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Every year, Oxfam releases an inequality report. And this year’s is a bombshell. It highlight the rise of a macro trend: hyper inequality. I’ll come to what the “hyper” means, in a moment, but first let me take you through a few of their key findings:
How bad is that? Even worse than you probably think. Let’s continue with some of Oxfam’s findings, before we discuss just why this research is so startling.
So billionaires are $3.3 trillion richer than they were just a few short years ago. How much is that? Now the part that begins to be startling. Let me put in perspective for you. That’s $10,000 for every American individual. Or $40,000 for every household in America.
Those are breathtaking numbers. Now you begin to see why I call it “hyper” inequality—the sheer magnitude of it is on another level. What could you have done with another $10,000? How about another $40,000 for your family? These stark levels of inequality are shocking, because…they make no real sense.
What do I mean by that?
The reason that I call this macro trend “hyper inequality” isn’t really just the scale of it. Rather, it’s all this unfolded during an historic cost of living crisis. Across the globe, households were squeezed. Making ends meet became a bitter, brutal struggle. Prices surged and interest rates skyrocketed, while real incomes fell—a triple blow that savaged the economy globally.
Oxfam puts that in an even sharper way: this immense rise in the wealth at the very top unfolded while 60% of the world got poorer.
That’s the real “hyper” in hyper inequality. You see, we economists perhaps gild the lily too much when it comes to inequality. We shade it too finely, sometimes. We speak of many different kinds—within countries, between countries, inequalities of wealth, of income. But above and beyond all those distinctions lies a larger trend, which is almost Dickensian in its sweep and power: the rich are getting mega richer, while the poor are getting poorer. Meanwhile, what little’s left of a stable, secure middle is having the life, optimism, and prosperity squeezed from it, the walls closing in.
“Hyper” inequality, in other words, means two kinds of inequality, dovetailing. The richest, amassing fortunes at stunning scales and speeds, eclipsing Rome, putting the Age of Empires in the twilight. Meanwhile, on the other end of the spectrum, those who struggle already are getting poorer. That’s a point worth thinking about, because often when we speak of inequality, we mean it in a far, far more benign way: sure, some are getting ahead, more and faster than others, but generally, the thought was, a rising tide would lift all boats.
Hyper inequality’s very, very different. It means that some are sinking—the majority. While a tiny few are building castles in the sky, if you like. Picture two lines diverging, and you get the picture. Benign inequality—10% of a society’s doing better than another 40% of it, who are still rising, but less slowly—is a different dynamic entirely. It points to far healthier economies, and has far less devastating consequences.
So why is all this bad? Well, you can certainly object morally. Oxfam does, calling for a fairer world. But it’s just the moral point that’s worth considering here, though of course failing to consider does raise the question of one’s conscience working at all.
This trend—hyper inequality—is incredibly bad for us as a civilization in every single way. And I mean that, emphatically.
Let’s begin with economics. Again, from Oxfam:
This is what economists call a “deadweight loss.” These titanic sums are just…lost. They don’t yield productive investment, at least not, certainly, in all the things that we desperately need as a civilization. What are those? Remember, we’re a civilization that still doesn’t know how to make food without fossil inputs, and then comes everything from concrete to steel to glass to plastic. The literal stuff of our daily lives—no idea how to manufacture it without fossil fuels. Now imagine what happens to our economies as climate catastrophe continues to strike. They go south, fast—even faster. The new estimates, which we’ve discussed, put half our economies at risk by 2070. That makes the Great Depression look like a fond memory.
So economically, these immense concentrations of wealth are a ruinous thing. Locking up all that capital in the hands of billionaires, who’d take hundreds of years to spend it—at the precise moment humanity’s at its greatest turning point? Not exactly a great idea, history will say, bewildered.
Then there’s society and politics. What do immense concentrations of wealth do? The problem in hyper inequality, like I said, is far more malign than in simple, everyday inequality. It’s one thing for the rich to get richer—it’s quite another for them to get richer while more than half the world gets poorer. Like I asked, what could your family have done with an extra…$40,000? That’s more than the American median income.
Here we see a clear link to another macro trend: stagnation and stagflation. It’s hardly a secret that rising prices have been half or more “greedflation,” and hence, the immense rise in the fortunes of the wealthiest. Again, during normal times? Maybe…acceptable…if greed is your thing. But in the teeth of historic crisis? What does all that do? It destabilizes societies.
As the global economy’s stagnated, masses have turned to authoritarian movements. A new wave of anti-democratic movements so severe is on the rise that this age is called “democracy under siege” by Freedom House, the world’s pre-eminent democracy think tank. Working and lower middle classes, especially, support demagogues around the globe, forging unbreakable bonds with, like Trumpism in America. Here we see the perverse face of hyper inequality. Demagogues like Trump promise liberation from the broken systems which let those below the median experience the brunt of global economic stagnation—all the while pocketing riches for themselves at every opportunity. Meanwhile, governments are slashing and burning social contracts, unable to provide people the basics—setting off a vicious spiral of stagnation set to last the decade and longer.
See how devastating that chain of consequences is?
Whenever we see such immense, forked-tongue inequality, we should expect sociopolitical destabilization. It’s hardly some kind of surprise—history paints it for us in titanic letter, from Rome to Versailles to Weimar Germany right down to, sadly, today, the wheel of folly turning once more.
Let me say something that needs to be said. Though criticism’s often politicized, this isn’t about politics in any way. It doesn’t make you a “communist” or a “radical” or anything of the sort to question all the above. I’ve taken the time to spell out the negative consequences of hyper inequality for you precisely because it’s a matter of common sense, reason, and empiricism, what’s self-evident. The more analytically and clearly we think, the more obvious it becomes how ruinous such yawning inequality is—and I haven’t even gone into the dismal statistics about how depressed and numb people feel this decade, or how social ties have ruptured: whole books could be written about, and have been, the Spirit Level being a particularly good one.
We see the effects of hyper inequality write large in history, and we see it in the world around us today, again, ominously.
It’s only fair to ask: what’s the point of a system like this? When this set of institutions, norms, and rules that we call modern day capitalism is producing this set of outcomes…has it gone off the rails? That doesn’t make you anti-anything, just pro common sense. What’s the logic or reason in more than half the world getting poorer, while just a tiny handful of people get so rich they could make every single average American household $40,000 better off? And when all that starves our civilization of the investments, energy, capital, that it needs to create tomorrow, avert climate catastrophe, all the while destabilizing societies, devastating democracy, and producing an authoritarian surge?
You see, all this is happening. I’m not making it up. Though our humdrum daily lives may go on, and like you, I certainly try to avoid the news, there’s no escaping this set of facts. All these macro trends are very real. So we’ve reached the point, as I often say, that we need paradigmatic reinvention. We need to think long and hard about the why of these systems, norms, values, institutions. What are they here for? Is it just…power? Control? Dominance? Surely we deserve better, and I mean that “we” in the biggest sense. History. The dead. Our ancestors. The unborn. The world around us. Our civilization. Those who’ll follow us.
We should be learning from our mistakes, my friends. That’s the essence of wisdom. And chief among our mistakes, right now, is hyper inequality, which futurity will surely regard as the fatal flaw in the way we worked, lived, and died.
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