Income inequality’s pitchfork in the road

Posted on in Equality Policy Context

TorontoSun.com – Opinion/Columnists
March 17, 2015.   Glen Pearson

The recent meeting of the global financial elite at the World Economic Summit in Davos, Switzerland, carried its usual flair for opulence, yet one group became the fly in the ointment.

Oxfam International chose that occasion to release a new study showing that, as of next year, more than half the world’s wealth will be owned by the top 1% of individuals. It was a staggering claim and hinted that the economic order we have known and which has sustained the West for decades could be coming to an end.

Oxfam’s presentation little affected the great gathering and yet a growing number of global economists are arriving at similar conclusions. To the traditional voices of the Dalai Lama, Pope Francis and U.S. Senator Elizabeth Warren, can be added the powerful input of economists such as Joseph Stiglitz, Paul Krugman and Thomas Piketty, speaking out about the dangers of financial inequality posed by the current global financial order.

And then there is the compelling case of Mark Carney. The noted former head of the Bank of Canada recently transferred his talents to Britain in order take on the role of the Bank of England’s governor.

Speaking in his usual competent and low-key manner, Carney last year told an elite audience at England’s Guild Hall that they were getting things wrong. It wasn’t what they were expecting.

“Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital for the long term dynamism of capitalism itself,” he began. Discomfort in the crowd was readily apparent, but he wasn’t nearly finished.

He spoke about how affluent nations had subtly morphed from being market economies to market societies and how it was changing the course of democracy for the worse. Any time citizens in general develop a growing distrust of the merits of the financial order, it’s just as bad for capitalism as it is for politics.

The interesting thing about Carney’s speech was the reaction of the audience. They remained silent, uncomfortable, but obviously having a sense of foreboding, given the speaker’s credentials and history.

Then Carney pivoted and started talking about people like you and me.

“Prosperity requires not just investment in economic capital, but investment in social capital,” he reasoned.

He went on to talk about how financial investors had to watch over and safeguard the “links” in society — those shared values and beliefs that encourage individuals to take responsibility not only for themselves and their families, but also for others. Modern capitalism was overlooking those links, he claimed, and the human and political fallout was enormous.

The Bank of England’s governor closed off by reminding his audience that human beings matter. He found it ironic that while real poverty was slowly being reduced in the developing world, it was growing to alarming levels in the developed world — those nations where capitalism has had its greatest influence.

Increasingly, Carney’s view is shared by the financial elite, not just with economists, but also with the wealthy themselves.

Nick Hanauer, a billionaire who helped start the Amazon empire, put it plainly:

“If we don’t do something to fix the glaring inequalities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this didn’t see the pitchforks eventually come out.”

Glen Pearson is co-director of the London Food Bank and a former Liberal MP.   < glen@glenpearson.ca >

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