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

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

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

UN agencies call for more resettlement and end to detention of asylum seekers in Libya

6th Edition of India m2m + iot Forum to open its door on 14th January, in association with The European Sting

Top UN political official updates Security Council on Iran nuclear deal

Mozambique cyclones a ‘wake-up call’ to boost resistance: UN weather agency

MEPs and European Youth Forum call on EU to Invest in Youth

Ebola Outbreak in Democratic Republic Congo is ‘largely contained’: WHO

Security Council urges countries to factor child protection into conflict prevention efforts

“Asia-Pacific takes stock of ambitious development targets”, written by the Heads of UNFPA and ESCAP

‘We are nowhere closer’ to Israeli-Palestinian peace deal, than a year ago, Security Council hears

How populist and xenophobic movements in the EU tear apart European businesses and startups

Eurozone stuck in a high risk deflation area; Draghi expects further price plunge

A third of world’s out-of-school youth live in conflict, disaster-affected countries: UNICEF report

CHALLENGING THE ZEITGEIST OF DIGITAL – Change making projects innovate mobile support for refugees, inclusive environments, early breast cancer detection and more

From glass ceiling to glass cliff: women are not a leadership quick-fix

Wednesday’s Daily Brief: mental health, conflict prevention, Ebola in Uganda, Sudan protests, child labour

Hundreds of wounded Gaza protesters risk limb amputation without immediate help, warns top UN official

New York high school students are getting free water bottles to cut plastic waste

Gender disparity in salary and promotion in medicine: still a long way to go

New Report Offers Global Outlook on Efforts to Beat Plastic Pollution

Winter 2019 Economic Forecast: growth moderates amid global uncertainties

MEPs urge the EU to lead the way to net-zero emissions by 2050

This new way of understanding disease is changing medicine

JADE Handover Ceremony at the European Parliement

Service Engineer Intern – 1991

Berlin wants to break South’s politico-economic standing

Sudan: UN chief deplores excessive force used against pro-democracy protesters, calls on military and civilian leaders to ‘stay the course’ in negotiations

Press conference by EC Vice-Presidents Valdis Dombrovskis (left) and Jyrki Katainen, on the Commission's proposals in the framework of the financial union (Source: EC Audiovisual Services / Copyright: EU, 2018 / Photo by Georges Boulougouris)

EU Finance ministers agree on new banking capital rules and move closer to Banking Union

‘The clock is ticking’ on meeting the Sustainable Development Goals, says UN deputy chief

UN chief urges Somalis not to be ‘deterred’ by latest deadly terror attack

Better ID card security to curb document fraud

Four lessons from Africa on building effective business ecosystems

The importance of exchanges for the medical students of the world

Q and A on the draft digital copyright directive

The European Parliament wants to stay in one place

The Brussels bureaucracy blocks the Youth Guarantee scheme

An expert in the South China Sea issue on an exclusive interview at the European Sting

How smartphones can close the global skills gap for billions

Here are 4 ways investors can influence more secure and responsible innovation

Our children’s career aspirations have nothing in common with the jobs of the future

Populist Eurosceptics helped by Trumpists seriously threaten the EU edifice

EP President praises Nobel Peace Prize award to Denis Mukwege and Nadia Murad

These are the world’s 20 most dynamic cities

Reflections on the the biggest refugee crisis since World War II

Companies have a new skill to master – innovation

Terrorist content online should be removed within one hour, says EP

More needs to be done to bridge the digital gender divide

Trump rejects Europe’s offer for zero car tariffs; he had personally tabled that idea in July

Khashoggi murder trials must public and meet international standards, UN expert urges

Medschool 4.0: how to succeed in the smart revolution of healthcare

EU sets ambitious targets for the Warsaw climate conference

Antibiotics are contaminating the world’s rivers

FROM THE FIELD: Liberia boosts efforts to guard against rising seas

Amsterdam is getting a 3D-printed bridge

EU Parliament: ECB accountable for not supporting real economy

FROM THE FIELD: Stopping aquatic hitchhikers to safeguard environments at sea

A skills gap is jeopardizing efforts to end energy poverty

Migration crisis, a human crisis after all

Parallel downfalls of Merkel and Deutsche Bank threaten Germany and Europe

5G mobile is nearly here – but we should share networks to make it affordable

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