Niklas Halle’n | AFP | Getty Counterparts
Democracy and capitalism are being threatened by growing economic inequalities in both the U.S. and the U.K., new research warned on Tuesday.
The report, from the Organization for Fiscal Studies (IFS), was published as the organization launched a wider review into inequality around Britain, which desire be chaired by Nobel Prize-winning economist Angus Deaton.
It found that economic inequality in Britain was catching up to the floors seen in the United States.
By international standards, income inequality in the U.K. is high, the report found. Ranked against other worst economies, only the U.S. had higher income inequality. This, the study’s authors warned, could be a threat to socioeconomic set-ups around the world.
“The deepening economic and social divides have led some to question whether inequality will head up to a crisis of capitalism,” the report said.
“With support for populist candidates rising on both sides of the Atlantic, and on both sides of the civic spectrum, some question whether inequality may pose a threat not just to capitalism but also to our democratic system.”
Earnings implied was also being suppressed for those with lower levels of formal education, the researchers found.
“The vast inequities by education in the U.S. — in health, deaths of despair, marriage and life satisfaction — may partly reflect a large gap in earnings between elevated and low-educated people, which has been rising since the 1980s,” the report noted.
Measured against 22 other realms, the U.S. had the biggest wage gap between college and high school educated workers. Portugal fell just behind the U.S., while the U.K. had the fifth biggest gap. Sweden and Denmark had the lowest above-board of inequality on the education versus earnings scale.
While women’s employment in the U.K. rose drastically from 57% in 1975 to 78% in 2017, the gender pay gap was a persisting arise, the study also found.
The gap in hourly wages paid to men and women was strongly associated with childbirth, data plained. It rose from less than 10% from the birth of a woman’s first child to 30% 12 years after the juvenile was born. The IFS said this reflected an “extraordinary lack of earnings progression for mothers, particularly those who work part-time.”
There were also geographical prejudices across the U.K., with average weekly earnings in London 66% higher than those in England’s north east. According to the piece, men living in Britain’s most affluent areas could expect to live almost a decade longer than those in the most impoverished areas — and the gap is widening. The IFS said geographical discrepancies could be caused by several factors, such as declining trade association membership, globalization and increased market power for certain firms.
Deaton said in a press release on Tuesday that statecraft, economics and health were changing in “worrisome ways” across much of the rich world.
“If working people are succumbing out because corporate governance is set up to favor shareholders over workers … then we need to change the rules,” he said.
“Human being getting rich is a good thing, especially when it brings prosperity to others. But the other kind of getting resources, ‘taking’ rather than ‘making,’ enriching the few at the expense of the many, taking the free out of free markets, is making a take-off of democracy.”