p2pnet news view Politics | Freedom:- The gap between the rich and poor is growing ever wider in Europe and North America, says the Organization for Economic Cooperation and Development (OECD).

Its new study covering developments over 20 years in 30 countries says Mexico, Turkey and the USA have by far the worst inequality records, with Canada in the 11th position.

Luxembourg, Sweden and Denmark have by far the best.

Societies with a large gap between rich and poor, “face the threat of political power being confined to the hands of a few wealthy citizens,” says Are we growing unequal?

Inequality of incomes was higher in most OECD countries in the mid-2000s than in the mid-1980s and, “Only a few bucked the trend: France, Greece and Spain moved towards greater equality of incomes over the past 20 years,” says Are we growing unequal?.

This phenomenon continues, it says, going on the past five years saw growing poverty and inequality in two-thirds of OECD countries with Canada, Germany, Norway and the United States the most affected.

But, ‘”The remaining third — particularly Greece, Mexico and the United Kingdom — have seen a shrinking gap between rich and poor since 2000,” it emphasises, stating:

“This proves that there is nothing inevitable about these changes.”

The income of the richest 10% of people is, on average across OECD countries, nearly nine times that of the poorest 10%, says the study, going on:

“But the size of income differentials varies. In Mexico, the richest have incomes of more than 25 times those of the poorest and, in Turkey, the ratio is 17 to one. The income gap between rich and poor is also well above the OECD average in Portugal, Poland and the United States.

“But in Nordic countries, such as Denmark, Sweden and Finland, the gap is much smaller.

The incomes of the richest 10% average around five times those of the poorest 10%. A number of countries are bunched together around the OECD average.

This group comprises most of the English-speaking countries (Canada and the United Kingdom, for example) and some Southern European nations, such as Greece, Italy and Spain.”

Nor, stresses the OECD, does it follow that poor people in rich countries are always better off than their counterparts in lower income countries.

“For example, the poorest 10% in Sweden have incomes 1.5 times the level of the poorest 10% in the United States even though average incomes are higher there,” it states.

In summary:

• The gap between rich and poor and the number of people below the poverty line have both grown over the past two decades. The increase is widespread, affecting three-quarters of OECD countries. The scale of the change is moderate but significant.
• Income inequality increased significantly in the early 2000s in Canada, Germany, Norway and the United States. But incomes in Greece, Mexico and the United Kingdom became more equal.
• The rise in inequality is generally due to the rich improving their incomes relative both to low- and middle-income people.
• Older people are much less likely to be poor than they were in the past. Poverty has shifted from pensioners to young adults and families with children.
• Demographic change – fewer babies, longer lives – explains some of the increase in inequality, mainly because it increased the number of single-adult households.
• Social change – especially the greater prevalence of lone parents – has had an important effect on inequality.
• The gap between the low- and high-paid has grown in most OECD countries. As with incomes, this is mainly driven by the high-paid pulling away from low- and middle-earners.
• There are now more people in employment than there were 10 or 20 years ago, which reduced the effect of higher earnings inequality on growth in household-income inequality. Nonetheless, there remain large pockets of joblessness among people with few skills and educational qualifications, which further blunted the impact.
• Incomes from capital and self-employment are very unequally distributed, and have become even more so.
• Work reduces poverty: almost six times as many jobless families are below the poverty line than working families.
• Work alone is not sufficient to avoid poverty: more than half of poor people live in households where one or more members are in work.
• Public services, such as education and health, are distributed more equally than income. Adding the cost of these services to the incomes of their recipients reduces inequality.
• Because the poor spend more of their income while the rich save some of theirs, indirect taxes (on goods and services) widen inequality.
• Household wealth is distributed much more unequally than income.
• Societies with greater income inequality also have less mobility: earnings of sons are closer to those of their fathers. More equal incomes go hand-in-hand with greater earnings mobility between generations.

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This entry was posted on Saturday, October 25th, 2008 at 10:28 am and is filed under Freedom, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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