Inequality surges in world’s richest countries, esp. in times of crisis

Not only has social inequality risen in the industrialized nations over the past three decades, the economic crisis of 2008-09 sped up the deterioration as “pain of the crisis was not evenly shared,” a new report says.

The Organization for Economic Cooperation and Development (OECD), which unites the world’s most developed countries, has published an update to its report ‘Divided We Stand’. The report published in December 2011 showed that by 2008 the industrialized nations had the worst situation with inequality in three decades.

According to the new data, the gap between the rich and the poor in most of its 34 members has been getting wider since the crisis started at a higher pace than it did before. Inequality grew more over the three years between 2007 and 2010 than it did over the 12 years before that.

Among OECD countries, it appears that “the top 10 percent has done better than the poorest 10 percent in 21 countries,” with the widest gaps seen in the United States, Turkey, Chile and Mexico. In the three years described above, their income status had been continuously plunging by 2 per cent every year. 

A majority of the countries experiencing the harshest rise of inequality were in Europe, where tough EU austerity policies took hold. Italy and Spain were hit worst. However, a 5 per cent decrease was seen annually in Iceland, Ireland, Estonia and impoverished Greece – which still remains on the verge of economic collapse.

One factor shared by all 34 countries surveyed by the OECD is children and young people. Whether it is due to unemployment or poor family living standards, they appear to have it have the worst. 

“Households with children were hit hard during the crisis. Since 2007, child poverty increased in 16 OECD countries, with increases exceeding 2 points in Turkey, Spain, Belgium, Slovenia and Hungary.”

What makes the news grimmer is that cash injections into the world’s financial elite, via banks and markets, as well as Wall Street, essentially only helped the uppermost 10 per cent multiply their wealth. In the years since 2007, their financial portfolios are said to have grown by a large margin.   

But OECD’s data also explains that the economic crisis could not have been the sole factor in the widening gap between segments of society and in their redistribution of wealth. There has been a process that has been exploiting these economic conditions since 2008, via the bankrupting and impoverishment taking place in the developed world, most likely for the purpose of competing with the developing world’s working classes and their cheap labor. So there is a widening base of severely underpaid working class workers across the entire world. But they don’t get nearly the kind of social, economic or healthcare benefits the upper layers of society do.

In the end, it will not get better – the report says. The only reason that 2010 seemed like the worst year is because the growth of the conditions of inequality was somewhat halted by many social state provisions, mostly across Europe. Without them, the report says the real trouble we are in would be more evident, and so would its growth in the years to come. What we are seeing now is only the beginning.