Britain Risks ‘Crisis of Capitalism’ Due to Rising Inequality
(Bloomberg) -- Britain risks following the U.S. in terms of declining life expectancy and stagnant wages for the less-educated portion of the population if the causes of inequality go unchecked, according to a report.
The research, published Tuesday, forms the first part of a review into inequality chaired by Nobel Laureate Angus Deaton, which will ultimately provide a set of policy proposals to tackle inequality in Britain.
The findings are bound to fuel the debate over wealth disparities in the U.K., an issue that both Prime Minister Theresa May and opposition leader Jeremy Corbyn have pledged to redress after years of austerity and meager income growth.
“The deepening economic and social divides have led some to question whether inequality will lead to a crisis of capitalism,” the report, commissioned by the Institute for Fiscal Studies, said. “With support for populist candidates rising on both sides of the Atlantic, and on both sides of the political spectrum, some question whether inequality may pose a threat not just to capitalism but also to our democratic system.”
The share of income going to the top 1% of households in the U.K. has nearly tripled in the last four decades, while adjusting for inflation, the lowest-earning working households today earn little more than they would have in the mid-1990s. Figures also show that “deaths of despair” -- those from suicide, drug and alcohol abuse -- are rising among the middle-aged, while residents of less affluent parts of England have lower life expectancy
Declining membership in trade unions and growth in the gig economy are likely reducing workers’ bargaining power, the report said. Technological change and globalization are also driving forces of inequalities, according to the report, which also looked at disparities in geography, generations, and gender.
“I think that people getting rich is a good thing, especially when it brings prosperity to others,” Deaton said. “But the other kind of getting rich, ‘taking’ rather than ‘making,’ rent-seeking rather than creating, enriching the few at the expense of the many, taking the free out of free markets, is making a mockery of democracy.”
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