OECD: Income inequality has reached record highs in most OECD countries

[ElNono]

21/05/2015 - Income inequality has reached record highs in most OECD countries and remains at even higher levels in many emerging economies. The richest 10 per cent of the population in the OECD now earn 9.6 times the income of the poorest 10 per cent, up from 7:1 in the 1980s and 9:1 in the 2000s, according to a new OECD report.

In It Together: Why Less Inequality Benefits All also shows that wealth is even more concentrated at the top than income, exacerbating the overall disadvantage of low-income households. In 2012, the bottom 40% owned only 3% of total household wealth in the 18 OECD countries with comparable data. By contrast, the top 10% controlled half of all total household wealth and the wealthiest 1% owned 18%.

“We have reached a tipping point. Inequality in OECD countries is at its highest since records began,” said OECD Secretary-General Angel Gurría, launching the report in Paris with Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility. “The evidence shows that high inequality is bad for growth. The case for policy action is as much economic as social. By not addressing inequality, governments are cutting into the social fabric of their countries and hurting their long-term economic growth."

The report highlights the need to address working conditions. The increasing share of people working part-time, on temporary contracts or self-employed is one important driver of growing inequality. Between 1995 and 2013, more than 50 per cent of all jobs created in OECD countries fell into these categories. Low-skilled temporary workers, in particular, have much lower and instable earnings than permanent workers.

Youth are most affected: 40% are in non-standard work and about half of all temporary workers are under 30. They are also less likely to move from a temporary job into a stable permanent one.

Another key lesson from the report is that more needs to be done to reduce the gender gap. The increase in the number of women working has helped stem the rise in inequality, despite their being about 16% less likely to be in paid work and earn about 15% less than men. If the proportion of households with working women had remained at levels of 20 to 25 years ago, income inequality would have increased by almost 1 Gini point more on average.

Beyond its impact on social cohesion, the report stresses that growing inequality and weak opportunities in the labour market are harmful for long-term economic growth. The rise in inequality between 1985 and 2005 in 19 OECD countries analysed is estimated to have knocked 4.7 percentage points off ulative growth between 1990 and 2010. In fact, it is inequality affecting the bottom 40% which mainly brings down overall growth. As inequality rises, families with lower socio-economic background experience significant falls in educational attainment and skills, implying large amounts of wasted potential and lower social mobility.

Inequality is highest among OECD countries in Chile, Mexico, Turkey, the United States and Israel and lowest in Denmark, Slovenia, Slovak Republic and Norway. Inequality is even higher in major emerging economies although it has fallen in many including Brazil.

To reduce inequality and boost inclusive growth, the OECD says governments should: promote gender equality in employment; broaden access to better jobs; and encourage greater investment in education and skills throughout working life.

Redistribution via taxes and transfers is also an effective way to reduce inequality. In recent decades, the effectiveness of redistribution mechanisms has been weakened in many countries. To address this, policies need to ensure that wealthier individuals, but also multinational firms, pay their share of the tax burden.

The full report and individual country notes for Australia, Canada, Chile, France, Germany, Italy, Japan, Mexico, Netherlands, Spain, United Kingdom, United States are available here: http://www.oecd.org/social/in-it-tog...4235120-en.htm


source: http://www.oecd.org/social/reducing-...inequality.htm
OECD info: http://en.wikipedia.org/wiki/Organis...nd_Development

[pgardn]

https://www.yahoo.com/politics/what-...490857141.html

First, we should recognize that neither party is giving us an especially accurate accounting of what’s happened over the last 20 years. Government hasn’t, in fact, throttled economic growth, as conservatives maintain that it has; incomes rose sharply under an activist administration in the ’90s (and under a Republican administration that raised taxes several times) while falling off a cliff under an administration that slashed taxes and regulation.
While the inequality cited by Democrats is real and pervasive, Shapiro’s data shows us that this is really a symptom of a larger structural problem in the economy, rather than the problem itself. Inequality was rising in the ’80s and ’90s too, when most Americans were getting richer and the wealthiest earners were outpacing everyone else. Inequality seems more acute now mainly because while the wealthy continue to soar, college-educated workers are barely gaining, and everyone else has been in free fall.
Second, in an era that has already given us the tea party and Occupy Wall Street, we should understand just why Americans are so angry at their political system. And we should face the reality that the longer this economic trend continues, the more unhinged our politics will likely become, as voters search for scapegoats and easy answers.




As a science guy I find economics very unsatisfactory and frustrating as it relies on the supposed rational behavior of humans during specific economic scenarios. You have different economists cherry picking their scenarios and the rational behavior that their very fallible people should exhibit.

And then emphasizing different economic periods and trade deals that back their preconceived notions as the model for unrelated times and history. It's a mess IMO. The more I read, the less confident I become in the real data, problems, and then we think we can provide solutions...

Amazing. But interesting.

[ElNono]

I'm really past the "who's responsible" stage, as both parties had ample time in government to do something about it, but largely have not. I'm not sure what the solution is to this problem, but I suspect rulings such as Citizen's United doesn't help.

[boutons_deux]

I'm really past the "who's responsible" stage, as both parties had ample time in government to do something about it, but largely have not. I'm not sure what the solution is to this problem, but I suspect rulings such as Citizen's United doesn't help.

one biggie is uncontrolled capital flows introduced in "free trade" globalization agreements, allowing BigCorp and wealthy to slosh their $Ts around the globe chasing a few extra % in return, creating national bubbles as long as the return is satisfactory, creating bubble-popping disasters for the 99% when the $Ts withdraw to somewhere else, all the while avoiding and evading taxes.

another is pitting a wealth countries' workers against a poor countries' sweat shop slave laborers

globalization as legalized in NAFTA, CAFTA, and now TPP/TTIP are main causes

BigCorp and the 1% wealth can hire the expertise to minimize their taxes, which includes buying politicians to pass laws and regulations in their favor.

certainly when US Congress reduces taxes on the wealthy, they are voting THEMSELVES less taxes, as most of them are multi-millionaires.

[ElNono]

Tax evasion through loopholes is certainly an ongoing issue that neither party seem to have the stomach to tackle. They're not even unknown schemings, you can read up on "double-irish" and the like everywhere now.

[boutons_deux]

your buddies the Repugs created the "carried interest" loophole in the 80s.

Hedge Fund Manager Compares Paying More Taxes to the Holocaust

http://www.alternet.org/hedge-fund-m...ter1036748&t=9

... which hilarious since many hedge fund managers are Jews.

[ElNono]

Nobody is "happy" to pay taxes. But the rules should apply evenly, and right now, they do not.

[TDMVPDPOY]

in certain parts of asia, rich get richer as in politicians or anyone who have these turds on t heir payroll

income growth is stagnate, while inflation or costs of living has increase where people are just getting by or eating

as for the chinese currency why its pegged against every currency? when u have 1b+ monkeys, u need to create jobs t o keep them happy...keeping the yuan low for low labor costs to attract foreign investment...

[pgardn]

I'm really past the "who's responsible" stage, as both parties had ample time in government to do something about it, but largely have not. I'm not sure what the solution is to this problem, but I suspect rulings such as Citizen's United doesn't help.

The ideologies fit the prescribed medicine. From what I gather the possible solutions could go against what feels right. Boots has a simple tax the wealthy and redistribute. This maybe exactly wrong from what might be a solution. The solution is not clear, but people would like it to be.

I have a place in my thinking for risk takers as being valuable assets. There are clearly people who settle into an economy and fill a spot that should not even be there. Even in the private sector, there are people who get lost in the layers and just extract money doing nothing (these can be very wealthy people). Because I am more familiar with small business it is clear to me it's much more difficult to hide. And of course there are many middle man businesses that thrive on being a false bridge between the real movers. Then there are those that don't even have the means to participate in an economy. And those that pretend they don't have the means.

The above barely scratches the surface, but it's what I think about.

I also feel I am a bad consumer. I don't care much about the big ticket items: house, cars, boats, restaurant every meal, fancy man cave electronics... I enjoy buying stuff associated with very simple sports. I am not valuable to an economy as a consumer. So even though I think I help create products, I don't spend enough of what I make because I have hobbies and behaviors that are not conducive to a good economy. I Do spend a bunch on travel, but that's it. I am bad for an economy. I also volunteer time, which may take away from people who could make money off what I volunteer for.

[ElNono]

I think one of the unintended (or intended?) consequences of moving fully into a services economy as opposed to a manufacturing economy is the exacerbation of the rentier model. Every unit of production is now licensed (rented) out multiple times instead of sold, there's minimal value transfer there (when you used to buy a big machine or even a big software package, you could list it as one of your assets. Not so when you're simply licensing/renting).

With the rent revenue stream, there's less incentive to innovate and create new products. You're also protected for the duration of whatever patent you might have on such product.

You even see it nowadays even with physical goods, like cellphones. All those programs where you can pay a monthly fee to upgrade your phone at any time (by first returning your current phone).

[boutons_deux]

"Boots has a simple tax the wealthy and redistribute."

You Lie