For years I have been trying to convince my wealthy friends that growing income inequality is inimical to their self interests. My “it’s in your self-interest to reduce income inequality” arguments usually take two forms: 1) Too much income inequality adversely effects economic growth; and 2) Too much income inequality is adversely related to a stable and orderly society, leading in the extreme to social unrest, governmental collapse and violence. In other words, income inequality can adversely effect the upper classes economic interests and their desire to live in a safe and orderly society.
A very recent study by the World Economic Forum asked over 1,000 experts from industry, government, academia and civil society to rank 50 global risks. Severe income disparity received the highest likelihood rank.
“The global risk that respondents rated most likely to manifest over the next 10 years is severe income disparity, while the risk rated as having the highest impact if it were to manifest is major t financial failure.”
The following graph depicts all 50 global risks with attention drawn to the location of “severe income disparity.”
The horizontal axis measure the likelihood of the risk factor to occur in the next ten years. The vertical axis measures the impact if the risk is to occur. The risk associated with “severe income disparity” has the highest likelihood of occurring in the next ten years and its impact is very high.
Note in the next graph how the authors of the study utilize “systems thinking” to link “severe income disparity” to critical system elements, with special attention drawn by me to the relationship between “severe income disparity” and ”global governance failure” and accompanying consequences.
Failure to mitigate the adverse impacts of income inequality through strategic interventions is unacceptable if one believes in the power of man to recognize and solve problems. Apathy, complacency and greed can and will lead to outcomes where everybody losses. What kind of stewards of the future do we want to be?
Reference
World Economic Forum. (2013). Global Risks 2013 Eighth Edition. Insight Report. An Initiative of the Risk Response Network. Cologny/Geneva, Switzerland.