The Shifting Form of Economic Inequality

The past President of the United States arguably the most political savvy personality with the meteoric rise to the White House, from the background of seven unremarkable years at the Illinois Senate. Barack Obama is well recognized for making “revolutionary” speeches to tens of thousands of adoring crowds on his agenda of change. Obama once called the economic inequality “the defining challenge of our time”. Did the Obama administration really have the formula to the best way to tackle inequality?

The renowned US Historian, Michael Beschloss once described Barack Obama as “Probably the smartest guy ever to become President.” There was no doubt Obama was eager to secure his place in history amongst the Giants. Obama has grandiose intent to leave his legacy in solving the worst financial crisis since the Great Depression, withdrawal from the War in Iraq, reconcile the United States to a less dominant role in the world. And above all, this is the President who wants to be “transformational” by putting millions of American back to work, redistribute wealth and reducing economic inequality as the top of his domestic and global agenda. Judging from the figures, Obama failed spectacularly! Globalization under his presidency had witnessed further widening of rich-poor divide and spelled the worst Economic disparity in history.

The irony is that Obama’s vision for the reduction of Economic Inequality is modeled against Ronald Reagan. In an interview with Reno Gazette Journal, Obama confessed: “I think Ronald Reagan changed the trajectory of America in a way that Richard Nixon did not and in a way Bill Clinton did not. He put us on a fundamentally different path because the country was ready for it.” He added: “I think they felt like with all the excesses of the 1960’s and 1970’s and government had grown and grown, but there wasn't much sense of accountability in terms of how it was operating.” Obama concluded: “Reagan just tapped into what people were ready feeling, which was we want clarity and optimism. We want a return to that sense of dynamism and entrepreneurship that had been missing!”

There is little doubt Reagan and Thatcher changed the trajectory of America and the rest of the world. The 1980’s economic liberation, deregulation and decline of the union, arguably was the very beginning of Economic Inequality in modern times. The 2015 study conducted by International Monetary Fund (IMF) also echoed the findings of the decline of unionization and neoliberalism in 1980’s indeed fuelled the unstoppable rise of the Economic Inequality.

The alarming signs of economic inequality were already apparent at the dawn of the Millennium. The World Institute for Development Economics Research at the United Nations University reported the richest 1% of adults alone owned 40% of global assets, and the three richest people in the world possess more financial assets than the lowest 48 nations combined in year 2000. The trend continued to worsen exponentially, as the combined wealth of the “10 million dollar millionaires” inflated to nearly $41 trillion by 2008. Last year, Oxfam revealed data citing the wealthiest 1% owning more than half of the global wealth.

Indeed, the widening income gap has become an issue that generated clouds of uncertainty globally. At the eve of this year’s World Economic Forum in Davos, Oxfam again published the report on “An economy for the 99 percent”. The rich poor divide is far greater than had been feared, as the headlines read “Eight richest men in the world own the same wealth as the 3.6 billion people who make up the poorest half of humanity”. The charity detailed how the elites are fueling the economic inequality by influencing politics, tax avoidance and driving down the wages. As usual, this raised the condemnations that the elites who are advocating changes in Davos are “all talks and no actions”, as they only cements the power of bankers, industrialists, technocrats and politicians serving the common interests: their own!

Davos, the picturesque Swiss mountain resort nestles in the pinnacle of Eastern Alps is often known as the highest town in Europe. Of course, for the rest of the World, Davos is better known for hosting the World Economic Forum (WEF), an annual gathering of global political and business elites at the end of every January. The meeting has attracted some crème de la crème of business leaders, politicians, economists, and industrial giants for years, brainstorming pressing issues facing the world since 1971. The mission of this nonprofit foundation is cited as “Committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agenda.” After nearly five decades of championing global issues such as Economic Inequality, wealth management, globalization, international conflicts and environmental catastrophes, has Davos achieved what it set out to do?

In fact, the notion that Davos had little positive influence on economic inequality was supported by a 2015 study published in the Journal of Commercial Research, concluding WEF do not have significant socio-economic impact on issues of poverty, debt and wealth distribution, as the solutions are never agreed upon and responsibilities often shifted back to the affected.

To be fair, the recurring theme in Davos over the last decade has been the echoes of concerns with the threats of economic inequality. Such phenomenon is defined as the disparity of economic wellbeing amongst individuals in groups, populations or countries. However, many would also argue, Davos 2017 finally would go down in history of as the game changer that generates the paradigm shift in the landscape of world economy. For the first time, the sparse US heavyweight representation is anything but, business as usual for the World Economic Forum. The change that took the limelight was undoubtedly the attendance of the Chinese President and his 200-Strong delegations. In his opening plenary statements that drew over-spilled crowds, Xi began by the acknowledgement that “Davos is the important pulse of global economy.” His speech was greeted with quite a stir, when Xi cited a quote from Charles Dickens describing the world after the Industrial Revolution as “It was the best of times, it was the worst of times”. He continued: “Today, we lived in the world of contradictions. On the one hand, with growing material wealth and advances in science and technology, human civilization has developed as never before. On the other hand, frequent regional conflicts, global challenges like terrorism and refugees, as well as poverty, unemployment and widening income gap have added to the uncertainties.” So, with the rising Chinese dominance in world stage, will this be the best of times or worst of times for the future of economic inequality?

#GlobalizedIssues