Day 9 — Why do we Hate the Rich?
The Champagne Glass effect clearly demonstrates how the richest 20% of the global population own over 80% of world income, whereas the poorest 20% own less than 1.5% of it. This is just one of many ways to explain the inequality we live in, and why many believe the rich could do more for the whole society…
The gap between the rich and the poor
Looking at a worldwide level, inequality is declining mainly due to some poor countries emerging fast, for example China. Before 1978, there were no Chinese billionaires; then by 2017, they were making two new billionaires a week.
There is even a gap between billionaires: 94% are worth less or equal to $10bn; 5% worth from $10bn-$30bn; and 1% worth $30bn or more. Most of these are from technology-related industries (e.g. Amazon, Facebook…).
13% of billionaires have inherited their wealth whilst 56% are self-made billionaires; and 30% (out of all billionaires) work to grow their wealth.
Kleptocrats are politically-connected people who get rich off a country’s natural resources (e.g. the near-100 Russians after the Soviet Union), people who started off lower-middle class or even poor, and worked their way up usually through corruption.
Why inequality is such a problem for society
Inequality can lead to various kinds of issues for both the economy and the society.
One of them is that it links quite closely with crime, obesity, mental health issues and more. For example, an LSE study from 2016 found that neighbourhoods in the US where income gaps were most obvious, there was a higher rate of property crime. This could be because the relatively poor would constantly be in contact with the relatively rich, causing for an incentive to steal. Sometimes it doesn’t even have to be between the clearly rich and poor (such as the inequality seen in Mumbai, India) because if your living standards are in any way below the living standards of those surrounding you, you are still seen as ‘poor’ — regardless of the fact that your quality of life is much better than that of others around the globe.
Another issue is that the education of many are affected. For children living in poor socio-economic situations, there are less opportunities for them to grow in their employability skills and social mobility. The OECD conducted a study where they found that children from the poorest 40% of households are currently missing out on educational opportunities, which are usually expensive. Therefore, a child may be potentially creative and intelligent, however would still be disadvantaged due to lack of evidence of how productive they could really be, and work somewhere with low wages, causing a decrease in economic participation and growth. And this does not just affect the poor, but also the rich: those who are self-made rich would lose out on potential clients as they cannot afford these products.
