policy_brief_covid-19_tourism_august_2020.pdf">more than US$1 trillion</a> in losses due to COVID-19, a reopening of travel would be much-needed relief. Even for those able to travel during the pandemic, arrival in most countries has required significant restrictions, often including a <a href="https://www.wsj.com/articles/hit-by-coronavirus-slowdown-hotels-try-catering-to-the-quarantined-11584624502">hotel quarantine</a> of up to 14 days.</p>
<p>Vaccination passports could <a href="https://www.wsj.com/articles/what-you-can-and-cant-do-if-youve-been-vaccinated-travel-gatherings-risk-factors-what-you-need-to-know-11614978343">allow families</a> separated by local lockdowns, or state or country border restrictions, to meet in person.</p>
<p>Pushing the case for a digital passport, an <a href="https://www.theguardian.com/world/2021/feb/23/air-new-zealand-to-trial-covid-vaccine-passport-on-sydney-flights">executive from Air New Zealand</a> told The Guardian, “Reassuring customers that travel is, in fact, safe is one of our priorities. By using the app, customers can have confidence that everyone onboard meets the same government health requirements they do.”</p>
<p>And it isn’t just travel. Passports could also open the door to everyday pursuits that seemed normal before the pandemic. In <a href="https://www.theguardian.com/world/2021/feb/28/green-pass-how-are-vaccine-passports-working-in-israel">Israel</a>, the country with the fastest vaccination rate, citizens with a vaccination “green pass” will be allowed entry to gyms, hotels, concerts and indoor dining at restaurants.</p>
<p>And <a href="https://hrexecutive.com/employers-can-legally-require-covid-vaccines-but-will-they/">some employers</a> are considering requiring proof of vaccination to return to work.</p>
<h2>Getting a green pass</h2>
<p>In short, the concept of vaccine passports is no longer theoretical, as it was early in the pandemic, when the World Health Organization <a href="https://www.who.int/news-room/commentaries/detail/immunity-passports-in-the-context-of-covid-19">recommended against</a> their use.</p>
<p>It has even <a href="https://www.wsj.com/articles/support-for-covid-19-vaccine-passports-grows-with-european-chinese-backing-11614771850">been suggested</a> that the lure of a vaccine passport could result in more people stepping forward to get vaccinated.</p>
<p>Israel instituted its green pass program on Feb. 21, both to reopen the economy and to <a href="https://www.usatoday.com/story/news/factcheck/2021/03/02/fact-check-israel-launching-green-pass-covid-19-vaccinated/6871965002/">encourage young people</a> to get vaccinated. </p>
<p>Other countries are monitoring the success of Israel’s program. <a href="https://www.theguardian.com/world/2021/feb/22/boris-johnson-considers-covid-status-certificates-to-unlock-society">The U.K.</a> has shown interest in the idea of vaccine passports, and the <a href="https://www.latimes.com/world-nation/story/2021-03-03/europe-coronavirus-vaccinations-passports">27 member states of the European Union</a> are considering some form of vaccine-certification system to allow easier cross-border travel in the EU.</p>
<p>In the U.S., President Joe Biden has <a href="https://www.cnbc.com/2021/02/25/covid-vaccine-passports-health-experts-are-deeply-concerned.html">directed government agencies</a> to “assess the feasibility” of some form of digital vaccine certificate, analogous to the concept of a vaccine passport.</p>
<h2>Pandemic inequities</h2>
<p>This potential opening up of the world after months of restrictions is welcomed. But the concern is that the benefits will not be distributed equitably, and as a result some groups will be disadvantaged.</p>
<p>After all, a pandemic once considered a “<a href="http://doi.org/10.1007/s11606-020-05880-5">great equalizer</a>” soon turned out to be anything but.</p>
<p>As with most health crises, <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7224347/">racial minorities</a> made up a higher proportion of those affected in the U.S. – as seen in their <a href="https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization-death-by-race-ethnicity.html">higher rates of hospitalizations and deaths</a>.</p>
<p>Disparities along income and racial lines have persisted in vaccination campaigns. <a href="https://www.nytimes.com/interactive/2021/03/05/us/vaccine-racial-disparities.html">In the United States</a>, for example, Black Americans have received the vaccine at <a href="https://www.kff.org/coronavirus-covid-19/issue-brief/latest-data-on-covid-19-vaccinations-race-ethnicity/">half the rate of white Americans</a>, and the disparity is even larger for Hispanic Americans. Globally, <a href="https://theconversation.com/covid-vaccines-rich-countries-have-bought-more-than-they-need-heres-how-they-could-be-redistributed-153732">rich countries have ordered</a> almost all of the currently available vaccines, meaning that the average citizen in a high-income country is much more likely to receive a vaccine than a health care worker or high-risk citizen in lower-income countries.</p>
<p>It is also likely that demographic groups with <a href="https://www.technologyreview.com/2020/12/22/1015451/vaccine-passports-nita-farahany-trust/">higher levels of trust</a> in authorities and medical institutions are the most willing to be vaccinated, and this may adversely affect marginalized communities. A recent study found that Black Americans – who have <a href="https://theconversation.com/many-black-americans-arent-rushing-to-get-the-covid-19-vaccine-a-long-history-of-medical-abuse-suggests-why-152368">legitimate reasons to distrust the medical establishment</a> – <a href="https://www.kff.org/report-section/kff-covid-19-vaccine-monitor-january-2021-vaccine-hesitancy/">were the least likely</a> of any racial group in the U.S. to say they’d get vaccinated against the coronavirus.</p>
<p>As such, vaccination passports could perpetuate existing inequities within countries if those who are vaccinated can enjoy the freedom to move about their community while others remain in lockdown. </p>
<h2>A world divided?</h2>
<p>Given the global imbalance of vaccine availability, it is not difficult to imagine a situation where the citizens of rich countries may regain their rights to travel to environments where local populations are still in some form of lockdown.</p>
<p>This potential to <a href="https://www.forbes.com/sites/joshuacohen/2021/03/04/vaccine-passports-could-exacerbate-global-inequities/?sh=6c6263d27874">further divide the global rich</a> from the global poor is a significant concern. Once economies start to “open” and those with vaccine passports are able to go about their business as usual, the urgency to deal with COVID-19 in marginalized communities may dissipate.</p>
<p>Further, vaccination passports may give populations an <a href="https://www.cbs46.com/news/vaccine-giving-some-a-false-sense-of-immunity-from-covid-19/article_bd0622b4-5c53-11eb-9204-d3eae5804de2.html">inaccurate level of risk perception</a>. It is still unclear <a href="https://www.bbc.com/future/article/20210203-why-vaccinated-people-may-still-be-able-to-spread-covid-19">how long immunity</a> will last. It is also unclear the extent to which virus transmission is limited once one is vaccinated. <a href="https://www.hopkinsmedicine.org/health/conditions-and-diseases/coronavirus/covid-19-vaccine-what-you-need-to-know">Public health authorities</a> still suggest that vaccinated individuals wear masks and maintain distancing in public for now, especially if interacting with unvaccinated people.</p>
<p>These recommendations have led to concerns that vaccinated tourists, diners and shoppers may act in ways that might risk the unvaccinated service and hospitality employees with whom they are interacting.</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p>
<p>There are also privacy concerns with vaccine passports, which are primarily being proposed in a digital format.</p>
<p>In the U.K., the proposed vaccine certification would come in the <a href="https://www.theguardian.com/world/2021/feb/24/nhs-covid-app-prove-vaccinated-status-access-venues-pubs-in-england">form of an app</a>, which could be scanned to gain entry to restaurants and venues. It has <a href="https://socialsciences.exeter.ac.uk/media/universityofexeter/collegeofsocialsciencesandinternationalstudies/lawimages/research/Policy_brief_-_Digital_Health_Passports_COVID-19_-_Beduschi.pdf">sparked concerns</a> that digital passports may infringe on the rights to privacy, freedom of movement and peaceful assembly.</p>
<p>Countries that <a href="https://freedomhouse.org/countries/freedom-world/scores?sort=asc&order=Total%20Score%20and%20Status">rank low in global freedom indices</a>, such as <a href="https://www.reuters.com/article/health-coronavirus-bahrain-vaccine-int-idUSKBN2AH18V">Bahrain</a>, <a href="http://www.moh.gov.bn/SitePages/bruhealth.aspx">Brunei</a> and <a href="https://www.nytimes.com/2020/03/01/business/china-coronavirus-surveillance.html">China</a>, are also using apps, often with troubling implications. In China, the app was found to be linked to law enforcement, and as people checked into locations across the city, their locations were tracked by the software.</p>
<p>Despite the upsides of vaccines passports, these concerns remain. The <a href="https://www.who.int/news-room/articles-detail/world-health-organization-open-call-for-nomination-of-experts-to-contribute-to-the-smart-vaccination-certificate-technical-specifications-and-standards-application-deadline-14-december-2020">World Health Organization has called</a> on nations to make sure that, if implemented, vaccine passports are not responsible for “increasing health inequities or increasing the digital divide.”</p>
<p>The danger is that thus far, at every stage the pandemic has exposed society’s inequities. Vaccine passports may perpetuate these inequities as well.</p><img src="https://counter.theconversation.com/content/156534/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Yara M. Asi is a Non-resident Fellow at the Arab Center DC and a Policy Member of Al-Shabaka.</span></em></p>The pandemic has exposed inequalities in society. There is concern that tying freedoms to vaccinations may further disadvantage vulnerable groups.Yara M. Asi, Post-Doctoral Scholar, Health Management and Informatics, University of Central FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1552772021-03-11T13:28:50Z2021-03-11T13:28:50ZSkipping the vaccine line is not only unethical – it may undermine trust in the rollout<figure><img src="https://images.theconversation.com/files/388850/original/file-20210310-24-1hes64d.jpg?ixlib=rb-1.1.0&rect=8%2C8%2C5455%2C3628&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Waiting in line for a vaccine at the Balboa Sports Complex in Encino, California.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/thomas-zisfain-of-woodland-hills-2nd-from-left-covers-up-to-news-photo/1230839506?adppopup=true">Mel Melcon/Los Angeles Times via Getty Images</a></span></figcaption></figure><p>The rollout of the COVID-19 vaccine has been <a href="https://mynbc15.com/news/spotlight-on-america/vaccine-cheats-at-risk-americans-wait-as-rich-and-connected-skip-ahead-for-covid-19-shots">accompanied by reports of line-jumping</a> as people farther down the list attempt to get ahead of those deemed higher priority.</p>
<p>In late February, for example, one health provider, <a href="https://www.npr.org/2021/02/24/970176532/high-end-medical-provider-let-ineligible-people-skip-covid-19-vaccine-line">One Medical</a>, was <a href="https://www.cbs8.com/article/news/health/coronavirus/one-medical-investigated-after-reportedly-vaccinating-ineligible-people/509-6d1edb1f-44dd-4d6e-824e-283eef01e24e">stripped of its vaccine allocation</a> after allegedly allowing people connected to the company and those paying for its “concierge medical service” to have the shots – despite not being eligible. Likewise in January, hospitals in <a href="https://www.forbes.com/sites/tommybeer/2021/01/27/seattle-hospital-offered-major-donors-invite-only-covid-19-vaccine-appointments/?sh=47cd37ef641a">Washington state</a> and <a href="https://www.miamiherald.com/news/coronavirus/article248323565.html">South Florida</a> faced criticism for offering invitation-only vaccine slots to private donors. More recently, <a href="https://www.texastribune.org/2021/03/09/texas-coronavirus-vaccine/">Texas has come under scrutiny</a> for allowing people to be vaccinated without proving eligibility.</p>
<p>The resulting unfairness of practices such as these has compounded other <a href="https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/race-ethnicity.html">inequalities highlighted by the pandemic</a>. As a law scholar who has <a href="https://blog.harvardlawreview.org/examining-the-interface-between-rights-and-queues/">studied queuing</a>, I consider building trust in the fairness of the line, alongside trust in the vaccine itself, to be important for the success of the immunization program. Those who skip the line not only displace those waiting behind them, they flout the informal rules of fair play that, with appropriate priority rules, make the rollout fairer than any market or lottery-based alternatives. </p>
<h2>First come, first served</h2>
<p>Historically, first come, first served has often been the default when it comes to queuing. The “<a href="https://core.ac.uk/download/pdf/188095001.pdf">first-in-time, first-in-right</a>” principle goes at least as far back as the 17th century, when it served to settle property disputes in <a href="https://doi.org/10.1016/S1574-0730(07)01003-1">English common law</a>. In wartime Europe, first come, first served was used to allocate rationed goods. And the <a href="https://www.qminder.com/queues-in-ussr/">bread lines in communist Eastern Europe</a> became a symbol of the erosion of trust when systems fail to match supply and demand.</p>
<figure class="align-center ">
<img alt="Dozens of people in Moscow stand in a food line on an icy street waiting to buy bread" src="https://images.theconversation.com/files/388870/original/file-20210310-18-87pahn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/388870/original/file-20210310-18-87pahn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/388870/original/file-20210310-18-87pahn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/388870/original/file-20210310-18-87pahn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/388870/original/file-20210310-18-87pahn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/388870/original/file-20210310-18-87pahn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/388870/original/file-20210310-18-87pahn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Bread lines became a metaphor for the decline of Communism.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/dozens-of-people-in-moscow-stand-in-a-food-line-on-an-icy-news-photo/612577394?adppopup=true">Shepard Sherbell/Corbis via Getty Images</a></span>
</figcaption>
</figure>
<p>Nowadays, first come, first served is often replaced by scheduling algorithms that can triage priority. And waiting lists differ in other respects. Sometimes the lines are winner-take-all, in which one’s position can determine whether or not one gets the goods or services. Other times, placement determines only your wait time.</p>
<p>The COVID-19 vaccine phased allocation falls somewhere in between the two – not quite winner-take-all, but a little more than affecting
just wait time, given the stakes of COVID-19 infection. </p>
<p>Because demand for COVID-19 vaccines has outstripped supply, there has had to be a rationing of supplies. In determining who is eligible for a vaccine and when, a series of <a href="https://www.cdc.gov/mmwr/volumes/69/wr/mm695152e2.htm">ethical principles</a> have been drawn up to help determine priority, alongside considerations of epidemiology and ease of implementation.</p>
<p>These ethical goals include reducing deaths and hospitalizations among high-risk groups, as well as promoting solidarity and <a href="https://www.atsdr.cdc.gov/placeandhealth/svi/index.html">protecting against systemic unfairness</a> disadvantaging vulnerable populations.</p>
<p>As the COVID-19 vaccine has rolled out across America, each state has established its own priority lists and timelines. As a general rule of priority – <a href="https://www.cdc.gov/coronavirus/2019-ncov/vaccines/recommendations.html">endorsed by the Centers for Disease Control and Prevention</a> – health care workers and long-term care residents have been given the highest priority, followed by those age 75 and over and front-line essential workers, with people at high risk of serious COVID-19 illness next in line.</p>
<p>Many states have added groups or tweaked the list. <a href="https://www.kff.org/coronavirus-covid-19/press-release/states-set-different-covid-19-vaccination-priorities-for-people-with-high-risk-conditions/">Sixteen states now give priority to smokers</a>, for example, and <a href="https://www.edweek.org/policy-politics/where-teachers-are-eligible-for-the-covid-19-vaccine/2021/01">44 have moved to provide teachers</a> with early eligibility. With so much variety and changeability in vaccine priority, and the different speed of each state’s rollout, some people might question whether the line deserves adherence. </p>
<h2>Skipping the line</h2>
<p>Each state has also made various official exceptions that allow people to jump the queue. Permission to skip the line has been given in cases of expiring doses, where vaccines would have to be disposed of if not injected into people’s arms. </p>
<p>In Los Angeles, expiring doses have been opened up to so-called “<a href="https://www.reuters.com/article/us-health-coronavirus-vaccine-chasers/covid-19-vaccine-chasers-hunt-wait-and-hope-in-los-angeles-idUSKBN2A91BY">vaccine chasers</a>,” who wait at clinics or vaccination sites and receive end-of-day shots. Meanwhile in Massachusetts, doses have been reserved for “<a href="https://www.mass.gov/doc/massachusetts-75-caregiver-covid-19-vaccine-eligibility/download">companions</a>” who accompany persons age 75 and over to a mass vaccination site. </p>
<p>But there have also been, as the One Medical case has shown, scandals involving line-cutting by the wealthy or politically connected. This is not restricted to the U.S. Several politicians in Peru, Argentina and Ecuador have been <a href="https://www.nytimes.com/2021/02/25/world/public-dismay-turns-to-anger-as-south-american-officials-jump-the-line-for-vaccines.html">forced to resign</a> after getting vaccines for friends and family, and scandals involving both the wealthy and the politically connected have been reported in <a href="https://www.wsj.com/articles/in-brazil-people-illicitly-snag-vaccines-and-brag-about-it-11613563201">Brazil</a>, <a href="https://abcnews.go.com/International/wireStory/canadian-couple-condemned-allegedly-jumping-vaccine-line-75518010">Canada</a> and the <a href="https://www.bbc.com/news/uk-wales-55803134">U.K.</a> This compounds the inequality of vaccine access between, as well as within, countries.</p>
<p>Cases of people jumping the line are entirely predictable; the special treatment of the rich and powerful has a long history when it comes to queuing. And line-jumping may be <a href="https://doi.org/10.1093/acprof:oso/9780195391572.003.007">more frequent in already unequal societies</a>, scholars have suggested.</p>
<h2>Concierge services</h2>
<p>This imbalance affects both the number of lines people have to join and the length of time they wait.</p>
<p>America’s poor often encounter more <a href="https://blog.harvardlawreview.org/examining-the-interface-between-rights-and-queues/">unavoidable lines</a> for basic services, and can spend days, weeks, months or even years waiting for housing, schools, health care or immigration services.</p>
<figure class="align-center ">
<img alt="A long line of people waiting for polio vaccines in Illinois in 1959" src="https://images.theconversation.com/files/388868/original/file-20210310-13-u5u8oj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/388868/original/file-20210310-13-u5u8oj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=348&fit=crop&dpr=1 600w, https://images.theconversation.com/files/388868/original/file-20210310-13-u5u8oj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=348&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/388868/original/file-20210310-13-u5u8oj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=348&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/388868/original/file-20210310-13-u5u8oj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=437&fit=crop&dpr=1 754w, https://images.theconversation.com/files/388868/original/file-20210310-13-u5u8oj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=437&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/388868/original/file-20210310-13-u5u8oj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=437&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Lines for vaccines aren’t new. This one is for a 1959 polio shot.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/PolioVaccine1959/b2247f40913d4aa1850f1699821ea728/photo?Query=lines%20AND%20vaccine&mediaType=photo&sortBy=arrivaldatetime:asc&dateRange=Anytime&totalCount=34&currentItemNo=0">AP Photo</a></span>
</figcaption>
</figure>
<p>Lines are prolific for specific vulnerable populations, such as those within the U.S.’s extensive prison system, welfare recipients or people caught up in an extreme weather disasters. This results in a cost to those affected in their time, but also in other ways. Studies have shown that an uncertain delay – one in which you are not sure how long you will be waiting for a service – can <a href="https://ssrn.com/abstract=3428718">reinforce subordination and political resignation</a> on the part of those already vulnerable. </p>
<p>Wealthier Americans do not have to encounter many of these lines. And in the ones they do join, they are more likely to be able to skip to the front. Common examples can be seen in air travel, where VIP lanes are opened for those who can afford them, or <a href="https://doi.org/10.1111/lsi.12256">recreational goods</a> – such as for sports games or theme parks, where you can pay more to bypass those lining up.</p>
<p>But the ability to pay to line-jump also extends to more basic goods, including health care. </p>
<p>Concierge medicine services – such as the ones that have allowed some people to get illegitimate early access to vaccines – allow paying patients the <a href="https://heinonline.org/HOL/Page?handle=hein.journals/stanlp17&div=12&g_sent=1&casa_token=u0vKjxMDO3cAAAAA:awze_K_yc1T9pMHMqaXUKHIH4dZ0RJEfp_df3bIrNQkZ3ugL5mUGAoReYs6vwFjFYtgcfA&collection=journals">first access</a> to a suite of time-sensitive resources, ranging from priority scheduling to eliminating waiting rooms. </p>
<p>They have been increasingly <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1625036">prevalent</a> in the U.S. and are <a href="https://doi.org/10.1016/j.amjmed.2017.03.031">presented</a> both as a workaround for wealthy patients and a way for doctors experiencing burnout to practice outside an overburdened primary care system. </p>
<p>Such practices have been justified by their supporters as a way to cut wait times. In reality, such VIP lines in health care can make health care more <a href="http://doi.org/10.1001/virtualmentor.2013.15.7.ecas3-1307">inaccessible</a>. Given the overall scarcity of primary doctors, and the premiums demanded for such services, such systems can <a href="https://doi.org/10.7326/M15-0366">displace</a> lower-income, minority and Medicaid patients.</p>
<p>They also <a href="https://www.theatlantic.com/magazine/archive/2012/04/what-isnt-for-sale/308902/">inject market forces</a> into a sphere generally governed by other ethical principles, such as the rights of all patients to health care. Skipping the line undermines this commitment. It also exposes line-jumping to be both a symptom and a cause of inequality.</p>
<p>This is the concern when it comes to the rollout of the COVID-19 vaccine. The <a href="https://www.cdc.gov/coronavirus/2019-ncov/vaccines/recommendations-process.html">CDC</a> and the different <a href="https://www.health.state.mn.us/diseases/coronavirus/vaccine/phase1b1c2.pdf">states</a>’ phased allocations have prioritized equality and mutual responsibility. Illegitimate line-jumping is a direct threat to these principles and works more insidiously to undermine them.</p>
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<p class="fine-print"><em><span>Katharine Young does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>No one likes a long line. But privileging the rich and powerful – as has often been the case – may undermine trust in the vaccine rollout.Katharine Young, Professor of Law, Boston College, Boston CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1563492021-03-02T20:05:44Z2021-03-02T20:05:44ZElizabeth Warren’s wealth tax would reduce inequality – the problem is it’s probably unconstitutional<figure><img src="https://images.theconversation.com/files/387327/original/file-20210302-21-1uds6bi.jpg?ixlib=rb-1.1.0&rect=219%2C93%2C4222%2C2863&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sen. Elizabeth Warren argues that her plan is constitutional.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/UltraMillionaireTax/bf0a19fb9589446f8493118cc8d10ed1/photo?Query=Elizabeth%20AND%20warren&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=5924&currentItemNo=5">AP Photo/Susan Walsh</a></span></figcaption></figure><p>Sen. Elizabeth Warren says it’s time to tax wealth. </p>
<p>The Massachusetts senator on March 1 <a href="https://www.nytimes.com/2021/03/01/business/elizabeth-warren-wealth-tax.html">introduced a bill</a> to tax households worth over US$50 million and up to $1 billion at a rate of 2%, and anything over that at 3%. She <a href="https://cdn.theconversation.com/static_files/files/1498/Wealth_Tax_Revenue_Estimates_by_Saez_and_Zucman_-_Feb_24_20211.pdf?1614702906">first proposed the idea of a wealth tax</a> during the Democratic presidential primary in 2019. </p>
<p>The legislation, which <a href="https://www.warren.senate.gov/imo/media/doc/Wealth%20Tax%20Revenue%20Estimates%20by%20Saez%20and%20Zucman%20-%20Feb%2024%2020211.pdf">could raise an estimated $3 trillion</a> over a decade, is meant to reduce inequality by using revenue from the wealthiest Americans to pay for new federal programs to lift up some of the poorest.</p>
<p>There’s at least one problem: It may be unconstitutional.</p>
<p>As an <a href="https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=56687">expert on tax policy</a>, I know firsthand how America’s system has exacerbated inequality. Fortunately, there are other ways to tax the rich.</p>
<h2>Income and wealth inequality</h2>
<p>Concerns about inequality have increased in recent decades. </p>
<p>Americans <a href="https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality">enjoyed substantial economic growth</a> and broadly shared prosperity from the end of World War II into the 1970s.</p>
<p>But in the 1980s, <a href="https://www.brookings.edu/blog/up-front/2017/12/08/what-we-learned-from-reagans-tax-cuts/">President Ronald Reagan dramatically slashed taxes on the wealthy</a> – twice – cutting the top rate on wages from 70% to 28%.</p>
<p>Studies have shown that the drop in tax rates, combined with other “trickle-down” policies such as deregulation, <a href="https://www.thebalance.com/trickle-down-economics-theory-effect-does-it-work-3305572">led to steadily rising income and wealth inequality</a>. </p>
<p>The wealthiest 1% <a href="https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality">controlled 39%</a> of all wealth in 2016, up from less than 30% in 1989. At the same time, the bottom 90% held less than a quarter of America’s wealth, compared with more than a third in 1989. </p>
<p><iframe id="XMweK" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/XMweK/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Currently, the federal government <a href="https://www.nerdwallet.com/blog/taxes/federal-income-tax-brackets/">taxes all income above $518,400</a> at 37% with <a href="https://www.thebalance.com/net-investment-income-tax-3192936">an additional 3.8% investment tax</a> on incomes over $250,000.</p>
<h2>The problem with a wealth tax</h2>
<p>Warren’s <a href="https://www.congress.gov/bill/117th-congress/senate-bill/510">wealth tax</a> aims to change that. </p>
<p>Her tax on estates worth over $50 million <a href="https://cdn.theconversation.com/static_files/files/1498/Wealth_Tax_Revenue_Estimates_by_Saez_and_Zucman_-_Feb_24_20211.pdf?1614702906">would affect an estimated 100,000 families</a>, or fewer than 1 in 1,000, according to University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman. The tax wouldn’t start until 2023. </p>
<p>Unlike an income tax, a wealth tax <a href="https://theweek.com/articles/717294/wealth-inequality-even-worse-than-income-inequality">reaches the root</a> of both wealth and income inequality.</p>
<p>There’s only one snag: There are <a href="https://taxfoundation.org/warren-wealth-tax-constitutionality/">strong</a> <a href="http://nymag.com/intelligencer/2019/02/constitutional-concerns-are-a-major-risk-for-a-wealth-tax.html">arguments</a> that a federal wealth tax is <a href="https://theconversation.com/how-slaverys-lingering-stain-on-the-us-constitution-spoils-elizabeth-warrens-wealth-tax-proposal-for-now-110964">unconstitutional</a>. Wealth taxes violate Article I, Section 2, Clause 3, of the U.S. Constitution, which forbids the federal government from laying “direct taxes” that aren’t <a href="https://constitutingamerica.org/february-24-2011-%E2%80%93-article-1-section-2-clause-3-of-the-united-states-constitution-%E2%80%93-guest-essayist-w-b-allen-havre-de-grace-md-2/">apportioned equally among the states</a>. </p>
<p>A direct tax <a href="https://www.salon.com/2019/02/22/how-slaverys-lingering-stain-on-the-us-constitution-spoils-elizabeth-warrens-wealth-tax-proposal_partner/">is a tax on a thing</a>, like property or income. An indirect tax is a tax on a transaction: for example, a sale or a gift. </p>
<p>The income tax is a direct tax and constitutional <a href="https://www.law.cornell.edu/constitution/amendmentxvi">because of the 16th Amendment</a>, which specifically allows income taxes without apportionment. As for property, you may notice that <a href="https://www.financialsamurai.com/property-taxes-by-state/">only states levy real estate taxes</a>. In almost every case, the federal government cannot tax real estate or any other form of wealth absent a transaction. </p>
<p>Warren <a href="https://www.bloomberg.com/opinion/articles/2019-01-30/elizabeth-warren-s-wealth-tax-is-probably-constitutional">cites a small group</a> of law professors who back her claim that a wealth tax passes constitutional muster. But the argument against constitutionality is strong enough that a lawsuit before the Supreme Court <a href="https://www.boston.com/news/politics/2019/01/29/elizabeth-warren-wealth-tax-constitution">is sure to follow any attempt to enact a wealth tax</a>. </p>
<p>Barring a victory before a conservative Supreme Court or <a href="https://www.archives.gov/federal-register/constitution">an arduous amendment to the Constitution</a>, the federal government is shut out of taxing wealth.</p>
<h2>Two other proposals</h2>
<p>Two other proposals to tax the rich also emerged in 2019.</p>
<p>Rep. Alexandria Ocasio-Cortez of New York <a href="https://www.cnn.com/2019/01/04/politics/alexandria-ocasio-cortez-tax-climate-change-plan/index.html?utm_term=image&utm_source=twbusiness&utm_content=2019-01-04T15%3A05%3A06&utm_medium=social">wanted to create</a> a new “60% to 70%” tax bracket for income earned from labor over $10 million. She <a href="https://www.washingtonpost.com/business/2019/01/05/ocasio-cortez-wants-higher-taxes-very-rich-americans-heres-how-much-money-could-that-raise/?utm_term=.462f85a3c9f7">estimated that her plan would catch about 4,000 people</a> and raise $720 billion over 10 years. </p>
<p>One problem with that idea was that the wealthy <a href="https://www.fool.com/taxes/2018/01/27/4-tax-breaks-for-high-income-households.aspx">can avoid or lower that tax</a> by <a href="https://www.moneytips.com/how-the-mega-rich-avoid-paying-taxes">choosing when they receive the income</a>. A second is that the rich <a href="https://www.forbes.com/sites/omaseddiq/2018/03/10/how-the-worlds-billionaires-got-so-rich/#125b82df124c">earn most of their money from capital gains</a>, which <a href="https://www.bankrate.com/investing/long-term-capital-gains-tax/">are taxed at a much lower rate</a> than wage income. </p>
<p>Vermont Sen. Bernie Sanders, who has <a href="https://www.cnbc.com/2021/03/01/elizabeth-warren-bernie-sanders-propose-3percent-wealth-tax-on-billionaires.html">since signed on to Warren’s plan</a>, <a href="https://www.cnbc.com/2019/01/31/bernie-sanders-proposes-big-estate-tax-hike-including-77percent-rate-for-billionaires.html">in 2019 proposed</a> going after wealth but targeted instances when it’s being transferred to someone else – which is what makes it constitutional. He wanted to lower the threshold at which the estate tax applies from $11 million – which <a href="https://www.taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax">touches just 1,000 estates a year</a> – to $3.5 million, where the threshold stood in 2009. He would also levy a new 77% rate on estates over $1 billion. Sanders estimated that his plan <a href="https://www.washingtonpost.com/us-policy/2019/01/31/bernie-sanders-propose-dramatic-expansion-estate-tax-richest-americans-including-percent-rate-billionaires/?utm_term=.9c31e5590447">would raise $315 billion</a> over 10 years. </p>
<p>Although this would bring in significantly less than his colleagues’ proposals, it is far superior because it both addresses the root of the problem – wealth disparities – and can be implemented immediately. And it wouldn’t pose a constitutional problem.</p>
<h2>A rising tide</h2>
<p>I agree with all three lawmakers that the United States should return to economic policies that <a href="https://www.economist.com/free-exchange/2014/03/04/does-raising-all-boats-lift-the-tide">seek to lift all boats</a>.</p>
<p>Although American wealth and productivity has surged in the last 40 years, most Americans <a href="https://www.latimes.com/business/lazarus/la-fi-lazarus-economy-stagnant-wages-20180831-story.html">have not fared nearly as well</a> as the <a href="https://inequality.org/facts/wealth-inequality/">richest have</a>. In 2020 alone, <a href="https://www.forbes.com/sites/chasewithorn/2020/12/16/the-worlds-billionaires-have-gotten-19-trillion-richer-in-2020/?sh=52eb3f857386">America’s billionaires saw their wealth increase $560 billion</a>, even as tens of millions <a href="https://www.bls.gov/news.release/empsit.nr0.htm">were unemployed</a> or <a href="https://philanthropynewsdigest.org/news/one-in-seven-americans-rely-on-foodbanks-report-finds">depended on food donations</a> to get enough to eat. </p>
<p>The U.S. tax system is at least partly responsible for these gaps. A wealth transfer tax – rather than one that taxes wealth – seems to be the best approach to both pass legal muster and help solve the problem.</p>
<p><em>This is an updated version of an <a href="https://theconversation.com/so-you-want-to-tax-the-rich-heres-which-candidates-plan-makes-the-most-sense-111945">article first published</a> on April 2, 2019.</em></p><img src="https://counter.theconversation.com/content/156349/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Beverly Moran receives funding from Ford Foundation in 2001 for work on taxation and wealth. Also the Annie E. Casey Foundation in around 2005. same type of work </span></em></p>Economists estimate the tax on households worth over $50 million could bring in $3 trillion over 10 years, but it will run into constitutional challenges.Beverly Moran, Professor of Law and Sociology, Vanderbilt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1512082021-01-26T18:52:43Z2021-01-26T18:52:43ZWe are the 1%: the wealth of many Australians puts them in an elite club wrecking the planet<figure><img src="https://images.theconversation.com/files/380346/original/file-20210124-13-1vb2vqt.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C8688%2C5709&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Among the many hard truths exposed by COVID-19 is the huge disparity between the world’s rich and poor. As economies went into freefall, the world’s billionaires <a href="https://www.theguardian.com/business/2020/oct/07/covid-19-crisis-boosts-the-fortunes-of-worlds-billionaires">increased</a> their already huge fortunes by 27.5%. And as many ordinary people lost their jobs and fell into poverty, The Guardian reported “the 1% are coping” by <a href="https://www.theguardian.com/world/2020/mar/13/coronavirus-lifestyles-of-the-rich-and-famous-how-the-1-are-coping">taking private jets</a> to their luxury retreats.</p>
<p>Such perverse affluence further fuelled criticism of the so-called 1%, which has long been the standard <a href="https://www.washingtonpost.com/lifestyle/style/why-does-everybody-suddenly-hate-billionaires-because-theyve-made-it-easy/2019/03/13/00e39056-3f6a-11e9-a0d3-1210e58a94cf_story.html">rhetoric of the political Left</a>. </p>
<p>In 2011, Occupy Wall Street protesters called out growing economic inequality by <a href="https://www.aljazeera.com/news/2011/12/27/occupy-wall-street-we-are-the-99">proclaiming</a>: “We are the 99%!”. And an <a href="https://www.oxfam.org/en/press-releases/carbon-emissions-richest-1-percent-more-double-emissions-poorest-half-humanity">Oxfam report</a> in September last year lamented how the richest 1% of the world’s population are responsible for more than twice as much carbon pollution as the poorest half of humanity.</p>
<p>But you might be surprised to find this 1% doesn’t just comprise the super-rich. It may include you, or people you know. And this fact has big implications for social justice and planetary survival.</p>
<figure class="align-center ">
<img alt="People crossing the street in Sydney" src="https://images.theconversation.com/files/380388/original/file-20210125-19-hdvuk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380388/original/file-20210125-19-hdvuk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380388/original/file-20210125-19-hdvuk6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380388/original/file-20210125-19-hdvuk6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380388/original/file-20210125-19-hdvuk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380388/original/file-20210125-19-hdvuk6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380388/original/file-20210125-19-hdvuk6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Many everyday Australians have a net worth that puts them in the world’s richest 1%.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Look in the mirror</h2>
<p>When you hear references to the 1%, you might think of billionaires such as Amazon’s <a href="https://mkorostoff.github.io/1-pixel-wealth/">Jeff Bezos</a> or Tesla founder <a href="https://www.bbc.com/news/technology-55578403">Elon Musk</a>. However, as of October last year there were <a href="https://www.cnbc.com/2020/10/08/asia-pacific-is-home-to-most-billionaires-globally-pandemic-grows-wealth.html">2,189 billionaires worldwide</a> — a minuscule proportion of the 7.8 billion people on Earth. So obviously, you don’t have to be a billionaire to join this global elite. </p>
<p>So how rich do you have to be? Well, Credit Suisse’s <a href="https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html">Global Wealth Report</a> in October last year showed an individual net worth of US$1 million (A$1,295,825) - combined income, investments and personal assets — will make you among the world’s 1% richest people. </p>
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Read more:
<a href="https://theconversation.com/five-ways-coronavirus-is-deepening-global-inequality-144621">Five ways coronavirus is deepening global inequality</a>
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</p>
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<p>The latest official data shows the average Australian household has a <a href="https://mccrindle.com.au/insights/blog/australias-income-and-wealth-distribution/">net worth of A$1,022,200</a>. Australia’s richest 20% of households – about two million of them – have an <a href="https://mccrindle.com.au/insights/blog/australias-household-income-wealth-distribution/?pdf=953">average net worth of A$3.2 million</a>. Even if those households comprised two income-earning adults, their net worth equally divided would put many in the top 1% of global wealth holders.</p>
<p>A net wealth of US$109,430 (A$147,038) puts you among the world’s <a href="https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html">richest 10%</a>. Half of Australia’s households have a <a href="https://www.abc.net.au/news/2019-07-12/household-income-and-wealth-abs-data-shows-rich-are-richer/11302696">net worth of A$558,900</a> or more. </p>
<figure class="align-center ">
<img alt="Aerial view of suburban Australian homes" src="https://images.theconversation.com/files/380348/original/file-20210124-13-133suwd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380348/original/file-20210124-13-133suwd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=477&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380348/original/file-20210124-13-133suwd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=477&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380348/original/file-20210124-13-133suwd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=477&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380348/original/file-20210124-13-133suwd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=599&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380348/original/file-20210124-13-133suwd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=599&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380348/original/file-20210124-13-133suwd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=599&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The net worth of many Australians puts them in the global elite.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>What does all this mean for the planet?</h2>
<p>It’s true the per capita emissions of the super-rich are likely to be far greater than others in the top 1%. But this doesn’t negate the uncomfortable fact Australians are among a fraction of the global population <a href="https://www.gfmag.com/global-data/economic-data/richest-countries-in-the-world">monopolising global wealth</a>. This group causes the vast bulk of the world’s <a href="https://www.leeds.ac.uk/news/article/4562/shining_a_light_on_international_energy_inequality">climate damage</a>.</p>
<p>A 2020 Oxfam report shows the world’s richest 10% produce a staggering <a href="https://www.oxfam.org.au/wp-content/uploads/2020/09/bp-power-profits-pandemic-100920-en-embargoed.pdf">52% of total carbon emissions</a>. Consistent with this, a 2020 <a href="https://www.nature.com/articles/s41560-020-0579-8?proof=t">University of Leeds study</a> found richer households around the world tend to spend their extra money on energy-intensive products, such as package holidays and car fuel. The UN’s 2020 Emission Gap Report further <a href="https://www.unenvironment.org/emissions-gap-report-2020">confirmed this</a>, finding the top 10% use around 75% of all aviation energy and 45% of all land transport energy.</p>
<p>It’s clear that wealth, and its consequent energy privilege, is neither socially just nor ecologically sustainable.</p>
<figure class="align-center ">
<img alt="Man with one shiny shoe and one scruffy shoe" src="https://images.theconversation.com/files/380372/original/file-20210125-21-1uki61.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380372/original/file-20210125-21-1uki61.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380372/original/file-20210125-21-1uki61.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380372/original/file-20210125-21-1uki61.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380372/original/file-20210125-21-1uki61.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380372/original/file-20210125-21-1uki61.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380372/original/file-20210125-21-1uki61.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Global wealth disparity is not just or sustainable.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>A potential solution</h2>
<p>Much attention and headlines are devoted to the <a href="https://www.oxfamamerica.org/explore/stories/billionaire-wealth-grows-by-25-billion-a-day-while-poorest-wealth-falls/">unethical wealth</a> of billionaires. And while the criticism is justified, it distracts from a broader wealth problem — including our own.</p>
<p>We should note here, one can have an income that’s large compared to the global average, and still experience significant <a href="https://www.dss.gov.au/sites/default/files/documents/09_2015/data-highlight-no-1-2014-financial-hardship_0.pdf">economic hardship</a>. For instance in Australia, the housing costs of more than one million households exceed 30% of total income – the commonly used <a href="https://www.acoss.org.au/housing-homelessness/">benchmark</a> for housing affordability.</p>
<p>Here lies a central challenge. Even if we wanted to reduce our wealth, the <a href="https://theconversation.com/when-houses-earn-more-than-jobs-how-we-lost-control-of-australian-house-prices-and-how-to-get-it-back-144076">enormous cost</a> of keeping a roof over our head prevents us from doing so. Servicing a mortgage or paying rent is one of our <a href="https://grattan.edu.au/wp-content/uploads/2018/03/901-Housing-affordability.pdf">biggest financial obligations</a>, and a key driver in the pursuit of wealth.</p>
<p>But as we’ve shown above, as personal wealth grows, so too does environmental devastation. The rule even applies to the lowest paid, who are working just to pay the rent. The industries they rely on, such as <a href="https://www.citysmart.com.au/news/unsustainable-impacts-fast-fashion/">retail</a>, <a href="https://theconversation.com/the-carbon-footprint-of-tourism-revealed-its-bigger-than-we-thought-96200">tourism</a> and <a href="https://www.theguardian.com/sustainable-business/2014/jul/25/greenwashing-hospitality-industry-water-conservation-technology-hotels">hospitality</a>, are themselves associated with environmental damage. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/coronavirus-shows-housing-costs-leave-many-insecure-tackling-that-can-help-solve-an-even-bigger-crisis-137772">Coronavirus shows housing costs leave many insecure. Tackling that can help solve an even bigger crisis</a>
</strong>
</em>
</p>
<hr>
<p><a href="https://www.ppesydney.net/content/uploads/2021/01/19_Baumann-Alexander-and-Burdon.pdf">Existing economic and social structures</a> mean stepping off this wealth-creating treadmill is almost impossible. However as we’ve <a href="https://theconversation.com/access-to-land-is-a-barrier-to-simpler-sustainable-living-public-housing-could-offer-a-way-forward-121246">written before</a>, people can be liberated from their reliance on economic growth when land - the very foundation of our security - is not commodified.</p>
<p>For social justice and ecological survival, we must urgently experiment with <a href="https://theecologist.org/2020/mar/04/towards-walden-wage">new land and housing strategies</a>, to make possible a lifestyle of reduced wealth and consumption and increased self-sufficiency. </p>
<p>This might include urban commons, such as the R-Urban project in Paris, where several hundred people co-manage land that includes a small farm for collective use, a recycling plant and cooperative eco-housing.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/333571/original/file-20200508-49579-4dc69m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/333571/original/file-20200508-49579-4dc69m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=434&fit=crop&dpr=1 600w, https://images.theconversation.com/files/333571/original/file-20200508-49579-4dc69m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=434&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/333571/original/file-20200508-49579-4dc69m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=434&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/333571/original/file-20200508-49579-4dc69m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=545&fit=crop&dpr=1 754w, https://images.theconversation.com/files/333571/original/file-20200508-49579-4dc69m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=545&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/333571/original/file-20200508-49579-4dc69m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=545&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The R-Urban project in Paris, which includes a small farm.</span>
<span class="attribution"><span class="source">Flickr</span></span>
</figcaption>
</figure>
<p>Under a new land strategy, other ways of conserving resources could be deployed. One such example, developed by Australian academic <a href="https://theconversation.com/the-simple-life-manifesto-and-how-it-could-save-us-33081">Ted Trainer</a>, involves cutting our earnings sharply - with paid work for only two days in a week. For the rest of the working week, we would tend to community food gardens, network and share many things we currently consume individually.</p>
<p>Such a way of living could help us re-evaluate the amount of wealth we need to live well.</p>
<p>The social and ecological challenges the world faces cannot be exaggerated. New thinking and creativity is needed. And the first step in this journey is taking an honest look at whether our own wealth and consumption habits are contributing to the problem.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-simple-life-manifesto-and-how-it-could-save-us-33081">The 'simple life' manifesto and how it could save us</a>
</strong>
</em>
</p>
<hr>
<hr>
<p><em>Clarification: this article has been updated to state that, for Australia’s richest 20% of households, the average net worth of two income-earning adults would put many in the top 1% of global wealth holders.</em></p><img src="https://counter.theconversation.com/content/151208/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alex Baumann is affiliated with the NTW project (<a href="http://www.ntwonline.weebly.com">www.ntwonline.weebly.com</a> | <a href="http://www.facebook.com/land4all">www.facebook.com/land4all</a>). This project is working on a reframing of public housing policy settings – to provide an example of of the sort of local collaborative development on public land related to the final link in this article.</span></em></p><p class="fine-print"><em><span>Samuel Alexander does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>You might be surprised to find yourself in the company of Elon Musk and Jeff Bezos in the world’s richest 1%. This has big implications for planetary survival.Alex Baumann, Casual Academic, School of Social Sciences & Psychology, Western Sydney UniversitySamuel Alexander, Research fellow, Melbourne Sustainable Society Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1509952020-12-06T13:17:45Z2020-12-06T13:17:45ZCanada’s fiscal update falls short in facing climate change and income inequality<figure><img src="https://images.theconversation.com/files/372901/original/file-20201203-15-tiu8bz.jpg?ixlib=rb-1.1.0&rect=115%2C0%2C3194%2C1891&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Finance Minister Chrystia Freeland gets a fist bump from Prime Minister Justin Trudeau after delivering the 2020 fiscal update in the House of Commons on Nov. 30, 2020. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Sean Kilpatrick</span></span></figcaption></figure><p>The federal Liberal government came to office five years ago promising “<a href="https://www.cbc.ca/news/politics/justin-trudeau-reform-real-change-analysis-wherry-1.4162122">real change</a>,” including action on the climate crisis and unprecedented wealth and income inequality.</p>
<p>Justin Trudeau was re-elected in 2019 reiterating these same promises. But shortly after his second mandate began, the country — and the world — was hit by the COVID-19 pandemic.</p>
<p>After proroguing Parliament in the summer of 2020, the federal government released a <a href="https://www.canada.ca/en/privy-council/campaigns/speech-throne/2020/speech-from-the-throne.html">speech from the throne</a> in late September that made a series of promises on where it wanted to take the country. The plan would be fleshed out in part, the government said, in the fiscal update. </p>
<p>It just released <a href="https://www.budget.gc.ca/fes-eea/2020/report-rapport/toc-tdm-en.html">the 237-page update</a>, outlining next steps in confronting three interwoven crises: the pandemic, inequality and climate.</p>
<h2>The pandemic</h2>
<p>The government has provided direct support for Canadian families and businesses totalling $270 billion thus far, with another $200 billion in credit and loan support. Once the pandemic crisis has passed, the fiscal update commits an additional $70 billion to $100 billion over three years for a “feminist,” “inclusive” and “sustainable” recovery, in the words of Finance Minister Chrystia Freeland.</p>
<p>Though far from perfect, the government clearly gets a passing grade on its efforts to address the pandemic, providing income support for laid-off workers, shuttered businesses, the elderly and other vulnerable members of society. Without this support, those affected, almost all of whom at the bottom half of the income ladder, would have suffered even more dramatically from income inequality.</p>
<p>The fiscal update projects the debt-to-GDP ratio peaking at 52.6 per cent in the next two years. The deficit scare-mongers have come out in full force. These powerful purveyors of what <a href="https://afhimelfarb.wordpress.com/2020/11/19/dont-panic-debt-can-build-a-better-world/">Alex Himelfarb, former clerk of the Privy Council</a>, calls “deficit derangement syndrome,” have for years pedalled false narratives about the evils of deficits.</p>
<figure class="align-center ">
<img alt="Chrystia Freeland gestures while speaking in the House of Commons." src="https://images.theconversation.com/files/372907/original/file-20201203-17-u1wg8x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/372907/original/file-20201203-17-u1wg8x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/372907/original/file-20201203-17-u1wg8x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/372907/original/file-20201203-17-u1wg8x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/372907/original/file-20201203-17-u1wg8x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/372907/original/file-20201203-17-u1wg8x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/372907/original/file-20201203-17-u1wg8x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Freeland delivers the 2020 fiscal update in the House of Commons, noting that the debt-to-GDP ratio will peak at 52.6 per cent over the next two years.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Sean Kilpatrick</span></span>
</figcaption>
</figure>
<p>It’s worth recalling that at the end of the Second World War, the debt-to-GDP ratio was 150 per cent, three times the current level. No one complained then.</p>
<p>Years of government austerity have played role in the rise of household debt now equivalent to <a href="https://tradingeconomics.com/canada/households-debt-to-gdp">106 per cent of GDP</a>. Cutting program spending in the name of fiscal responsibility would raise household debt levels, adversely affecting low- and middle-income Canadians.</p>
<p><a href="https://www.cbc.ca/radio/sunday/the-sunday-edition-for-june-7-2020-1.5594627/no-need-to-worry-about-a-deficit-when-the-government-can-print-money-say-some-economists-1.5594636">The Bank of Canada</a> has funded the large majority of government borrowing during the pandemic and will continue to do so. Governments rarely pay back this debt to the money-creating institution they own. The debt incurred during the Second World War, for example, was never paid back.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-government-deficits-fund-private-savings-113964">How government deficits fund private savings</a>
</strong>
</em>
</p>
<hr>
<p>Money creation, while essential, exacerbates inequality because it tends to increase stock prices, which are held almost exclusively by the richest. Measures in the fiscal update to prevent the floor from falling out from beneath the bottom 50 per cent of Canadian taxpayers, while critically important, do nothing to rein in the wealth at the top. Hence the need for fiscal measures, specifically progressive taxation measures.</p>
<h2>The inequality crisis</h2>
<p>The pandemic has exposed the corrosive underbelly of inequality. The last four decades have funnelled income and wealth upward to a level not seen since the late 1920s — exacerbating insecurity, poverty and suffering for many.</p>
<p>Freeland wrote a book a few years ago about the rise of the wealthy class or the one per cent, <a href="https://www.penguinrandomhouse.com/books/305569/plutocrats-by-chrystia-freeland/">aptly named <em>Plutocrats</em></a>. </p>
<p><a href="https://nationalpost.com/opinion/chrystia-freeland-the-erosion-of-middle-class-jobs-and-incomes-in-canada-is-finally-being-exposed">She wrote:</a> </p>
<blockquote>
<p>“Rising income, inequality and a hollowed-out middle class are the dominant social and political challenges facing our generation.”</p>
</blockquote>
<p>Those at the top of the wealth and power pyramid have waged, in Freeland’s words, “successful political efforts … to tilt the rules of the game in their favour.”</p>
<p>The richest one per cent currently <a href="https://www.pbo-dpb.gc.ca/web/default/files/Documents/Reports/RP-2021-007-S/RP-2021-007-S_en.pdf">hold more than a quarter</a> of Canada’s total wealth. Though not as extreme as wealth inequality, <a href="https://www.lemonde.fr/blog/piketty/2020/11/17/global-inequalities-where-do-we-stand/">the one per cent hold 15 per cent of national income</a>, almost as much as the bottom 50 per cent of the population. </p>
<p><a href="https://www.taxfairness.ca/sites/default/files/resource/canadian_for_tax_fairness_-_billionaires_report_2020_final.pdf">A new report by Canadians for Tax Fairness reveals</a> Canada’s leading 44 billionaires grew their fortunes by $53 billion, or 28 per cent, from April to October 2020, in the midst of the pandemic. Canada’s club of 100 billionaires now has as much wealth as the 12 million poorest Canadians.</p>
<p>Such levels of inequality produce cynicism and desperation, corroding democracy, which in extreme cases can lead to political upheavals like <a href="https://www.newyorker.com/magazine/2020/10/19/philosophy-in-the-shadow-of-nazism">occurred Europe in the 1930s</a>.</p>
<p>What has the government done in the fiscal update to address wealth inequality? With a couple of exceptions — such as ending stock option deductions — not much. Measures like wealth and estate taxes, restrictions on tax avoidance via offshore tax havens and reforms to the capital gains tax are conspicuous by their absence.</p>
<h2>The climate crisis</h2>
<p>The government has continued to acknowledge the severity of the climate crisis in the fiscal update. It’s reiterated its intention to exceed existing 2030 emissions targets of 15 per cent below 2005 levels, apparently aware of the warning contained in the <a href="https://www.ipcc.ch/sr15/">IPCC Special Report on 1.5 C</a> that the world had 12 years to make deep emissions reductions — <a href="https://www.ipcc.ch/sr15/chapter/spm/">45 per cent below 2010 levels</a> — by 2030 to prevent irreversible planetary climate damage.</p>
<figure class="align-center ">
<img alt="Dozens of young people lie on the floor of a food court." src="https://images.theconversation.com/files/372912/original/file-20201203-17-16qua38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/372912/original/file-20201203-17-16qua38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/372912/original/file-20201203-17-16qua38.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/372912/original/file-20201203-17-16qua38.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/372912/original/file-20201203-17-16qua38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/372912/original/file-20201203-17-16qua38.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/372912/original/file-20201203-17-16qua38.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Young people participating in a ‘die-in’ climate action protest lie on the floor in the food court of a shopping centre in downtown Vancouver in September 2019.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
</figcaption>
</figure>
<p>While the fiscal update has put forward substantive measures that move the country in the right direction, those measures don’t on their own provide assurances that the government will meet its still unannounced 2030 targets on the way to net zero emissions by 2050.</p>
<h2>Hope on the horizon</h2>
<p>The pace of government action to date does not align with the urgency of the twin climate and inequality crises. Nothing it has done so far is threatening to the corporate plutocracy and its hold on power. </p>
<p>Archeologist Ronald Wright examined the rise and fall of a handful of past civilizations in his prescient <a href="https://www.cbc.ca/radio/ideas/the-2004-cbc-massey-lectures-a-short-history-of-progress-1.2946872">2004 Massey lectures, published as <em>The Short History of Progress</em></a>. These civilizations fell into what he calls progress traps: a chain of technological advances which, beyond a certain point, led to their collapses.</p>
<p>A common trait of these failed civilizations was the concentration of wealth and power at the top, which clouded their ability to foresee the danger until it was too late given their vested interest in the status quo.</p>
<p>The <em>Short History of Progress</em> is a cautionary tale written in the belief that the knowledge we have about past failures can enable us to avoid the global apocalypse facing us now. Therein lies hope. But hope must be twinned with widespread citizen mobilization to push political leadership through the barrier of climate denialism to transformative action.</p><img src="https://counter.theconversation.com/content/150995/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bruce Campbell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The pace of federal government action to date does not align with the urgency of the twin climate and inequality crises. The latest fiscal update doesn’t go far enough on either crisis.Bruce Campbell, Adjunct professor, Faculty of Environmental Studies, York University, CanadaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1421692020-07-26T19:53:13Z2020-07-26T19:53:13ZHomeBuilder only makes sense as a nod to Morrison’s home-owning base<p><a href="https://treasury.gov.au/coronavirus/homebuilder">HomeBuilder</a> grants of A$25,000 are being offered to build or renovate a home as part of the Australian government’s <a href="https://treasury.gov.au/sites/default/files/2020-05/Overview-Economic_Response_to_the_Coronavirus_3.pdf">emergency economic response</a> to the coronavirus pandemic. <a href="https://theconversation.com/homebuilder-might-be-the-most-complex-least-equitable-construction-jobs-program-ever-devised-140162">Critics</a> note that the program, framed as stimulus for residential construction, benefits already well-off households. It ignores the realities of the housing market, especially the affordability crisis, with housing stress affecting precarious renters, the homeless and those struggling with bloated mortgage payments. </p>
<p>Homebuilder appears to be a <a href="https://theconversation.com/homebuilder-might-be-the-most-complex-least-equitable-construction-jobs-program-ever-devised-140162">bewildering policy</a>. It’s likely to support construction work that <a href="https://theconversation.com/scott-morrisons-homebuilder-scheme-is-classic-retail-politics-but-lousy-economics-140076">would have occurred anyway</a> while failing to meet <a href="https://theconversation.com/homebuilder-misses-a-chance-to-make-our-homes-perform-better-for-us-and-the-planet-140067">real housing needs</a>.</p>
<p>However, to criticise HomeBuilder simply as bad policy made on the run is to miss a broader picture. HomeBuilder begins to make a lot more sense when understood as a response to the role of housing assets in shaping both economic inequality and electoral politics. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/scott-morrisons-homebuilder-scheme-is-classic-retail-politics-but-lousy-economics-140076">Scott Morrison’s HomeBuilder scheme is classic retail politics but lousy economics</a>
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<h2>The rise of the ‘asset economy’</h2>
<p>We describe this dynamic as the “<a href="https://politybooks.com/bookdetail/?isbn=9781509543458">asset economy</a>”: our socio-economic positions are defined less and less by employment income and more and more by our holdings of wealth-generating assets, especially housing.</p>
<p>The government has touted HomeBuilder as boosting construction jobs through a “tradie-led” recovery. House-price inflation has made the economy particularly dependent on construction jobs. <a href="https://australianjobs.employment.gov.au/jobs-industry/industry-overview">Construction</a> is the third-biggest employer in Australia and the only industry outside the services sector to have had significant job growth in recent years. </p>
<p>However, the government could have boosted construction jobs at least as much, if not more, by investing in <a href="https://theconversation.com/why-the-focus-of-stimulus-plans-has-to-be-construction-that-puts-social-housing-first-136519">social housing</a> or <a href="https://theconversation.com/homebuilder-misses-a-chance-to-make-our-homes-perform-better-for-us-and-the-planet-140067">energy-efficient housing</a>. Why then did it choose to make the already well-off even better off by paying owners to add value to their homes?</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/why-the-focus-of-stimulus-plans-has-to-be-construction-that-puts-social-housing-first-136519">Why the focus of stimulus plans has to be construction that puts social housing first</a>
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<h2>A long history of looking after home owners</h2>
<p>It’s no coincidence that, beyond the initial emergency responses to support household and business incomes, the first substantive stimulus the Coalition government announced went to residential property owners. </p>
<p>The rise of the asset economy has occurred in <a href="https://www.thesaturdaypaper.com.au/news/politics/2020/06/13/who-morrison-looking-after/15919704009961">parallel with a shift in voting patterns</a>. The 2019 <a href="https://australianelectionstudy.org/wp-content/uploads/The-2019-Australian-Federal-Election-Results-from-the-Australian-Election-Study.pdf">Australian Election Study</a> observed a move “away from occupation-based voting and towards asset-based voting”. Voters who own housing – owner-occupiers and investors – strongly favour the Liberal and National parties. </p>
<p><a href="https://www.sydney.edu.au/arts/our-research/futurefix/asset-ownership-and-the-new-inequality.html">Our research</a> on the asset economy reveals the long-term drivers of Australia’s asset-based politics. HomeBuilder is the latest in a long line of Australian government policies over the past four decades to encourage, prop up and reward residential property ownership. These policies have included selling off public housing, tax incentives (especially <a href="https://grattan.edu.au/wp-content/uploads/2016/04/872-Hot-Property.pdf">negative gearing and capital gains tax exemption</a> for the family home) and promoting home ownership as an alternative to welfare programs such as public pensions. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/fall-in-ageing-australians-home-ownership-rates-looms-as-seismic-shock-for-housing-policy-120651">Fall in ageing Australians' home-ownership rates looms as seismic shock for housing policy</a>
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<p>These policies have not simply encouraged home ownership – they have transformed it. Nowadays the <a href="https://theconversation.com/explainer-the-financialisation-of-housing-and-what-can-be-done-about-it-73767">home is a financial asset</a>, an investment financed by growing debt that is supposed to generate capital gains. </p>
<p>Property price increases, driven by the liberalisation of credit and low interest rates, came to be seen as a key route to economic security for households in an economy with <a href="https://theconversation.com/theres-an-obvious-reason-wages-arent-growing-but-you-wont-hear-it-from-treasury-or-the-reserve-bank-122041">stagnant wages</a> and <a href="https://theconversation.com/self-employment-and-casual-work-arent-increasing-but-so-many-jobs-are-insecure-whats-going-on-100668">precarious employment</a>. Credit-driven home ownership expanded and property prices grew. Many property-owning households saw major gains in their wealth portfolios. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/homebuilder-might-be-the-most-complex-least-equitable-construction-jobs-program-ever-devised-140162">HomeBuilder might be the most-complex least-equitable construction jobs program ever devised</a>
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<h2>Housing is now a driver of inequality</h2>
<p>Credit-driven home purchases pushed prices to heights where it became increasingly difficult for people to enter the market. In Australia as well as in other Anglo-capitalist countries ― including the United Kingdom, the United States and Canada ― rates of home ownership show the <a href="https://www.tandfonline.com/doi/full/10.1080/13563467.2017.1401055">same pattern from 1980 to 2020</a>: increases followed by decreases. </p>
<p>In large cities such as Sydney and Melbourne price inflation over time has made it virtually impossible to buy a house on the basis of an average wage alone. As a result, <a href="https://www.abc.net.au/news/2019-07-17/home-ownership-falling-while-more-people-are-renting-abs-study/11318070?nw=0">private rental markets have expanded</a>, rents have soared and <a href="https://www.tandfonline.com/doi/full/10.1080/14649365.2018.1466355">new modes of occupancy</a> have emerged, including <a href="https://theconversation.com/why-adult-children-stay-at-home-looking-beyond-the-myths-of-kidults-kippers-and-gestaters-68931">multigenerational</a> and <a href="https://theconversation.com/generation-share-why-more-older-australians-are-living-in-share-houses-107183">shared living</a>. These renters are not simply locked out of home ownership but also out of the wealth it generates. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graph showing changes in rates of home ownership and rental by households from 1994-95 to 2017-18" src="https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=582&fit=crop&dpr=1 600w, https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=582&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=582&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=731&fit=crop&dpr=1 754w, https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=731&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/349281/original/file-20200724-15-1ok5wa8.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=731&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure">Source: AIHW. Data: ABS 2019</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>These trends have opened up a rift between those with and without housing assets. This entails not just major differences in levels and patterns of wealth accumulation, but also in <a href="https://theconversation.com/life-chances-policy-must-respond-to-the-real-lives-of-young-people-27425">life chances</a>. The asset economy has fundamentally <a href="https://journals.sagepub.com/doi/full/10.1177/0308518X19873673">reworked the social structure</a>, or what sociologists study as patterns of “class” or “stratification”. </p>
<p>This means even when people have similar jobs or earn the same wages, deep inequalities can exist between those who own assets and those who do not. </p>
<p>These trends are particularly notable among younger generations, giving rise to stark new forms of inequality. Those who are set to inherit housing assets or whose access to parental wealth offers a route into home ownership have a distinct advantage. They can benefit from property-based asset inflation and capital gains.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-housing-boom-propelled-inequality-but-a-coronavirus-housing-bust-will-skyrocket-it-139039">The housing boom propelled inequality, but a coronavirus housing bust will skyrocket it</a>
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<h2>Shoring up the base in a crisis</h2>
<p>HomeBuilder is a product of the electoral politics that emerged out of this asset economy. Asset owners vote with their feet and resist any changes that would jeopardise the long-lived advantages that asset ownership gives them. The result of the 2019 <a href="https://www.abc.net.au/news/2019-05-15/federal-election-2019-alp-capital-gains-tax-negative-gearing/11108734?nw=0">federal election</a>, when Labor’s policy was to reduce the benefits available from negative gearing and the capital gains tax discount, showed this. </p>
<p>The government knows as long as it keeps in place the advantages that flow to home owners, residential property investors and the “bank of mum and dad”, they form a powerful core of the Coalition’s electoral base. It’s offering a stimulus measure directed specifically at this constituency, adding yet more value to their assets at a time of economic uncertainty. HomeBuilder is an asset owner’s policy aimed at appeasing and shoring up the Liberal-National party’s <a href="https://7ampodcast.com.au/episodes/the-power-of-tradesmen">electoral base</a>. </p>
<p>As home ownership rates decline and asset-based inequalities increase, just how long such tactics can produce electoral success remains a critical question.</p><img src="https://counter.theconversation.com/content/142169/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Voters who own housing are strongly invested in increasing the value of their wealth-generating assets. And they strongly favour the Coalition, which knows to protect their interests.Lisa Adkins, Professor of Sociology and Head of School of Social and Political Sciences, University of SydneyGareth Bryant, Senior Lecturer in Political Economy, University of SydneyMartijn Konings, Professor of Political Economy and Social Theory, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1423452020-07-17T13:32:54Z2020-07-17T13:32:54ZPoorest Americans drink a lot more sugary drinks than the richest – which is why soda taxes could help reduce gaping health inequalities<figure><img src="https://images.theconversation.com/files/348142/original/file-20200717-37-tjdn6g.jpg?ixlib=rb-1.1.0&rect=219%2C78%2C5628%2C3410&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Soda contributes to obesity and other diseases. </span> </figcaption></figure><p>Many countries such as the <a href="https://www.lshtm.ac.uk/research/research-action/features/uk-sugar-tax-will-it-work">U.K.</a> and <a href="https://www.latimes.com/science/sciencenow/la-sci-sn-soda-tax-mexico-20161102-story.html">Mexico</a> and a handful of U.S. cities such as <a href="https://drexel.edu/now/archive/2020/February/Soda-Tax-and-Beverage-Consumption/">Philadelphia</a> and <a href="https://sftreasurer.org/business/taxes-fees/sugary-drinks-tax">San Francisco</a> have imposed soda taxes in an effort to fight rising obesity. </p>
<p>Lots of research shows a link between drinking sugary substances and a <a href="https://www.cdc.gov/nutrition/data-statistics/sugar-sweetened-beverages-intake.html#:%7E:text=Frequently%20drinking%20sugar%2Dsweetened%20beverages,gout%2C%20a%20type%20of%20arthritis">whole host of negative health outcomes</a>, including type 2 diabetes, heart disease, liver disease, tooth decay and gout. </p>
<p>As economists who study <a href="https://www.researchgate.net/profile/Jay_Zagorsky">economic status</a> and <a href="http://www-personal.umd.umich.edu/%7Epksmith/research.htm">health</a>, we wanted to look at this from another perspective: Does how wealthy you are affect how much soda you consume? And could reducing sugary beverage consumption narrow the <a href="https://www.nationalacademies.org/news/2017/01/new-report-identifies-root-causes-of-health-inequity-in-the-us-outlines-solutions-for-communities-to-advance-health-equity">double-digit life expectancy gap</a> between the richest and poorest Americans? </p>
<h2>Wealth and soda</h2>
<p><a href="https://www.doi.org/10.1016/j.ehb.2020.100888">We analyzed data</a> for over 24,000 U.S. adults in two nationally representative random samples from the <a href="http://www.nlsinfo.org/">National Longitudinal Surveys</a>, which follow groups of people over a period of time, asking them hundreds of questions each year on a variety of topics like employment, health and attitudes. Some questions are asked every year, while others are included less frequently. </p>
<p>We looked at two groups of people. The first is referred to as the <a href="https://www.nlsinfo.org/content/cohorts/nlsy79">NLS 1979 cohort</a> and includes people born from 1957 to 1964. They were asked how often they consumed sugary drinks in the previous week every other year from 2008 to 2016, meaning the respondents were in their 40s and 50s when asked the question. </p>
<p>The second group is known as the <a href="https://www.nlsinfo.org/content/cohorts/nlsy97">NLS 1997 cohort</a> and includes people born from 1980 to 1984. They were asked the sugary drink question four times from 2009 to 2015, putting them in their 20s and 30s. </p>
<p><a href="https://www.cdc.gov/nchs/products/databriefs/db122.htm">Prior studies</a> <a href="http://www.doi.org/10.3945/ajcn.111.018366">have found</a> that consumption of sugary drinks <a href="http://www.doi.org/10.1016/j.jand.2012.09.016">tend to rise</a> as income falls. But few of them controlled for the range of other factors that could also matter, such as gender, race and ethnicity, education, cognitive skills and interest in health and nutrition. Moreover, none of them focused on wealth, which can offer unique insights on the issue. </p>
<p>Wealth represents an accumulation of resources rather than a regular flow of income. Newly graduated doctors have high income and low wealth, while retirees may have high wealth, but little income. The difference between income and wealth means they could affect consumption patterns differently. Wealth is distributed much more unequally. In addition, individuals may signal their membership in the upper economic echelons through the foods they consume.</p>
<p>[<em><a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=experts">Expertise in your inbox. Sign up for The Conversation’s newsletter and get expert takes on today’s news, every day.</a></em>]</p>
<p>We first looked at the share of respondents who reported drinking any sugar-sweetened beverages in the survey week by income and wealth deciles, which divides them into 10 equal groups depending on their income or wealth. </p>
<p>The number of sugar-sweetened beverages consumed generally falls as income rises. We found the same pattern when we looked at wealth, but the differences by wealth are more pronounced. Our analysis suggests that adults living in the richest 10% of families drink about 2.5 fewer sugary drinks a week than those in the poorest 10%. </p>
<p>This decline in sugary drink consumption as income and wealth rise holds up even after taking into account things like education, race, gender, cognitive abilities and interest in nutrition. </p>
<p>What’s the impact of 2.5 more sugar drinks a week? Rough calculations based on the typical sugar amounts in these drinks – <a href="https://sphhp.buffalo.edu/content/dam/sphhp/emergency-responder-human-performance/understanding-nutrition-labels.pdf">about 9.5 teaspoons</a> per 12-ounce can – suggest that it could result in <a href="https://www.livestrong.com/article/532975-how-to-calculate-how-many-calories-comes-from-sugar/">about 5.6 pounds of weight gain</a> over a year, assuming no increase in physical activity or decrease in consumption of calories from other sources.</p>
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<h2>For richer or poorer</h2>
<p>We also wondered whether soda consumption might change as people gain or lose wealth or make more or less money. Would increases in economic status correlate with decreases in sugary drink consumption?</p>
<p>Over the four-year periods we could observe, changes in income and wealth, even large ones, were not correlated to changes in sugary drink intake. We did not observe that adults who had gotten richer tended to report a drop in the number of sugary drinks consumed.</p>
<p>One possible explanation is that while economic status shapes our early drinking habits, those habits don’t much change in adulthood. Another possible explanation is that four years is not enough time for noticeable changes in sugar-sweetened beverage consumption to happen.</p>
<p>Our finding that people who are wealthier or make more money consume fewer sugary drinks supports the idea that soda consumption contributes to <a href="https://www.nationalacademies.org/news/2017/01/new-report-identifies-root-causes-of-health-inequity-in-the-us-outlines-solutions-for-communities-to-advance-health-equity">health inequities</a> along the economic distribution.</p>
<p>However, that doesn’t mean soda taxes are the best way to reduce these inequities. Since we find that sugary beverage consumption is higher for poorer Americans, these taxes can be regressive – meaning they fall more heavily on those with less income. On the other hand, if people with lower incomes respond to the higher prices caused by “soda taxes” by cutting consumption substantially, they can avoid the tax and improve their health. </p>
<p>A <a href="http://doi.org/10.1161/CIRCULATIONAHA.119.042956">just-published study</a> suggests that some soda taxes may be more effective than others at changing drinking habits. Specifically, it found that taxes based on the quantity of sugar in a drink are more successful than those simply based on volume, which <a href="https://www.cnn.com/2020/06/22/health/soda-tax-sugar-content-wellness/index.html">are more common in the U.S.</a></p>
<p>So well-designed soda taxes can help reduce rich-poor health disparities, but we’ll need a range of strategies to achieve that goal.</p><img src="https://counter.theconversation.com/content/142345/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>But the taxes have to be well-designed to avoid being overly regressive and targeting the poor.Patricia Smith, Professor of Economics, University of MichiganJay L. Zagorsky, Senior Lecturer, Questrom School of Business, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1416242020-07-01T12:38:35Z2020-07-01T12:38:35ZWhy Vladimir Putin’s tax hike for the rich won’t bother Russia’s oligarchs<p>Just a couple of days before Russians began voting in a <a href="https://www.intellinews.com/podcasts/woe-putin-s-referendum-with-ben-noble-and-mark-galeotti-185941/?source=russia">constitutional referendum</a> in late June that is likely to pave the way for Vladimir Putin to stay on as president until 2036, the government announced a tax rise for well-off Russians. It was widely seen as a populist gesture. </p>
<p>From January 2021, Russians earning more than 5 million roubles a year (£57,000) will <a href="https://www.themoscowtimes.com/2020/06/23/russia-will-raise-taxes-on-top-earners-putin-announces-a70675">pay 15% tax on income over that amount</a>. This is the first change to the flat 13% rate of income tax which Putin introduced for all Russians in 2001 – but it will not bring in large amounts of extra cash. The estimated addition to the treasury will be only 60 billion roubles, which Putin said would be spent on <a href="https://www.reuters.com/article/us-russia-putin-taxation/putin-raises-tax-for-wealthy-russians-ahead-of-vote-on-his-rule-idUSKBN23U2CF">helping sick children</a>. </p>
<p>Putin’s populist reasoning makes strategic sense. Significant numbers of Russians <a href="https://thebell.io/eto-otkryvaet-yashhik-pandory-pochemu-putin-otmenyaet-svoyu-samuyu-uspeshnuyu-reformu">still resent the wealth</a> some of their fellow citizens acquired in the 1990s as the country transitioned from communism to capitalism. These targets of hatred, however, are unlikely to be much affected by the latest tax hike. </p>
<p>One of the richest of them is the metal tycoon <a href="https://www.forbes.com/profile/vladimir-potanin/#314559b13db9">Vladimir Potanin</a>, who since March 2020 has been leading Russia’s Forbes rich list. Like many other wealthy Russians, his wealth was hit when the oil price plummeted after Russia broke with OPEC in early March. By May, however, Forbes reported that he had <a href="https://www.forbes.ru/milliardery/401395-rossiyskie-milliardery-razbogateli-za-vremya-pandemii-na-62-mlrd">regained US$6.4 billion</a>, a rise in his total wealth from US$19.7 to US$26.1 billion.</p>
<p>Potanin’s <a href="https://www.ft.com/content/a48fedf2-3da0-11e8-b7e0-52972418fec4">biography embodies</a> everything Russians resent. In 1995, he reputedly thought up – and certainly benefited from – the scandalous loans-for-shares auctions in which some of the country’s largest assets were auctioned off at a bargain price to a handful of insiders. </p>
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<img alt="" src="https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=150&fit=crop&dpr=1 600w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=150&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=150&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=189&fit=crop&dpr=1 754w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=189&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=189&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em>Listen to Recovery, a series from <a href="https://theconversation.com/uk/topics/the-anthill-podcast-27460">The Anthill Podcast</a>, to hear more about how the world recovered from past crises, including an episode on the post-Soviet transition in the 1990s.</em></p>
<hr>
<p>It’s highly lucrative to be one of the biggest business players in Russia today – and it is much less risky than widely assumed. True, the oligarchs’ grip on political power declined during the early years of the Putin presidency in the 2000s and some fled or <a href="https://www.theguardian.com/world/2014/dec/26/mikhail-khodorkovsky-life-after-prison-russia-after-putin">were imprisoned</a>. But if you become a billionaire in Russia, <a href="https://www.credit-suisse.com/about-us-news/en/articles/news-and-expertise/global-wealth-in-2015-underlying-trends-remain-positive-201510.html">you are more likely than in any G7 country</a> to keep that status.</p>
<h2>Stepping in to help</h2>
<p>As my own research has detailed, Russia’s multi-billionaires know they must pull their weight and <a href="http://schimpfossl.com/academic-publications/russian-philanthrocapitalism/">commit to helping sustain Russia’s infrastructure</a> to stay in Putin’s good books. There have been times when they have been especially nudged into doing so: after the 2008 financial crisis, in December 2014 when the rouble crashed in the aftermath of the Crimean crisis, and now during the COVID-19 crisis. </p>
<p>The hyper-rich chip in not only to pacify the Kremlin but also for their own sake. Many of them have set up their business empires by taking control of vast natural resources and large industrial complexes in remote areas, where they dominate as the single employer. Such <a href="https://www.tandfonline.com/doi/abs/10.1080/1060586x.2015.1054103?forwardService=showFullText&tokenAccess=x2R9qzjn8pyksu6HMcmh&tokenDomain=eprints&doi=10.1080%2F1060586x.2015.1054103&doi=10.1080%2F1060586x.2015.1054103&journalCode=rpsa20">monotowns</a> make up <a href="https://www.ft.com/content/e8001869-3ce0-3b8c-93b0-36421acc60ed">around 25%</a> of Russia’s urban population, most of whom depend on a single employer and their attached industries for a living. </p>
<p>Many of Russia’s biggest private charity foundations operate in the regions where the major plants of these business empires are located. Each recent crisis has given these foundations new meaning in these areas. In some regions, foundations attached to businesses tried to <a href="https://www.uclpress.co.uk/collections/contact-94729/products/111621">absorb some of the harm done</a> to the local population following downsizing and layoffs in the aftermath of the 2014 crisis. Their costs in doing so were minimal, but the tough business strategies proved lucrative. </p>
<p>Now, many of these oligarchs have come forward to help the state during the coronavirus crisis. At the end of June, Russia had the third-highest <a href="https://coronavirus.jhu.edu/map.html">number of cases</a> in the world after the US and Brazil. According to Forbes, Potanin’s foundation in Norilsk, a town with a population of 180,000 in the Arctic region, has spent 10.5 billion roubles on testing kits, millions of masks and 46 ventilators. </p>
<p>Other oligarchs <a href="https://www.nytimes.com/2020/05/07/world/europe/oligarchs-russia-coronavirus.html">were more hands-on</a>. They took decisions way beyond their official competence, using their <a href="https://www.forbes.ru/milliardery-photogallery/398377-lechebnye-milliardy-kak-uchastniki-spiska-forbes-boryutsya-s?photo=2">companies’ logistics and procurement capacity</a> to deliver COVID-19 test kits and provide the elderly with fresh food. Some even shut down airports near to their business empires to minimise the movement of people and prevent the spread of the virus. </p>
<h2>Mutual benefit</h2>
<p>It will work for them. As much as Russians resent the 1990s oligarchs, any negative sentiments have been successfully detached from the actual individuals. Men such as Potanin are now celebrated as much for their generosity as they are resented for their path to richesse. </p>
<p>So much so that Potanin may well avoid serious consequences for an environmental disaster at one of his company’s power plants in the Arctic in late May. A fuel tank collapsed, <a href="https://www.themoscowtimes.com/2020/06/19/russia-to-clean-up-arctic-oil-spill-with-flexible-pipeline-a70636">releasing more than 21,000 metric tons of diesel</a> into the thawing permafrost and surrounding rivers. A few weeks later, his company suspended workers responsible for dumping waste water at a <a href="https://www.themoscowtimes.com/2020/06/28/russian-mining-giant-admits-waste-violations-at-arctic-plant-a70723">metals plant</a> in the same area.</p>
<p>Potanin was chastised by Putin in a <a href="https://abcnews.go.com/International/wireStory/putin-chastises-russian-tycoon-massive-arctic-oil-spill-71088094">televised video call</a> about the oil spill, and <a href="https://www.forbes.com/sites/daviddawkins/2020/06/10/billionaire-vladimir-potanin-promises-to-clean-up-his-mess--diesel-fuel-spill-could-cost-russias-richest-man-4-billion/">promised</a> to pay the costs of the clean up. But this could take years, and it’s unlikely Putin will come down very hard on Potanin for the scandal. It’s mutually beneficial for the president and oligarchs to maintain their current levels of cooperation. </p>
<p>Environmental activists did their own investigation: the toxic fuel might have already reached the Arctic Ocean and Greenpeace Russia <a href="https://www.themoscowtimes.com/2020/06/25/activists-allege-cover-up-as-toxic-siberian-fuel-spill-reaches-arctic-ocean-a70701">estimate the damages</a> to the Arctic waterways at 100 billion roubles. That’s ten times the amount Potanin has reportedly donated to ease the COVID-19 crisis and nearly twice as much as the new wealth tax will bring in.</p><img src="https://counter.theconversation.com/content/141624/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>From 2015-2017 Elisabeth Schimpfössl held an Early Career Fellowship from the Leverhulme Trust. From 2017-2019 she received a British Academy/Leverhulme Small Research Grant.</span></em></p>After Russian oligarchs stepped in to help with the coronavirus response, Putin upped their taxes. But it’s unlikely to phase them.Elisabeth Schimpfössl, Lecturer in Sociology and Policy, Aston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1391742020-06-14T12:27:43Z2020-06-14T12:27:43ZSurviving the coronavirus requires escaping the status quo — together<figure><img src="https://images.theconversation.com/files/340611/original/file-20200609-21226-1e5c8ne.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3000%2C2151&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protesters take a knee during a demonstration calling for justice for the death of George Floyd and all victims of police brutality in Montréal on June 7, 2020. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Graham Hughes</span></span></figcaption></figure><p>The world was ill-prepared for COVID-19, <a href="https://www.ncbi.nlm.nih.gov/books/NBK92467/">despite SARS</a>, <a href="https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/index.html">Ebola</a> and many other <a href="https://journalofethics.ama-assn.org/article/responding-global-public-health-crises/2020-01">public health crises</a> and despite <a href="https://www.who.int/news-room/feature-stories/ten-threats-to-global-health-in-2019">numerous reports</a>, commissions, warnings and even prescient films like <a href="https://www.newscientist.com/article/2239913-how-realistic-is-contagion-the-movie-doesnt-skimp-on-science/"><em>Contagion</em></a>.</p>
<p>We’re stuck in a <a href="https://www.bloomberg.com/news/articles/2020-03-21/covid-19-divides-u-s-society-by-race-class-and-age">social class quagmire</a> that disadvantaged the majority of citizens leading up to COVID-19.</p>
<p>The <a href="https://www.theguardian.com/us-news/2020/jun/01/george-floyd-protests-editorials-worldwide">killing of an unarmed Black man, George Floyd</a>, by police in the United States, and the ensuing massive protests, have underscored that entrenched, systemic racism is ripping society to shreds. </p>
<p>As we near the 100-day mark of the COVID-19 pandemic being declared by the World Health Organization, I have three proposals for escape hatches from the status quo: <a href="http://www.education4democracy.net/single-post/2019/03/18/Announcing-a-new-book-%E2%80%9CIt%E2%80%99s-not-education-that-scares-me-it%E2%80%99s-the-educators%E2%80%A6%E2%80%9D-Is-there-still-hope-for-democracy-in-education-and-education-for-democracy">reimagining democracy beyond elections</a>, <a href="https://indigenouspeoplesatlasofcanada.ca/section/truth-and-reconciliation/">reconciling</a> before taxation and humanizing <a href="https://www.thersa.org/discover/publications-and-articles/rsa-blogs/2020/03/global-solidarity-covid-19-crisis">global interactions</a>.</p>
<p>The objective is to underscore that there are paths that allow us to stop cultivating extreme vulnerabilities and social inequalities after COVID-19.</p>
<h2>Reimagining democracy beyond elections</h2>
<p>The corporate-dominated, elite-based political model leaves little room for democracy. The <a href="https://truthout.org/articles/the-covid-19-pandemic-is-exposing-the-plague-of-neoliberalism/">hyper-capitalist</a> or neoliberal model of governance underpinning elections has come to define democracy. This includes endless campaigning, fundraising, polling, marketing and strategizing. The goal is to win, not to support or build a democracy. </p>
<p>This hands over endless resources, authority and decision-making power to a small group — a political party — with a primary goal of maintaining or obtaining power. There are also problems of representation, inclusion <a href="https://www.academia.edu/39810146/Citizen_Engagement_in_the_Contemporary_Era_of_Fake_News_Hegemonic_Distraction_or_Control_of_the_Social_Media_Context">and citizen participation.</a> </p>
<p>Concurrently, there are significant social movements — like <a href="https://blacklivesmatter.com/">Black Lives Matters</a>, <a href="http://www.idlenomore.ca/">Idle No More</a>, <a href="https://metoomvmt.org/">#metoo</a>, <a href="http://occupywallst.org/">Occupy</a>, the <a href="http://www.environmentandsociety.org/arcadia/collection/global-environmental-movements">environmental movement</a> and the <a href="https://www.thenation.com/article/archive/what-a-21st-century-peace-movement-looks-like/">peace movement</a> — and innovations, projects and mobilizations taking place around the world despite the traditional forms of democracy that underpin public policy and programs. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/340604/original/file-20200609-21219-1yr9fz9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/340604/original/file-20200609-21219-1yr9fz9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/340604/original/file-20200609-21219-1yr9fz9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/340604/original/file-20200609-21219-1yr9fz9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/340604/original/file-20200609-21219-1yr9fz9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/340604/original/file-20200609-21219-1yr9fz9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/340604/original/file-20200609-21219-1yr9fz9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Washington Monument and the White House are visible behind the words Black Lives Matter, painted in bright yellow letters on 16th Street in Washington, D.C., on June 6, 2020.</span>
<span class="attribution"><span class="source">(Khalid Naji-Allah/Executive Office of the Mayor via AP)</span></span>
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<p>Reimagining democracy beyond elections should be a priority in the post-coronavirus world. Transformative and critically engaged education needs to be aligned with this goal. Similarly, <a href="https://www.participatorybudgeting.org/what-is-pb/">participatory budgeting</a>, <a href="https://www.youtube.com/watch?v=zFwReSYt_W4">consensus democracy</a>, <a href="https://link.springer.com/article/10.1007/s11266-018-0031-x">solidarity-based economics</a>, mandating <a href="https://www.samaracanada.com/samarablog/blog-post/samara-main-blog/2018/12/21/improving-political-representation-of-marginalized-communities">representation for marginalized groups</a> and <a href="https://www.citizenlab.co/blog/civic-engagement/how-citizen-participation-helps-to-rebuild-trust-within-communities/?utm_source=CitizenLab+Newsletter+%28GDPR+optin%29+EN&utm_campaign=b7aa0fd122-en-newsletter-January20&utm_medium=email&utm_term=0_49e1e8647d-b7aa0fd122-199002701&goal=0_49e1e8647d-b7aa0fd122-199002701">innovative citizen participation initiatives</a> should be considered.</p>
<p><a href="https://americansfortaxfairness.org/issues/tax-havens/examples-of-offshore-corporate-tax-dodging-fixed-by-the-stop-tax-haven-abuse-act/">Eliminating off-shore tax havens</a>, considering a ceiling for a <a href="https://canadiandimension.com/articles/view/would-a-maximum-wage-law-work-for-canada">maximum wage</a> while augmenting the minimum wage, instituting a substantial <a href="https://thewalrus.ca/does-a-guaranteed-annual-income-actually-work/">guaranteed annual income</a> and <a href="https://www.raisingtheroof.org/about-homelessness/housing-as-a-human-right/">making housing a human right</a> for all homeless and disadvantaged people should all be part of the equation. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/basic-income-a-no-brainer-in-economic-hard-times-101006">Basic income: A no-brainer in economic hard times</a>
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</em>
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<p>Lastly, <a href="https://www.cbc.ca/news/politics/grenier-political-contributions-1.3895134">eliminating fundraising from political activities</a> and publishing data on racism, poverty, discrimination, corruption and discretionary spending, along with action and accountability plans overseen by citizen groups, could all be part of this conversation.</p>
<h2>Reconciliation before taxation</h2>
<p>We can’t continue to live in a society with rampant inequality as if it doesn’t exist, or as if those most affected by generational and systemic injustice somehow deserve this treatment.</p>
<p>The reconciliation process in Canada has been ineffective, and going on for so long that generations of <a href="https://www.afn.ca/policy-sectors/lands-claims/">First Nations have been negotiating</a> without much light at the end of the tunnel.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/340613/original/file-20200609-21226-11px5db.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/340613/original/file-20200609-21226-11px5db.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=419&fit=crop&dpr=1 600w, https://images.theconversation.com/files/340613/original/file-20200609-21226-11px5db.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=419&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/340613/original/file-20200609-21226-11px5db.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=419&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/340613/original/file-20200609-21226-11px5db.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=526&fit=crop&dpr=1 754w, https://images.theconversation.com/files/340613/original/file-20200609-21226-11px5db.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=526&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/340613/original/file-20200609-21226-11px5db.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=526&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Joyce Hunter, right, whose brother Charlie Hunter died at St. Anne’s Residential School in 1974, and Stephanie Scott of the National Centre for Truth and Reconciliation, lay down a ceremonial cloth with the names of 2,800 children who died in residential schools at a ceremony in Gatineau, Québec in September 2019.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Justin Tang</span></span>
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<p>Before every successive government proclaims how we need to <a href="https://www.americanprogress.org/issues/economy/news/2019/09/26/475083/trumps-corporate-tax-cut-not-trickling/">reduce taxes</a>, we should consider how we can first plan for a meaningful reconciliation. </p>
<p>As we continue the standstill, <a href="https://www.huffingtonpost.ca/2018/06/21/indigenous-languages_a_23465069/">Indigenous languages are being lost</a> and young people are being denied life and educational opportunities. For some, potable water is still a privilege, not a right, health care is woefully inadequate, discrimination is a debilitating reality and legitimate land claims are being ignored. If not now, when?</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-the-covid-19-crisis-calls-us-towards-reconciliation-139259">How the COVID-19 crisis calls us towards reconciliation</a>
</strong>
</em>
</p>
<hr>
<p>Reconciliation, at several levels, can no longer be considered a throwaway campaign pledge. The political, economic, social and moral cost is simply too high to pretend that it doesn’t matter. </p>
<p>We could consider pegging a percentage of all federal budgets to rapidly enhance socio-economic conditions for First Nations. We could develop solidarity programs between every secondary school in Canada and Indigenous communities, making it a condition for graduation. </p>
<p>We could slash investments in military production and transfer the funds to Indigenous knowledge, culture, development and self-governance. We should also enlarge reconciliation to address the legitimate and long-delayed concerns of racialized communities, notably Black Canadians. </p>
<h2>Humanize global interactions</h2>
<p>Stock-market indices, unemployment rates, home sales, trade imbalances and profit margins aren’t helpful in determining the health, welfare, happiness, liberty, engagement and humanity of a society. </p>
<p>Those indicators don’t indicate the state of poverty, racism, sexism, discrimination, conflict, corruption or access to health care and education. Notably, the environment is neither prioritized nor seriously addressed in neoliberal globalization. </p>
<p>Who benefits, how and to what degree? </p>
<p>Do we have the courage to denounce structural global inequities and racism against migrant workers and immigrants while simultaneously asking why Canada and the United States need to <a href="https://www.thestar.com/news/canada/2020/03/17/migrant-workers-help-grow-our-food-coronavirus-is-leaving-them-in-limbo.html">import low-wage agricultural workers from Mexico</a>, for example? Why does Canada, and a host of other countries, continue to <a href="https://www.amnesty.org/en/latest/news/2019/08/killer-facts-2019-the-scale-of-the-global-arms-trade/">sell arms</a> to just about anyone? </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/canadas-checkered-history-of-arms-sales-to-human-rights-violators-91559">Canada’s checkered history of arms sales to human rights violators</a>
</strong>
</em>
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<p>Why do we <a href="https://www.indy100.com/article/usa-american-army-invasions-police-actions-overseas-dod-defense-war-troops-deployment-marines-7908611">invade some countries</a>, <a href="https://www.globalresearch.ca/overthrowing-other-peoples-governments-the-master-list-of-u-s-regime-changes/5400829">destabilize the regimes</a> of others <a href="https://www.pressenza.com/2019/11/un-overwhelmingly-votes-for-ending-u-s-blockade-against-cuba/">and blockade</a> still others? Why do we set up <a href="https://cirdi.ca/wp-content/uploads/2017/06/Conflict-Full-Layout-060817.pdf">mining operations</a> around the world amid widespread claims of <a href="https://www.dw.com/en/fighting-corruption-in-mining-poses-tough-challenges/a-41645234">corruption</a>, collusion, <a href="https://republicofmining.com/category/mining-environmental-accidents/">environmental catastrophe</a> and the <a href="http://www.dplf.org/sites/default/files/report_canadian_mining_executive_summary.pdf">assault on Indigenous Peoples</a>? </p>
<p>Extreme poverty, vulnerability, desperation and degradation lead to a multitude of global forces that impact and affect everyone, including mass migration, environmental catastrophe and political and economic instability. </p>
<p>Eliminating exploitation, corruption, racism, military conflict and nefarious globalization should be a necessity in the post-COVID-19 world. </p>
<p>And the most global issue facing all of us — <a href="https://mronline.org/2020/04/12/covid-19-is-a-sign-of-our-fate-if-we-do-not-take-radical-action-interview-of-michael-d-yates/">environmental destruction</a> — must be at the centre of international affairs.</p>
<h2>What’s next?</h2>
<p>Our environmental, political, economic, social, health and education systems are intertwined and interdependent. </p>
<p>They have been constructed, upheld and operated by human beings, and, as such, they can be changed for the greater good of everyone. Canadians have low <a href="https://www.pewresearch.org/fact-tank/2018/05/21/u-s-voter-turnout-trails-most-developed-countries/">voter participation</a>, so creative, imaginative solutions must be found to unleash more equitable, meaningful and engaging ways to participate and live together, outside of elections.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/340623/original/file-20200609-21230-1o4vjvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/340623/original/file-20200609-21230-1o4vjvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/340623/original/file-20200609-21230-1o4vjvi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/340623/original/file-20200609-21230-1o4vjvi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/340623/original/file-20200609-21230-1o4vjvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/340623/original/file-20200609-21230-1o4vjvi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/340623/original/file-20200609-21230-1o4vjvi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A woman holds a sign reading ‘White Silence = Violence’ as thousands of people gather for a peaceful demonstration in support of George Floyd and Regis Korchinski-Paquet and protest against racism, injustice and police brutality, in Vancouver.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
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</figure>
<p>Within the American context, scholar and activist <a href="https://www.democracynow.org/2020/6/1/cornel_west_us_moment_of_reckoning">Cornel West</a> put it succinctly: The American empire is imploding.
In Canada, the mysterious death in Toronto of <a href="https://globalnews.ca/news/6999791/toronto-woman-death-high-park-activists/">Regis Korchinski-Paquet</a>, an Indigenous-Black woman, has highlighted the fragility of race relations here. </p>
<p>Surviving COVID-19 means reconsidering what type of world we want to build and live in, together. We can no longer feign being a democracy that is not democratic.</p><img src="https://counter.theconversation.com/content/139174/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul R. Carr does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Surviving COVID-19 means reconsidering what type of world we want to build and live in, together. We can no longer feign being a democracy that is not democratic.Paul R. Carr, Full Professor, Département des sciences de l'éducation & Chair-holder, UNESCO Chair in Democracy, Global Citizenship and Transformative Education (DCMÉT), Université du Québec en Outaouais (UQO)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1390392020-06-08T19:48:43Z2020-06-08T19:48:43ZThe housing boom propelled inequality, but a coronavirus housing bust will skyrocket it<figure><img src="https://images.theconversation.com/files/339683/original/file-20200604-130951-cnpdbv.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5742%2C3440&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">iStock</span> <span class="attribution"><span class="license">Author provided</span></span></figcaption></figure><p>A housing boom that lasted from the mid-1980s with only minor interruptions has <a href="https://theconversation.com/how-the-housing-boom-has-driven-rising-inequality-102581">added to rising income inequality</a> in Australia. Yet an impending housing market bust, triggered by the coronavirus pandemic and the resulting spike in unemployment, will not restore greater equality. On the contrary, recent history shows housing busts can <a href="http://web.stanford.edu/group/recessiontrends-dev/cgi-bin/web/sites/all/themes/barron/pdf/IncomeWealthDebt_fact_sheet.pdf">worsen inequality</a>. </p>
<p>Those who benefit most from a boom are not those who pay the price when it busts. And those harmed by the boom often become even more vulnerable during the bust. </p>
<p>Our analysis highlights the risks for people who bought their first home at the peak of the boom. We estimate 24,000 households are at very high risk because they took out large loans that might soon exceed their home value and also work in sectors with high job losses. Another 135,200 are at high risk and 121,000 are at moderate risk.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-the-housing-boom-has-driven-rising-inequality-102581">How the housing boom has driven rising inequality</a>
</strong>
</em>
</p>
<hr>
<h2>Coronavirus has set up a housing bust</h2>
<p>Experts have long cited an upsurge in unemployment as the main threat to house price growth. This risk became reality with the coronavirus pandemic. Over the seven weeks from mid-March to early May, <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6160.0.55.001Media%20Release1Week%20ending%202%20May%202020?opendocument&tabname=Summary&prodno=6160.0.55.001&issue=Week%20ending%202%20May%202020&num=&view=">jobs fell by 7.3%</a>. </p>
<p>Unless employment rapidly recovers, the housing market is facing a major downturn. In one worst-case scenario released by the Commonwealth Bank, <a href="https://www.abc.net.au/news/2020-05-13/coronavirus-commonwealth-bank-house-prices-economy-unemployment/12241338">house prices could fall by up to 32% </a> over the next two years. </p>
<h2>Recent first-time buyers are most vulnerable</h2>
<p>Households that can hold on to their homes and weather the storm until the market recovers are not substantially harmed. Established owners, who bought their homes before or early in the boom years, have enjoyed the largest increase in their home values, and the largest reductions in their debt. This puts them in a position of relative resilience to a housing market bust.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-falling-house-prices-do-less-to-improve-affordability-than-you-might-think-111267">Why falling house prices do less to improve affordability than you might think</a>
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<hr>
<p>In contrast, <a href="https://dra.american.edu/islandora/object/auislandora%3A70463/datastream/PDF/view">evidence from the 2008 housing crisis</a> in the United States shows which households are most at risk. These were households that bought their first home with no deposit, or a very low one, in the period leading up to the 2008 crash. The crash left these households “underwater”, trapped with an asset worth less than their mortgage debt. Many defaulted on their mortgages, fuelling the housing market’s downward spiral. </p>
<p>The Australian housing market and financial institutions differ from those in the United States in 2008 in fundamental ways. Still, Australian households that bought their houses at the peak of the boom and have now lost their jobs in the coronavirus pandemic are facing the highest risk. </p>
<p>These include 24,000 recent (2014-5 to 2017-18) first home buyers who borrowed over 80% of the value of their home and were employed in <a href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0">industries where jobs have now collapsed</a>. Another 135,200 recent first home buyers with high loan-to-valuation ratios are also at risk of going “underwater”, with homes worth less than their debt. Many of them are also in precarious employment, irrespective of the pandemic. (These figures do not include first home buyers in 2018-19, for which data are not yet available.) </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=264&fit=crop&dpr=1 600w, https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=264&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=264&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=332&fit=crop&dpr=1 754w, https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=332&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/337161/original/file-20200523-124840-haxmey.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=332&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Recent first home buyers at risk in a COVID-19 housing bust.</span>
<span class="attribution"><span class="source">Source: Liss Ralston; data from ABS Survey of Income and Housing 2014-5 to 2017-8</span></span>
</figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/build-social-and-affordable-housing-to-get-us-off-the-boom-and-bust-roller-coaster-113113">Build social and affordable housing to get us off the boom-and-bust roller coaster</a>
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</em>
</p>
<hr>
<h2>Renters’ relief could be short-lived</h2>
<p>Many private renters hope a housing downturn will translate into lower rents and perhaps give them a chance to buy their first home in a more affordable market. However, this is not always the case in a downturn. In the US from 2007 to 2009, despite declining house prices, <a href="https://www.urban.org/sites/default/files/publication/27011/1001550-Rental-Market-Stresses-Impacts-of-the-Great-Recession-on-Affordability-and-Multifamily-Lending.PDF">rental affordability stress has only increased</a>.</p>
<p>In Australia, the sudden decline in international students and short-term rentals has <a href="https://www.theage.com.au/national/victoria/inner-city-rental-vacancy-rate-nearly-triples-amid-covid-19-student-exodus-20200523-p54vri.html">increased long-term rental vacancies in some areas</a>. <a href="https://www.smh.com.au/national/nsw/a-very-good-time-to-upgrade-tenants-bag-bargains-as-landlords-drop-rents-20200523-p54vp9.html">Reports suggest</a> rents are going down, especially at the upper end of some rental markets. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/as-coronavirus-hits-holiday-lettings-a-shift-to-longer-rentals-could-help-many-of-us-134036">As coronavirus hits holiday lettings, a shift to longer rentals could help many of us</a>
</strong>
</em>
</p>
<hr>
<p>However, in the longer run, the slowdown in housing construction will create supply shortages, leaving rental vacancies low and rents high. Many landlords, mostly “mum and dad” investors, have taken <a href="https://www.ahuri.edu.au/__data/assets/pdf_file/0020/16904/AHURI-Final_Report-296-Private-rental-in-transition-institutional-change-technology-and-innovation-in-Australia.pdf">large loans to finance their property investment</a>. They will need to keep rents high to hold on to their investment properties. </p>
<p>Lower house prices will enable some households to become home owners for the first time, after being locked out of the market during the boom years. These households could benefit from a coronavirus housing bust if the market then recovers. Even so, their gains will do little to change the overall trend of rising inequality made worse by the housing downturn.</p>
<h2>We need to flatten out booms and busts</h2>
<p>Improved housing affordability is necessary to reduce social and economic inequality. A housing downturn will reduce house prices. But this downturn, when coupled with rising unemployment, will not deliver greater equality, especially if it’s followed by yet another boom. </p>
<p>Australia has flattened the curve of COVID-19 infections. To be successful in reducing inequality, we need to flatten the curve of both booms and busts in the housing market cycle. And only a <a href="https://theconversation.com/coronavirus-lays-bare-5-big-housing-system-flaws-to-be-fixed-137162">thorough overhaul of national housing policy</a> will achieve that. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/coronavirus-lays-bare-5-big-housing-system-flaws-to-be-fixed-137162">Coronavirus lays bare 5 big housing system flaws to be fixed</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/139039/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ilan Wiesel receives funding from the Australian Research Council and Lord Mayor's Charitable Foundation. </span></em></p><p class="fine-print"><em><span>Liss Ralston has previously received funding from Lord Mayor's Charitable Foundation and AHURI.</span></em></p><p class="fine-print"><em><span>Wendy Stone receives funding from the Australian Research Council (ARC) and the Australian Housing and Urban Research Institute (AHURI). </span></em></p>You’d think falling housing prices might help people on low incomes, but history shows downturns often increase inequality. And many buyers who took out big loans during the housing boom are at risk.Ilan Wiesel, Senior Lecturer in Urban Geography, The University of MelbourneLiss Ralston, Urban Statistician, Centre for Urban Transitions, Swinburne University of TechnologyWendy Stone, Associate Professor, Centre for Urban Transitions and Director, Australian Housing and Urban Research Institute Swinburne Research Centre, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1304522020-02-11T20:07:46Z2020-02-11T20:07:46ZHow the T-Mobile-Sprint merger will increase inequality<figure><img src="https://images.theconversation.com/files/314835/original/file-20200211-146674-1s8c3ei.jpg?ixlib=rb-1.1.0&rect=93%2C46%2C4379%2C2930&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The lawsuit filed by New York Attorney General Letitia James and 13 colleagues was the last roadblock to the merger. </span> <span class="attribution"><span class="source">Drew Angerer/Getty Images</span></span></figcaption></figure><p>A <a href="https://www.bloomberg.com/news/articles/2020-02-11/t-mobile-sprint-judge-didn-t-buy-state-claims-of-antitrust-harm?srnd=premium">federal judge gave his blessing</a> to the US$26.5 billion merger between T-Mobile and Sprint on Feb. 11, several months after the deal got <a href="https://www.geekwire.com/2019/democrat-regulators-warn-fcc-approval-t-mobile-sprint-merger-creates-cozy-oligopoly/">final antitrust approval</a> from the U.S. government. </p>
<p>A group of attorneys general from 13 states and the District of Columbia <a href="https://abcnews.go.com/Business/trial-begins-state-ags-lawsuit-mobile-sprint-megamerger/story?id=67598013">had sued to try to block the merger</a>, arguing it would reduce competition in the telecommunications industry and raise customer prices by billions of dollars. </p>
<p>Let me add a third reason the judge should have blocked the deal: It will likely increase economic inequality. </p>
<p>Research on inequality, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2395438">including my own</a>, has generally focused on how <a href="https://www.nber.org/papers/w7038">economic growth</a>, <a href="https://www.cfr.org/backgrounder/inequality-and-tax-rates-global-comparison">tax policy</a> and the <a href="https://data.nber.org/reporter/winter03/technologyandinequality.html">use of technology</a> affects it. Less attention has been paid to another important factor: enforcement of antitrust laws. </p>
<p>With the <a href="https://www.hup.harvard.edu/catalog.php?isbn=9780674979857">gap between rich and poor</a> <a href="https://www.washingtonpost.com/business/2019/09/26/income-inequality-america-highest-its-been-since-census-started-tracking-it-data-show/">soaring to new historic highs</a>, tackling the problem has become increasingly necessary.</p>
<p>My research on <a href="https://rbj.net/2020/01/20/we-need-to-bolster-antitrust-enforcement/">inequality and antitrust</a> suggests the U.S. could begin to rein in its yawning wealth gap by again vigorously cracking down on anti-competitive behavior in the marketplace – just as it did during the mid-20th century.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/314875/original/file-20200211-146696-9x7fem.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/314875/original/file-20200211-146696-9x7fem.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=421&fit=crop&dpr=1 600w, https://images.theconversation.com/files/314875/original/file-20200211-146696-9x7fem.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=421&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/314875/original/file-20200211-146696-9x7fem.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=421&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/314875/original/file-20200211-146696-9x7fem.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=529&fit=crop&dpr=1 754w, https://images.theconversation.com/files/314875/original/file-20200211-146696-9x7fem.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=529&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/314875/original/file-20200211-146696-9x7fem.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=529&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">American statesman and lawmaker John Sherman authored the Sherman Act.</span>
<span class="attribution"><span class="source">Bettmann Archive/Getty Images</span></span>
</figcaption>
</figure>
<h2>Origins of antitrust</h2>
<p>The U.S. has three principal federal antitrust laws: the <a href="https://www.investopedia.com/terms/s/sherman-antiturst-act.asp">Sherman Act</a>, the Clayton Act and the Federal Trade Commission Act.</p>
<p>The Sherman Act, passed in 1890, forbids anti-competitive agreements as well as conduct that monopolizes or attempts to dominate a particular market. This applies to cartels and to any attempt to fix prices, reduce industrial output, share markets or exclude competition. </p>
<p>The administration of President Theodore Roosevelt aggressively enforced the Sherman Act, which led to the <a href="https://learning.blogs.nytimes.com/2012/05/15/may-15-1911-supreme-court-orders-standard-oil-to-be-broken-up">breakup of Standard Oil in 1911</a>. </p>
<p>The Clayton Act strengthened Sherman by more precisely defining anti-competitive behavior, while the Federal Trade Commission Act <a href="https://www.ftc.gov/about-ftc/what-we-do">provided the federal government with an agency</a> to investigate potential violations of its antitrust laws. Both laws were passed in 1914.</p>
<p>Over time, the federal courts <a href="https://www.businessjustice.com/antitrust-standards-of-review-the-per-se-rule-of-reason-and-quic.html">developed a body of antitrust law</a> that made certain kinds of anti-competitive behavior explicitly illegal. Other types of behavior were subject to a more detailed and laborious case-by-case analysis to ascertain whether the conduct in question unreasonably restrained trade.</p>
<p>But, apart from the 1900s, the federal government <a href="https://hbr.org/2017/12/the-rise-fall-and-rebirth-of-the-u-s-antitrust-movement">didn’t vigorously enforce antitrust laws</a> until the late 1930s, when President Franklin Delano Roosevelt appointed Thurman Arnold to run the Justice Department’s antitrust division. Arnold ushered in three decades of <a href="https://lawecommons.luc.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1494&context=facpubs">robust enforcement</a>, including a <a href="https://promarket.org/140-years-antitrust2/">landmark case</a> against the American Medical Association, which allowed doctors to work with health maintenance organizations for the first time.</p>
<h2>Antitrust goes out of style</h2>
<p>This enthusiasm for promoting competitive markets and consumer welfare began to change in the early 1970s. </p>
<p>Conservative judges and legal scholars such as <a href="https://www.washingtonpost.com/news/wonk/wp/2012/12/20/antitrust-was-defined-by-robert-bork-i-cannot-overstate-his-influence/">Robert Bork</a> argued that the purpose of antitrust should be to <a href="https://scholarworks.law.ubalt.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1676&context=all_fac">promote economic efficiency</a>, rather than consumer welfare. </p>
<p>This viewpoint dovetailed nicely with Ronald Reagan’s own views about the role of the government in markets. So when he became president in 1981, Reagan <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=276913">appointed two like-minded conservative scholars</a>, William Baxter and James Miller, to head the antitrust division and the FTC.</p>
<p>Focused solely on the promotion of economic efficiency, Baxter, Miller and judges with similar views <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2769132">dramatically reduced</a> the scope of antitrust enforcement. And the range of conduct that would previously be condemned by courts as anti-competitive decreased and the proof required to demonstrate harm to plaintiffs increased. </p>
<p>This gave businesses much greater freedom to seek profit through <a href="http://dx.doi.org/10.2139/ssrn.2612047">anti-competitive means</a>. As a result, <a href="https://news.cision.com/ibisworld/r/top-10-highly-concentrated-industries,c9219248">numerous industries</a> from search engines and telecoms to soda companies and tire makers <a href="https://www.economist.com/graphic-detail/2016/03/24/corporate-concentration">have become dominated by a handful of companies</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/314614/original/file-20200210-109951-pwvqal.jpg?ixlib=rb-1.1.0&rect=85%2C141%2C4642%2C2863&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/314614/original/file-20200210-109951-pwvqal.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=382&fit=crop&dpr=1 600w, https://images.theconversation.com/files/314614/original/file-20200210-109951-pwvqal.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=382&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/314614/original/file-20200210-109951-pwvqal.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=382&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/314614/original/file-20200210-109951-pwvqal.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=480&fit=crop&dpr=1 754w, https://images.theconversation.com/files/314614/original/file-20200210-109951-pwvqal.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=480&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/314614/original/file-20200210-109951-pwvqal.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=480&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Many industries in the U.S. are dominated by just a handful of companies, such as Amazon and Apple.</span>
<span class="attribution"><span class="source">Aytac Unal/Anadolu Agency/Getty Images</span></span>
</figcaption>
</figure>
<h2>Impact on inequality</h2>
<p>This exacerbates inequality in three ways. </p>
<p>First, when a company has market power in an industry, it can set prices on its own terms, higher than it would otherwise be able to in a more competitive environment. This <a href="https://pdfs.semanticscholar.org/2810/b52e7f8b827c67ded8ed60d2afd66802cf0f.pdf">transfers wealth from customers</a> who pay the higher prices to the dominant company. Because the managers and the owners of these powerful businesses tend to be wealthier than their consumers, this wealth transfer is regressive and therefore promotes economic inequality.</p>
<p>A second kind of anti-competitive behavior <a href="https://corpgov.law.harvard.edu/2016/08/10/mergers-and-acquisitions-technological-change-and-inequality/">arises in the context of mergers and acquisitions</a>, such as the T-Mobile-Sprint deal. The telecoms sector was already very concentrated, and <a href="https://www.theatlantic.com/ideas/archive/2019/10/t-mobile-and-sprints-merger-will-hurt-consumers/599245/">now it’s expected to get even worse</a>.</p>
<p>Or take the health care industry. After the Affordable Care Act became law, <a href="https://www.kaufmanhall.com/news/hospital-merger-and-acquisition-activity-sharply-2015-according-kaufman-hall-analysis">there was a wave of hospital mergers</a>. These mergers <a href="https://www.rwjf.org/en/library/research/2012/06/the-impact-of-hospital-consolidation.html">led to price increases</a> of over 20% for consumers.</p>
<p>So, once again, we have regressive wealth transfers from poorer consumers to wealthier hospital owners and managers.</p>
<p>Finally, anti-competitive behavior frequently arises when there is common ownership of corporations. The airline industry provides a great illustration of this. </p>
<p>From 2013 to 2015, the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427345">same seven shareholders controlled</a> 60% of United Airlines, 27.5% of Delta, 27.3% of JetBlue and 23.3% of Southwest. Harvard law professor Einer Elhaug <a href="https://corpgov.law.harvard.edu/2019/05/20/how-horizontal-shareholding-harms-our-economy-and-why-antitrust-law-can-fix-it/">argues</a> this kind of common ownership of multiple companies in an industry is very likely to lead to anti-competitive prices. </p>
<p>And that’s exactly what researchers have found. A 2018 paper <a href="https://doi.org/10.1111/jofi.12698">showed that ticket prices</a> are 3% to 11% higher due to common ownership, and studies of the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2710252">banking</a> and <a href="https://promarket.org/antitrust-answer-rising-wealth-inequality/">other industries</a> have found similar effects. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/314802/original/file-20200211-146708-1bi25rc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/314802/original/file-20200211-146708-1bi25rc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=419&fit=crop&dpr=1 600w, https://images.theconversation.com/files/314802/original/file-20200211-146708-1bi25rc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=419&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/314802/original/file-20200211-146708-1bi25rc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=419&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/314802/original/file-20200211-146708-1bi25rc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=527&fit=crop&dpr=1 754w, https://images.theconversation.com/files/314802/original/file-20200211-146708-1bi25rc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=527&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/314802/original/file-20200211-146708-1bi25rc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=527&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Sprint Executive Chairman Marcelo Claure, left, and T-Mobile US CEO John Legere spoke at a House subcommittee hearing on their companies’ merger.</span>
<span class="attribution"><span class="source">AP Photo/Jose Luis Magana</span></span>
</figcaption>
</figure>
<h2>An American tradition</h2>
<p>Americans now have over four decades of experience with relatively lax antitrust enforcement focused almost exclusively on the narrow criterion of economic efficiency. The resulting picture is not pretty.</p>
<p>Poorer consumers have padded the balance sheets of wealthier companies through prices that are higher than they would have been with more aggressive antitrust enforcement. I and <a href="https://scholarship.law.georgetown.edu/facpub/1462">other researchers argue</a> this has contributed to <a href="https://blogs.umass.edu/bikehara/2014/10/02/capital-in-the-twenty-first-century/">soaring economic inequality</a> since around 1980. </p>
<p>But since economic power <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2769132">leads to political power</a>, these companies <a href="https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B">have used their resources</a> to lobby for rules and regulations that further narrow the scope of antitrust laws and harm consumers. </p>
<p>[<em><a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=expertise">Expertise in your inbox. Sign up for The Conversation’s newsletter and get a digest of academic takes on today’s news, every day.</a></em>]</p><img src="https://counter.theconversation.com/content/130452/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amitrajeet A. Batabyal does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The T-Mobile-Sprint merger is the latest example of weakened enforcement of antitrust laws, which reduces competition and exacerbates already-record levels of inequality.Amitrajeet A. Batabyal, Arthur J. Gosnell Professor of Economics, Rochester Institute of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1264062019-11-07T12:16:38Z2019-11-07T12:16:38ZInequality is higher in some states like New York and Louisiana because of corporate welfare<figure><img src="https://images.theconversation.com/files/300474/original/file-20191106-12521-1n5z88i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New York's offer of incentives to Amazon to open a headquarters in the state faced significant opposition.</span> <span class="attribution"><span class="source">AP Photo/Karen Matthews</span></span></figcaption></figure><p>Income inequality <a href="https://markets.businessinsider.com/news/stocks/income-inequality-reached-highest-level-ever-recorded-in-2018-2019-9-1028559996">made</a> <a href="https://www.washingtonpost.com/business/2019/09/26/income-inequality-america-highest-its-been-since-census-started-tracking-it-data-show/">big</a> <a href="https://www.axios.com/income-inequality-united-states-record-c78b1ff4-4b71-4a88-a890-db20ff8222f3.html">headlines</a> in 2019, after the <a href="https://www.census.gov/programs-surveys/acs/news/data-releases/2018/release.html#par_textimage_copy">U.S. Census Bureau</a> released data showing that the gap between the richest and poorest Americans is at its <a href="https://www.npr.org/2019/09/26/764654623/u-s-income-inequality-worsens-widening-to-a-new-gap">highest level in at least half a century</a>. </p>
<p>Less reported was the <a href="https://data.census.gov/cedsci/table?hidePreview=true&q=B19083%3A%20GINI%20INDEX%20OF%20INCOME%20INEQUALITY&table=B19083&tid=ACSDT1Y2018.B19083&lastDisplayedRow=155&g=0100000US.04000.001&tp=true">significant variation among the states</a>. New York and California had the highest inequality in 2018, while Utah and Alaska had the lowest. In addition, states as diverse as Alabama, Texas and New Hampshire experienced large increases from the prior year.</p>
<p>Why are some states more or less equal than others? </p>
<p>It usually comes down to policies. States with <a href="https://scholars.org/contribution/how-states-can-fight-growing-economic-inequality">more generous welfare programs</a> and <a href="http://csivc.csi.cuny.edu/Thomas.Volscho/files/volscho1.pdf">higher minimum wages</a> often have lower inequality, while those with <a href="https://doi.org/10.1177/1532440018760198">weaker unions</a> and <a href="https://www.nytimes.com/2019/07/20/opinion/sunday/inequality-taxes.html">lower taxes on the rich</a> have higher levels.</p>
<p>My <a href="https://jmjansa.files.wordpress.com/2019/11/chasing-disparity-sppq-final-version-w-cover.pdf">research suggests</a> there’s another, less-noticed reason behind the disparities: corporate welfare. </p>
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<h2>Incentivizing inequality</h2>
<p>States offer economic development incentives to businesses in order to encourage their investment and expansion in the state.</p>
<p>Famously, <a href="https://www.nytimes.com/2018/01/18/technology/amazon-finalists-headquarters.html">hundreds of states and cities offered</a> Amazon property and income tax credits, bonds, grants, reimbursements and infrastructure assistance in their efforts to convince the Internet giant to open a “second” headquarters in one of their cities. One of the finalists even offered to provide Amazon with <a href="https://www.cnbc.com/2018/11/14/atlanta-offered-amazon-the-chance-at-its-own-train-car-for-hq2.html">a private train car</a>. New York and Virginia won the sweepstakes with a combined <a href="https://www.nytimes.com/2018/11/13/business/economy/amazon-hq2-va-long-island-city-incentives.html">US$2 billion in incentives</a> – although Amazon dropped New York after it met political resistance.</p>
<p>But the amount of incentives states offer can vary significantly. For example, New Hampshire spent just $9.9 million on incentives, or 75 cents for every state resident, per year from 1999 to 2014, while Louisiana paid out an average of $1.2 billion a year, or $267 per capita.</p>
<p>I wanted to know if how much a state spends on corporate incentives affects its level of income inequality. So I analyzed incentive spending using <a href="https://www.goodjobsfirst.org">Good Jobs First</a> data and income inequality as measured by the <a href="https://data.census.gov/cedsci/table?hidePreview=true&q=B19083%3A%20GINI%20INDEX%20OF%20INCOME%20INEQUALITY&table=B19083&tid=ACSDT1Y2018.B19083&lastDisplayedRow=155&g=0100000US.04000.001&tp=true">Gini coefficient</a> from 1999 to 2014. </p>
<p>The Gini coefficient measures inequality by assigning a decimal number that can range from 0, which represents perfect equality, to 1, meaning perfect inequality. New York had a Gini of 0.513 in 2018, while Utah’s was 0.426. A change in the Gini coefficient of as little as 0.01 means the top 10% of households earned $1,500 to $2,400 more per year, depending on the state. </p>
<p>I found that when states spend more on incentives, their level of inequality tends to spike within a year or so. This holds true even when controlling for other economic and demographic factors and other public policies.</p>
<p>The data showed that, on average, for every $180 per citizen that a state spends on incentives, the Gini coefficient increases by 0.004. In other words, $600 to $1,000 more winds up in the pockets of people from wealthy households.</p>
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<p>In big-dollar terms, $180 per citizen is the equivalent of a state spending $200 million to $2 billion a year on incentives, depending on its population. To put it in context, states frequently give billion-dollar incentive packages to individual companies, such as <a href="https://www.scientificamerican.com/article/nevada-gives-1-3-billion-tax-break-to-electric-car-maker-tesla/">Tesla</a>, <a href="https://www.cnbc.com/id/100315374">Nike</a>, <a href="https://www.oregonlive.com/silicon-forest/2018/12/intels-oregon-tax-breaks-are-among-the-nations-biggest-new-report-finds.html">Intel</a>, <a href="https://news.bloombergtax.com/daily-tax-report-state/boeings-8-7-billion-washington-state-tax-break-under-scrutiny">Boeing</a> and <a href="https://www.goodjobsfirst.org/study-nissans-mississippi-subsidies-top-13-billion">Nissan</a>.</p>
<p>Incentives serve to redistribute funds to the wealthy and reduce resources for broadly redistributive policies over the long run.</p>
<h2>The whole story</h2>
<p>Incentives, of course, do not explain everything. New Hampshire, for example, has growing inequality but doesn’t spend much on incentives.</p>
<p>Yet, looking at incentives can help explain why states that are <a href="https://scholars.org/contribution/how-us-states-are-tackling-inequality-and-what-more-can-be-done">leaders in mitigating inequality</a> through higher minimum wages or welfare spending on the poor, such as New Mexico and New York, are still seeing growing inequality.</p>
<p>So the next time you hear an elected official cite big <a href="https://madison.com/wsj/news/local/govt-and-politics/ap-fact-check-scott-walker-embellishes-return-on-new-milwaukee/article_f00d4074-d403-5944-a00f-902705e8153f.html">returns on investment</a> as their reason for offering a company billions in incentives to open a factory or office, remember they aren’t telling the whole story. Those big returns come at a cost: higher inequality, which in turn can <a href="http://dx.doi.org/10.2139/ssrn.178708">hamper economic growth</a>.</p><img src="https://counter.theconversation.com/content/126406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joshua Jansa does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The gap between rich and poor is at record levels in the U.S., yet it varies widely among the states. A political scientist explains why.Joshua Jansa, Assistant Professor of Political Science, Oklahoma State UniversityLicensed as Creative Commons – attribution, no derivatives.