Income inequality threatens the socio-political structures in developed countries

Christine Lagarde, Managing Director of the International Monetary Fund (IMF), and José Manuel Barroso President of the European Commission (in the background, from left to right). 1st High Level Political Forum on Sustainable Development (HLPF) under the auspices of the 68th session of the United Nations General Assembly (UNGA). (EC Audiovisual Services, 24/09/2013).

Christine Lagarde, Managing Director of the International Monetary Fund (IMF), and José Manuel Barroso President of the European Commission (in the background, from left to right). 1st High Level Political Forum on Sustainable Development (HLPF) under the auspices of the 68th session of the United Nations General Assembly (UNGA). (EC Audiovisual Services, 24/09/2013).

Christine Lagarde, Managing Director of IMF, is not renowned for her social concerns and sensitivities. Yet, while speaking last week at the National Press Club, in Washington DC, about “The Global Economy in 2014”, among other important policy proposals for the world to exit the era of the “seven weak years”, she didn’t forget to cite the increasing inequality of income distribution as a major threat to socio-political stability, even sustainability.

She concluded that, “This all (observations – recommendations), points to one thing: the need to stay focused on the policies needed for sustainable growth and rewarding jobs, which in the end are needed to make everybody better off”. She also had a negative paradigm of unequal distribution of incomes, the USA economy: “in the United States, 95 percent of income gains since 2009 went to the top 1 percent. This is not a recipe for stability and sustainability”.

Unsustainable inequality

However, the same is true for this side of the North Atlantic Ocean. In Eurozone the last five crisis years have led to a marked deterioration of the income distribution curve and the ‘gini coefficient’ which measures inequality. This is especially true for the countries hit by the crisis and obliged to implement severe austerity policies. For example in Spain, the largest country of Eurozone with liquidity problems, this coefficient which measures income inequality, rose from 31.9 in 2008 to 35 in 2012.

No doubt the IMF has a more long term and complete picture of the word economy. Its managing director said “One of our strengths is that we have to look at the bigger picture – how all the moving parts fit together, how what happens in one country affects the wider global economy”. This is exactly the motive that put the inequality argument in her mouth.

In Greece, Italy, Spain, Portugal and elsewhere in the Eurozone the democratic system cannot stand any more austerity measures. The key point is that those measures, being either wages or social benefits cuts or tax increases, cannot be applied just because Berlin and Brussels want it. Fortunately, they have to be approved by the national parliaments. In countries where democratic institutions are well established and divergence from the democratic rule of law is not an option, the deterioration of the income distribution may lead to dead-ends.

An EU without Britain and Greece?

In cases like this, it’s not only that growth is out of question but even the standard economic activities are been obstructed by social and political uncertainties. It was not by chance that a fascist inclination party, the Golden Dawn, was catapulted in the third place of the Greek party system and gained in a very short time a position of national prominence, after a long time in the margins of law and recognition. The same severe austerity policies sent a marginal left wing party, SYRIZA, into the first place of preferences as expressed in polls and positioned it as major opposition in the Greek legislative. As Lagarde said, increasing inequality “is not a recipe for stability and sustainability”.

Unfortunately, Europe is stepping backwards on this path. The ‘petty jobs’ arrangement in Germany has deprived regularly working people of the ability to support a decent living. All over Europe an increasing number of workers live in the margins of social life unable to support a family. This is almost the rule in the south of Eurozone where more than half of youths are jobless. Even when at work their remuneration doesn’t permit them to support themselves in independent living outside the parental foyer.

All in all, democratic deficit or not, it seems that parliamentary democracies in Europe cannot support more deterioration of labour and social protection. The US, with their bi-party political system seems to be able to withstand more inequality than Europe. The EU has obviously reached its limits on this account. European south and north countries alike are now at risk of a political disintegration. Wealthy and impoverished EU member states face similar political dead-ends with the rise of extreme parties on both ends of the spectrum like the UKIP and SYRIZA. It’s more than certain that, if the present economic policies continue, the very existence of the EU itself may be at risk. Who can imagine a European Union without, Britain, Greece and Italy?

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Making money from meeting the SDGs? An overarching approach to sustainable development.

“BEUC cautions against TTIP that would seek to align EU and US chemicals management frameworks”

China Unlimited and the Chinese dream

Google strongly rejects EU antitrust charges and now gets ready for the worst to come

A Sting Exclusive: “The challenge of Society’s digital transformation”, Spanish Minister of Spain for Industry, Energy and Tourism José Manuel Soria live from European Business Summit 2015

Brexit: No deal without marginalizing the hard Tory Eurosceptic MPs

Merkel: Nationalism and egoism must never have a chance again in Europe

OECD joins with Argentina to fight financial crime

The refugee crisis as a young Nigerian doctor sees it

3 charts to help you understand the American shale boom

UK: Crawley group wins European Citizens’ Prize

Rising landmine blast toll in Afghanistan highlights long-term care needs of survivors

EU-Western Balkans summit in Sofia

Trump’s MAGA policy remains unchanged as EU warns to impose additional retaliation tariffs on US products

Have Europe’s Ukrainian wounds begun to heal?

Brexit talks stalled at launch; issues with European Court’s authority in Britain

What happens when the Eurogroup decides to help Greece

Berlin wants to break South’s politico-economic standing

VW diesel scandal and climate change: can increased independent car checks lead to cleaner mobility?

At last Britain considers a super-soft Brexit

Libya: ‘Substantial civilian casualties’ in Derna, UN humanitarian chief ‘deeply concerned’

Sanctions on Russia to be the biggest unity test at this European Council

Europe and UN form bulwark against ‘might makes right’ worldview, EU foreign affairs chief tells Security Council

A machine din

Hostages to a rampant banking system

UN chief welcomes re-opening of key Gaza border crossing

Report on EU trade defence – effective protection against unfair trade

New rules to help consumers join forces to seek compensation

Yemen: Major UN aid boost for ‘up to 14 million’ as country risks becoming a land of ‘living ghosts’

Quality Education on the table at the European Parliament

The Commission tries to stop the ‘party’ with the structural funds

UN launches drive to highlight environmental cost of staying fashionable

INTERVIEW: ‘Defend the people, not the States’, says outgoing UN human rights chief

The UK to split if May’s hard or no-deal Brexit is pursued

UN General Assembly President defends ‘landmark’ migration compact

The Juncker Plan at work: bringing investment back on track in Europe

Local innovation, international impact: SMEs and the ITU Telecom World Awards

COP24: Huge untapped potential in greener construction, says UN environment agency

Three myths keeping government procurement stuck in the past

Sahel States need international support ‘now more than ever’– UN peacekeeping chief

Why strive for Industry 4.0

This project in India helps people and tigers co-exist peacefully

UNICEF warns of ‘lost generation’ of Rohingya youth, one year after Myanmar exodus

Algeria must stop arbitrary expulsion of West African migrants in desert: UN migration rights expert

Commission proposes fishing opportunities in the Atlantic and North Sea for 2019

Rule of Law: The Commission opens a debate to strengthen the rule of law in the EU

Impacting society with digital ingenuity – World Summit Award proclaiming the top 8 worldwide

Berlin favours economic and social disintegration in certain Eurozone countries

Making the most of the Sustainable Development Goal 3: its overlooked role in medical education

European Citizens’ Initiative: Commission registers ‘Mandatory food labelling Non-Vegetarian / Vegetarian / Vegan’ initiative’

Oh, well, you are wrong, Google responds to the European Commission

COP21 Breaking News_05 December: Children Will Bear the Brunt of Climate Change: UNICEF

3 ways to nurture collaboration between universities and industry

Modern farming is harming the planet. Tech-driven permaculture could heal it

European Business Summit 2013: Where Business and Politics shape the future

EU Summit/Migration: Parliament calls for joint solutions based on solidarity

China is building 8 new airports a year

EU Budget: InvestEU Programme to support jobs, growth and innovation in Europe

‘Power is not given, power is taken’, UN chief tells women activists, urging push-back against status quo

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s