The gap between rich and poor has widened over the past 20 years in nearly all the countries studied, even as trade and technological advances have led to rapid growth in their economies.
With job losses and home foreclosures increasing and many of these countries now facing recession, policy-makers must act quickly to prevent a surge in populist and protectionist sentiment as was seen after the Great Depression, said the Organization for Economic Cooperation and Development, or OECD, which is based in Paris.
In a 20-year study of its member countries, the OECD found that inequality had increased in 27 of its 30 members.
The United States has the highest inequality and poverty rates in the OECD after Mexico and Turkey, and the gap has increased rapidly since 2000, the report said. France, meanwhile, has seen inequalities fall in the past 20 years as poorer workers are better paid.
Rising inequality threatens social mobility -- children doing better than their parents, the poor improving their lot through hard work -- which is lower in countries such as the U.S., Great Britain and Italy, where inequality is high, than countries with less inequality such as Denmark, Sweden and Australia, the report said.
Wealthy households are not only widening the gap with the poor, but in such countries as the United States, Canada and Germany, they are also leaving middle-income earners further behind.
The OECD's Gurria urged governments to deal with the "divisive" issue of growing inequality.
"Greater income inequality stifles upward mobility between generations, making it harder for talented and hardworking people to get the rewards they deserve," he said in a statement. "It polarizes societies, it divides regions within countries, and it carves up the world between rich and poor."
In the United States, the richest 10 percent earn an average of $93,000 -- the highest level in the OECD. The poorest 10 percent earn an average of $5,800 -- about 20 percent lower than the OECD average.
*** [3/29/14]
Everyone knows someone (or is someone) who started from nothing and became something. The problem, as they say in journalism, is that the plural of "anecdote" is not "trend." Yes, some are born into poverty and work their way to the top. But most don't.
Just 4% of those born into the lowest income quintile eventually make it to the top income quintile, but 40% of those born into the highest income group will stay there as adults, according to the Pew Economic Mobility Project. Of those born into the lowest income quintile, more than 70% won't make it out of the bottom half of wage earners as adults. For those born into the top income quintile, two-thirds will remain in the top half as adults.
*** [3/29/14]
Movies on the subject on Netflix.
Inequality for All
Park Avenue: Money, Power and the American Dream
The One Percent
*** [4/25/14]
As a second-generation Irish American, I was a huge believer in the American dream as a kid. My parents quoted Walt Disney at the dinner table, and taught us that anyone could achieve whatever they wanted to in life, as long as they worked hard enough. Abraham Lincoln's rise from a one-room log cabin in Kentucky all the way up to the White House seemed to me like the perfect illustration of my parents' teaching.
It appears that my early faith in rapid social mobility in the United States might not have been entirely justified, according to a recent study. Gregory Clark, author of "The Son Also Rises: Surnames and the History of Social Mobility", has found that the pace of social mobility is much, much slower than we previously thought. According to his research, you may eventually succeed in raising the status of your family, but in some cases, it could "take 10 to 15 generations (300 to 450 years), much longer than most social scientists have estimated in the past."
Clark has conducted a rigorous analysis of surnames in order to track the rich and poor across the generations in England, the United States, Sweden, India, Japan, Korea, China, Taiwan, and Chile. Instead of just looking at one aspect of social mobility, he considers a wide array of factors such as wealth, income, occupational status, and education. His research focuses on surnames inherited by fathers because most of the societies he studied were characterized by this form of surname inheritance. Clark doesn't think the results would be any different by studying the matrilineal lines.
This is how he concisely summarizes his main thesis:
To a striking extent, your overall life chances can be predicted not just from your parents' status but also from your great-great-great-great grandparents'.While believing that success depends very much on individual effort, Clark's findings seem to indicate that "the compulsion to strive, the talent to prosper and the ability to overcome failure are strongly inherited."
*** [7/9/14] Blake's thread
[7/29/14] Read about this three generation rule in Ho'oulu 'Ohana Issue 04 2013 (which is a newsletter from First Hawaiian Bank Wealth Management Group. Don't see the issue online, but the above would seem to contradict this rule.
Anyway, here's an excerpt from the article.
In her role in wealth planning, [Jodene] Arakaki is aware of the problems families can run into that diminish their wealth across generations.
Issues arise when their is a lack of financial literacy, less emphasis on family values and differences in generational approaches to handling and managing wealth, she said, adding that each generation perceives money differently because of the experiences each has had with it.
"Those in the first generation were the creators of wealth," said Arakaki. "They are the immigrants who came to this country with hardly anything or the business owners who started their businesses from scratch. These individuals worked hard and made personal sacrifices to build that family wealth."
"The second generation may not have had it as hard as the first generation, but they at least witnessed what their parents went through. They had a chance to see the the struggle and sweat it took to get the family on track to a better standard of living. So the second generation understands what it took to build the wealth and is more motivated to preserve the family's wealth."
"The third generation is fortunate in that they grew up reaping the benefits of their hard-working family members before them," she said. "Because of this, they may not have the same perspectives or attitudes toward wealth as their parents or grandparents. Without a sense of the personal cost to build that wealth, some of them might spend it more freely."
[actually that makes sense to me]
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