Vladimir Putin, Communism and Christianity
| January 18, 2018 | 9:12 pm | Analysis, Russia, USSR, V.I. Lenin, Vladimir Putin | No comments

Thursday, January 18, 2018

Vladimir Putin, Communism and Christianity

https://communismgr.blogspot.com/2018/01/vladimir-putin-communism-and.html
“Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people”. – Karl Marx. [1]
 
By Nikos Mottas*.
 
A few days ago, during an interview for the documentary Valaam an excerpt of which was broadcast on Russia 1 TV channel, Russian President Vladimir Putin likened communism to christianity and Vladimir I. Lenin’s mausoleum to the veneration of the relics of saints.
More specifically, Putin said: “First of all, faith has always accompanied us, becoming stronger every time our country, our people, have been through hard times. There were those years of militant atheism when priests were eradicated, churches destroyed, but at the same time a new religion was being created. Communist ideology is very similar to Christianity, in fact: freedom, equality, brotherhood, justice – everything is laid out in the Holy Scripture, it’s all there. And the code of the builder of communism? This is sublimation, it’s just such a primitive excerpt from the Bible, nothing new was invented.”
As for V.I.Lenin, he pointed out: Look, Lenin was put in a mausoleum. How is this different from the relics of saints for Orthodox Christians and just for Christians? When they say that there’s no such tradition in Christianity, well, how come, go to Athos and take a look, there are relics of the saints there, and we have holy relics here”.
The above statements of President Putin come just three months before the elections of March 18th. Being an intelligent bourgeois politician, Putin will make any communicative effort to flatter the ears of large parts of the voters, including of course communists and people of left ideology. However, no communist in Russia, or anywhere else, must fall victim of Putin’s communicative propaganda.
Despite the seemingly flattering words (“freedom”, “equality”, “justice” etc), President Putin’s effort to present communism as similar with christianity actually downgrades the marxist-leninist worldview. Contrary to Putin’s arguments, socialism-communism has nothing to do with religion. While communism consists a scientifically documented worldview, christianity – like all religions- is based on metaphysics.
In response to Mr.Putin’s statements, we remind the simple truth: The christian faith, like every religious belief (despite their varieties and differences), teaches the restoration of justice in “another life”. The christian doctrines of “turning the other cheak” and “posthumous reward” consists one of the best justification of the exploitation of man by man: Why should the victims of exploitation react, as long as- according to christianity- they will take their “revenge” on heaven?
Vladimir Lenin– whose legacy still makes Putin, the Russian bourgeoisie and the deeply reactionary Russian Orthodox Church trembling- was writing: “…those who live by the labour of others are taught by religion to practise charity while on earth, thus offering them a very cheap way of justifying their entire existence as exploiters and selling them at a moderate price tickets to well-being in heaven.”[2]
Contrary to religions, the communist ideology does not exploit people’s metaphysical concerns and fears and does not offer posthumous “rewards”. Marxism-Leninism refers to the- one and only- earthly life, which interprets and addresses through the prism of dialectical materialism, promoting the class struggle for the ultimate abolition of exploitation of man by man. This is our answer to Mr. Putin.
 
A century after the 1917 Great October Socialist Revolution and almost 27 years since the prevalence of counterrevolution in the Soviet Union, the spectre of socialism-communism continues to haunt the bourgeoisie in Russia and the world. That is why they make every effort to vilify communism, by distorting the truth. However, no matter how much anti-communist poison they pour, history will move forward.

[1] K.Marx, A Contribution to the Critique of Hegel’s Philosophy of Right, 1844.
[2] V.I.Lenin, Socialism and Religion, 1905: From Lenin Collected Works, Progress Publishers, 1965, Moscow, Volume 10, pages 83-87
 
Nikos Mottas is the Editor-in-Chief of ‘In Defense of Communism’. 
Martin Luther King Opposed Everything Liberal America Represents

https://sputniknews.com/analysis/201801171060829216-mlk-opposed-liberal-america/

Martin Luther King Opposed Everything Liberal America Represents

Dr. Martin Luther King, Jr. gives a young picket a pat on the back as a group of youngsters started to picket St. Augustine, Fla.

Martin Luther King Opposed Everything Liberal America Represents

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There is nothing quite so nauseating as liberal America associating itself with the legacy of Dr Martin Luther King Jr., a man who stood against everything it stands for and represents, such as cozying up to Wall Street and the rich at home while unleashing war without end overseas.

That Martin Luther King Day is an annual circus of liberal hypocrisy is evidenced in the likes of Barack Obama and Hillary Clinton using it an opportunity to engage in gushing tribute to a man whom, if alive today, would be among their most impassioned adversaries. As US academic Cornel West writes, “The litmus test for realizing King’s dream was neither a black face in the White House nor a black presence on Wall Street. Rather, the fulfillment of his dream was for all poor and working people to live lives of decency and dignity.”

Dr. Martin Luther King Jr. receives Nobel Peace prize from Gunnar Jahn, the chairman of the Nobel Committee in Oslo, Norway in 1964
Dr. Martin Luther King Jr. receives Nobel Peace prize from Gunnar Jahn, the chairman of the Nobel Committee in Oslo, Norway in 1964

It is hard to think of a political figure whose life and legacy been so abused, distorted, and exploited as Martin Luther King’s. Indeed, it is impossible to quantify the extent to which the true meaning of his work has suffered by dint of its appropriation by a liberal establishment that cloaks its mendacity and murderous propensity for war in the garb of compassion and democracy. When, for example, Hillary Clinton is tweeting the words of MLK, celebrating his life, you know you have entered the desert of the real.

So what then did Martin Luther King actually stand for? A trite response to that question is everything that Barack Obama, Hillary Clinton, and others of their kind do not stand for – namely justice for the poor of America and poor countries of the world threatened by America. Thus MLK was not killed because he had a ‘dream’ he was killed because he was awake to the fact that the United States government was, in his words, “the greatest purveyor of violence in the world today.”

The speech in which he spoke those words is titled ‘Beyond Vietnam’. It is one of his most famous, which he delivered in New York in 1967 a year before his assassination in the midst of an imperialist war that would claim the lives of two million Vietnamese and 80,000 Americans by the time it ended in 1975.

READ MORE: Faith Leaders Protest Against Trump, Racism at MLK ‘Dream’ Speech Rally

But widely overlooked as a result of the sanitization of MLK’s legacy by this liberal establishment, for which opportunism is a mandatory requirement, is the animus that was directed at him for daring to oppose the war in Vietnam. As King biographer, James H Cone reveals, “Martin also felt that the vehement criticisms that he received from the white community regarding his opposition to the Vietnam War were motivated by racism.”

Many of those critical voices from within the white community were former allies in Washington, including within the Johnson administration, who’d been happy to support him when his focus was on racial equality at home but refused to understand or accept the circular relationship between structural racism at home and racist wars unleashed overseas.King was a man who did come to understand this relationship, along with the rank hypocrisy of opposing one while not opposing the other, which is why he became such a threat to the moral foundations of the liberal status quo. As he said to one of his black colleagues after said colleague expressed concerns that MLK’s stance against the war in Vietnam would alienate liberal support for the struggle for black civil rights at home, “what you’re saying my get you a foundation grant but it won’t get you into the kingdom of truth.”

The radicalism embraced by MLK towards the end of his life was the product of his refusal to ignore the truth his eyes were imparting to him. His belief and trust in a liberal establishment to deliver justice not only to black Americans but poor Americans had been rocked by the shocking condition of the poor of all colors and race he witnessed while touring the country.

READ MORE: Sanders Carries Torch as US Marks Death of Martin Luther King, Jr.

In the eminently informed analysis of Cornel West the “radical King was a democratic socialist who sided with poor and working people in the class struggle taking place in capitalist societies. This class struggle may be visible or invisible, manifest or latent. But it rages on in a fight over resources, power, and space.”

Martin Luther King, Jr.
© Photo: Wikipedia / Dick DeMarsico, World Telegram staff photographer – Library of Congress

West’s assertion is proved by MLK’s championing of the struggle of sanitation workers in Memphis for better pay and conditions a couple of months before he was murdered in 1968. “And I come by here to say that America too is going to hell if she doesn’t use her wealth,” he declared in a speech at a rally of striking workers and their supporters in the city. “If America does not use her vast resources of wealth to end poverty and make it possible for all of God’s children to have the basic necessities of life, she too will to hell.”Can anyone seriously imagine Hillary Clinton endorsing such sentiments, a woman whose embrace of Wall Street and big business is a matter of record? Or how about Barack Obama, Washington’s first black president, who swore his oath of office on MLK’s own personal bible?

READ MORE: Rallies Erupt in Cities All Around Country to Reclaim Legacy of MLK Jr.

Cornel West is someone who is in no doubt as to the insult to King’s legacy Obama’s transparent attempt to posit his election to the White House the symbolic culmination of MLK’s ‘dream’: “The dream of the radical King for the first black president surely was not a Wall Street presidency, drone presidency, and surveillance presidency with a vanishing black middle class, devastated black working class, and desperate black poor people clinging to fleeting symbols and empty rhetoric.”

When it comes to the legacy of Martin Luther King, the biting insight of Irish rebel leader James Connolly applies: “Apostles of freedom are ever crucified when alive, but glorified when dead.”

The views and opinions expressed in this article are solely those of the author and do not necessarily reflect those of Sputnik.

 

Counterrevolution in the USSR – Mikhail V. Popov

Wednesday, January 17, 2018

Mikhail V. Popov – Counterrevolution in the USSR (Михаил Попов- Контрреволюция в СССР)

By Mikhail V. Popov.
Len.ru, 10 April 2017.

Transcript and translation by Srećko Vojvodić.

Now almost everybody understands that a counterrevolution took place in the USSR. It is so simple to see it since up until then there was socialism in the USSR, as a first phase of communism, whereas now we have a fully established capitalism in Russia. Therefore, it is not that only the counterrevolution happened, but also a restoration has taken place: all bourgeois institutions have been restored and we have a fully-fledged bourgeois state, with bourgeois democracy, as a form of the dictatorship of the bourgeoisie.
When did this happen?
Initially, some people deemed that it happened somewhere between the end of 1990 and the beginning of 1991. However, a deeper analysis shows that it was not so. Things do not happen that way.
Transitions from one system to another do not happen instantaneously in history. Let us review some examples. The transition from capitalism to communism took 18 years in Russia and the USSR: between 1917 and 1935. And how long did the transition between the first phase of communism back to capitalism take? This is the question to be deliberated.
When is a state socialist? A state is socialist if the working class holds the power in it. And when does the working class hold the power? The working class holds the power when the dictatorship of the proletariat is being implemented.
Then what is the dictatorship of the proletariat? The dictatorship of the proletariat is, as indicated in Lenin’s Great Beginning, a scientific, Latin-derived, historical-philosophical expression, meaning that only a specific social class, namely urban, factory-based industrial workers are able to lead the whole mass of working and exploited people in the fight for a complete destruction of all classes. To be explicit, this means not only the liquidation of the exploiting classes, but also the elimination of the differences between the city and the countryside, between men of physical and intellectual work.
Then there is another definition of the dictatorship of the proletariat, which fits our needs in deliberating the counterrevolution in the USSR even better, although it does not contradict the previous definition. This other definition was given by Lenin in his book ‘Left-Wing’ Communism: an Infantile Disorder, and says: “The dictatorship of the proletariat is a persistent struggle, bloody and bloodless, violent and peaceful, military and economical, pedagogical and administrative, against forces and traditions of the old society.”
Well, if we pose the following questions:
  • Are the forces and traditions of the old society disappearing under socialism?
  • Is not the class struggle waged under socialism against petty bourgeois mentality and attitudes?
  • Has the working class under socialism completed its task, and have all social classes been completely destroyed, effectively ending class struggle against petty bourgeois mentality and attitudes?
then the answer is:
  • If you do not fight them, then they fight you!
These are the petty bourgeois mentality and attitudes, which are present and which contradict the interests of the working people in a socialist society. Therefore, if we formulate the questions that way, it will become clear as to when the counterrevolution took place in the USSR: the counterrevolution took place in the USSR when the ruling party voted in its congress for the removal from its program of the centerpiece of Marxism, which is the dictatorship of the proletariat. This happened in 1961, at the XXII Congress. That meant that this Party did not want to wage a persistent struggle against forces and traditions of the old society any more, that it did not want to wage this struggle any more either as a party, or as a leading force of the society, i.e. as a political party, holding in its hands the political power in the state. Consequently, based on the decision of the XXII Congress, the state changed instantaneously its nature: once a state of the dictatorship of the proletariat, it became a state of the opposite nature.
What does this mean: a state of the opposite nature? It means: the bourgeois state. Some people ask “but where was the bourgeoisie?“ assuming that there was no bourgeoisie under socialism. That is true; there was no bourgeoisie – until the very moment, when this decision was made! However, as soon as it was made, what happened to the state apparatus, which managed the whole economic and political life? It started consisting of those people who, de facto, had a grip on the means of production. Then, if they earlier had to run those means of production for the sake of satisfying the needs of the whole society, in the interests of the working class – which expresses interests of all working people, now they became able to run those means of production for their own interests. In fact, it became their duty! A caste was thus formed which used the means of production for its own interests.
In general, state ownership – if we are talking about it – is not identical to social ownership. State ownership is a form of social ownership only if the state belongs to the working class and acts in the interests of the working class. Therefore, as soon as the state ceases to act in the interests of the working class, the state property becomes property of a part of the society, and the property of a part of the society is private property. That way, beginning in 1961, private property of the ruling nomenclature’s highest echelon appeared in the USSR.
Well, this private property was collectively owned – just as it is in any joint-stock company. In any such corporation private property is not individual, it belongs to all stockholders. In Russia, it happened that initially there was no fragmentation to individual stockholders; instead, everybody of this whole nomenclature highest echelon held it together in their hands. It should be noted that at this level of power only rare individuals remained in working-class positions, while everybody else jumped at the chance to appropriate this common, state property – which was no longer a social property.
We may say that the best solution was found in Belarus. They did not undertake a fragmentation of this common private property. Therefore, state property, as a large private property, remained there. However, in the rest of the USSR, at the easy hands of Chubais, Gaidar and other ideologues: Nemtsov, Iavlinskii, Boldirev and other gurus of liberal capitalism, which did not grow up even to the imperialism, to the state monopoly capitalism, a decision was made to squander this state property, to tear it down to smithereens.
This carve-up did not happen all at once. It was necessary first to bend the adversary; it was necessary to solve the problem that Nikita Khrushchov was solving when he put up the shooting of workers, and their children, in Novocherkassk in 1962. I think that anybody who will be considering this historical fact will have to conclude that if workers were being shot upon orders of the government head, then such a state was not exactly a working class state.
Now, what those workers were demanding? They were demanding only that prices not be increased and tariffs not lowered – the same thing that workers demand all over the world. This is a demand for which nobody in the world, even in the bourgeois world, shoots at workers. Therefore, in this aspect, Khrushchov spat even over those who carry out the dictatorship of the bourgeoisie in other countries. Because of this, one may say that so begins, since 1961, the transition stretch from the first phase of communism to capitalism and further, that a political revolution took place at the XXII Congress in 1961.
Accordingly, if we use the term “revolution” to denote transition from one economic order to another then such a process is very lengthy. It is evident that it lasted from 1961 to 1991 – which is a 30 years span – and it is much longer than the 18 years [needed for the transition from capitalism to communism, first in Russia, and then in the whole USSR].
This pushes against the popular notion that the Soviet Union “broke up”. No, it did not break up, it was fought against, from inside and from outside. By both traitors to the cause of socialism, to the cause of the Communist Party and to the cause of the working class within the top leadership, and by the external forces that were invited during Ieltsin’s years into all ministries, to reconstruct everything as a capitalist economy, and to direct it, not even towards interests of the Russian bourgeoisie, but towards the interests of foreign bourgeoisie, and especially those of the American bourgeoisie.
So the whole thing was long lasting, and bears no similarity with a “breakup” of the Soviet Union.
The Soviet Union resisted for a very long time and we know that there were forces that resisted.
In 1989 the Unified Front of Working People was constituted and I participated in it, together with comrades Pizhov and Krasavin, as candidates for people’s representatives of the USSR from the national-territorial ward of Leningrad. We constituted the Leningrad Section of the Unified Front of Working People and then another such section was constituted in Moscow. Finally, a Joint Front of Working People of Russia was constituted – with the support of our trade unions, of some Party organs and some Party cadres.
The Joint Front of Working People nominated Gen. Makashov for President and Dr. Sergueiev (Economics) – who used to be my Ph.D. thesis opponent – for Vice President, while I was Gen. Makashov’s Advisor. Therefore, it is impossible to say that nobody resisted – as a matter of fact, we resisted a lot. We had constitutive congresses of the communists of Russia – because all Party members who were in the Joint Front organized this constitutive movement, which stood against Gorbachov’s cupula, wrote a corresponding program and in this program we wrote: “Expel from the Party Gorbachov’s anti-communist faction conducting anti-people’s policies.” In my capacity of member of Leningrad Regional Committee, I moved a motion to vote on this proposal at a plenary session of the Leningrad Regional Committee. However, only 17 members of the Committee voted in favour of it, while some people who used to speak a lot about communism, such as Bielov, did not support my motion. They did not want to vote against Gorbachov.
We defended this demand: Dolgov, Jelmeiev and I. We collected Party organizations’ decisions, succeeded in constituting the Communist Party of the RSFSR and participated in authoring its Program. There was no revisionism in this Program and, therefore, those who wanted us to go to capitalism under red flags had to shut down both the CPSU and the CPRSFSR. Well, that was an openly counterrevolutionary action of Yeltsin’s power structure.
At the same time, this struggle never ceased. Russian Communist Workers’ Party and after that Workers’ Party of Russia was constituted – which means that forces, opposed to the counterrevolution, have been acting and keep on acting.
In conclusion, we have to answer the questions from the beginning: “When the counterrevolution began in the USSR, what was its course and what did it consist of?” Here is the answer:
The counterrevolution in the USSR took place in 1961 but its preparations began in 1956 and even earlier. Judging by the attitude towards the foremost person who fought for socialism – comrade Stalin, of his former comrades-in-arms, indicates that even in the Central Committee a counterrevolutionary and anti-communist group was formed. Judging by their voting at the Congress, how they voted unanimously against the dictatorship of the proletariat, it becomes evident how they selected the Congress delegates – which means that Khrushchov’s group functioned well and, not accidentally, managed to intimidate Party officials by killing Beria because this is a dark affair and it is understandable that, as we were told then that Beria was an English spy, it was a fairly ridiculous accusation since Beria supervised both the nuclear program and the missile program, while building, at the same time, Moscow State University. Therefore, when such things are published, and we were observing that those people, who glorified Stalin and, so to say, were putting him on the shield, did not utter a single loud word in his defense during all this time, then it becomes clear why only much later the first pronouncements and correct evaluations of Stalin’s work began – which are now dominant, we may say. At that time, however, nothing of that kind could be heard.
This is what we can say briefly about the counterrevolution in the USSR.

* Mikhail Vasilyevich Popov is a Professor of the Department of Economics and Law at Saint Peterburg State University.  
KKE expresses solidarity with the people of Sudan, condemns government’s repression

Wednesday, January 17, 2018

KKE expresses solidarity with the people of Sudan, condemns government’s repression

https://communismgr.blogspot.com/2018/01/kke-expresses-solidarity-with-people-of.html
In a statement the International Relations section of the CC of the Communist Party of Greece expresses its solidarity to the communists and the people of Sudan and condemns the local government’s repression.
 
The statement points out: “The KKE condemns the antipeople measures taken by the government of Sudan in coordination with the IMF and the World Bank, which deteriorate even more the living standards of the country’s working class and popular strata.
The KKE salutes the workers-people’s mobilizations against the antipopular measures, for the social and democratic rights and denounces the brutal crackdown against the people and the Communist Party of Sudan, demanding the immediate release of comrades Mohiedean Algalad and Zohier Ahmed and all fighters for the labor, social and democratic rights.
 
The authoritarianism of the government and the repression of the people’s mobilization shall not pass!”.
 
Source: 902.gr / Translation: In Defense of Communism.
 
According to a Reuters’ report published on January 16th, Sudanese police fired tear gas, struck demonstrators with batons and arrested several people at a protest against soaring living costs in the center of Khartoum on Tuesday. 
 
Several hundred demonstrators gathered on a street near the presidential palace, chanting slogans against rising prices and calling for a change of government before clashes broke out. 
 
Protests and clashes with security forces broke out across the country early this month after Khartoum imposed tough economic measures in line with recommendations by the International Monetary Fund (IMF).
South Africa/USA: Inequality Extreme and Rising
| January 17, 2018 | 8:38 am | Africa, Economy | No comments

South Africa/USA: Inequality is Extreme and Still Rising

AfricaFocus Bulletin January 15, 2018 (180115) (Reposted from sources cited below)

Editor’s Note

“I came here because of my deep interest and affection for a land settled by the Dutch in the mid-seventeenth century, then taken over by the British, and at last independent; a land in which the native inhabitants were at first subdued, but relations with whom remain a problem to this day; a land which defined itself on a hostile frontier; a land which has tamed rich natural resources through the energetic application of modern technology; a land which once imported slaves, and now must struggle to wipe out the last traces of that former bondage. I refer, of course, to the United States of America.” – Robert F. Kennedy, University of Cape Town, June 6, 1966

More than 50 years after Robert Kennedy’s speech in Cape Town, there have been many victories in the fight for political rights and against racial discrimination in both South Africa and the United States. The sacrifices and victories of those decades should not be discounted.

Nevertheless, despite tha advance of many African Americans and Black South Africans into positions of power and wealth, the inequality inherited from that history remains deeply imprinted in the society and the economy. Its effects are felt not only in the explicit racial inequalities that still exist, but also in the ideologies rationalizing inequality more generally and legitimizing structural inequalities as the allegedly deserved outcome of individual achievement.

The World Inequality Report, just released, documents with the best data available on the trends of inequality at global and national levels, a necessary but of course insufficient step in finding remedies to reverse the trend of increasing inequality and to repair the damages still felt from historical inequities.

This AfricaFocus Bulletin contains excerpts from the chapters on South Africa and the United States from the new World Inquality Report. Excerpts from the executive summary of the report appear in another AfricaFocus Bulletin sent out today and available at http://www.africafocus.org/docs18/ineq1801.php.

For previous AfricaFocus Bulletins on South Africa, visit http://www.africafocus.org/country/southafrica.php

++++++++++++++++++++++end editor’s note+++++++++++++++++

World Inequality Report 2018

Trends in global income inequality

For the full report, database, and extensive additional background information, visit http://wir2018.wid.world/

Robert F. Kennedy in Soweto, June 8, 1966. Credit: Photo taken by Alf Kumalo

2.12: Income inequality in South Africa

  • South Africa stands out as one of the most unequal countries in the world. In 2014, the top 10% received 2/3 of national income, while the top 1% received 20% of national income.
  • During the twentieth century, the top 1% income share was halved between 1914 and 1993, falling from 20% to 10%. Even if these numbers must be qualified, as they are surrounded by a number of uncertainties, the trajectory is similar to that of other former dominions of the British Empire, and is partly explained by the country’s economic and political instability during the 1970s and 1980s.
  • During the early 1970s the previously constant racial shares of income started to change in favor of the blacks, at the expense of the whites, in a context of declining per capita incomes. But while interracial inequality fell throughout the eighties and nineties, inequality within race groups increased.
  • Rising black per capita incomes over the past three decades have narrowed the interracial income gap, although increasing inequality within the black and Asian/Indian population seems to have prevented any decline in total inequality.
  • Since the end of Apartheid in 1994, top-income shares have increased considerably. In spite of several reforms targeting the poorest and fighting the segregationist heritage, race is still a key determinant of differences in income levels, educational attainment, job opportunities and wealth.

South Africa’s dual economy is among the most unequal in the world

South Africa is one of the most unequal countries in the world. In 2014, the top 10% of earners captured two thirds of total income. This contrasts with other high-income inequality countries such as Brazil, the United States and India where the top 10% is closer to 50–55% of national income. However, unlike other highly unequal countries, the divide between the top 1% and the following 9% in South Africa is much less pronounced than the gap between the top 10% and the bottom 90%. Otherwise said, in terms of top income shares, South Africa ranks with the most unequal Anglo-Saxon countries, but, at the same time, there is less concentration within the upper income groups, mostly composed by the white population. The average income among the top 1% was about four times greater than that of the following 9% in 2014 (for comparative purposes, the top 1% in the United States earn seven times more than the following 9%), while average income among the top 10% was more than seventeen times greater than the average income of the bottom 90% (it is eight times more in the United States). It is then only logical that the income share of the top 1% is high, capturing 20% of national income, though this is not the largest share in the world.

The South African “dual economy” can be further illustrated by comparing South African income levels to that of European countries. In 2014, the average national income per adult among the richest 10% was €94 600, at purchasing power parity, that is, comparable to the average for the same group in France, Spain or Italy. But average national income of the bottom 90% in South Africa is close to the average national income of the bottom 16% in France. In light of these statistics, the recently debated emergence of a so-called middle class is still very elusive. Rather, two societies seem to coexist in South Africa, one enjoying living standards close to the rich or upper middle class in advanced economies, the other left behind.

Inequality has decreased from the unification of South Africa to the end of apartheid

South Africa is an exception in terms of data availability in comparison with other African countries. The period for which fiscal data are available starts in 1903 for the Cape Colony, seven years before the Union of South Africa was established as a dominion of the British Empire, and ends in 2014, with some years sporadically missing, and noticeably an eight- year interruption following the end of apartheid in 1994. As is often the case with historical tax data series, only a very small share of the total adult population was eligible to pay tax in the first half of the twentieth century. Therefore, the fiscal data from which we can estimate top-income shares allows us to track the top 1% income share since 1913, but only cover the top 10% of the population from 1963 (with a long interruption between 1971 and 2008).

With important short run variations, the evolution of income concentration over the 1913–1993 period seems to follow a very clear long-term trend. The income share of the richest 1% was more than halved between 1913 and 1993, falling from 22% to approximately 10%. Not only did the income share attributable to the top 1% decrease, but inequality within this upper group was also reduced. Indeed, the share of the top 0.5% fell more quickly than the share of the next 0.5% (from percentile 99 to percentile 99.5). Consequently, while the top 0.5% represented about 75% of the top 1% in 1914, by the end of the 1980s, their representative proportion fell to 60%.

Despite the extreme social implications of the first segregationist measures that were implemented in the early 1910s, these policies did not lead to large increases in income concentration among the top 1%. This was also a time in which South Africa progressively developed its industrial and manufacturing sector, enjoying notable accelerations in the 1930s that were to the benefit of the large majority of the population. Aside from a brief fall during the Great Depression, average real income per adult then increased steadily. Following a trend similar to other former Dominions of the British Empire (Australia, Canada and New Zealand) inequality decreased significantly in South Africa from 1914 to the beginning of the the Second World War, despite some short-run variations in the late 1910s: the income share of the top 1% fell from 22% to 16%.

During the Second World War, national average continued to follow its previous trend, but the average real income of the richest 1% took off. As a consequence of the demand shock during the war, the agricultural export prices boomed, the manufacturing sector more than doubled its output between 1939 and 1945, and profits for the foundry and engineering industries increased by more than 400%. However, the wage differential between skilled/white and unskilled/black workers remained extremely large. As C.H. Feinstein described, “black workers [were] denied any share of the growing income in the new economy they were creating.” The fact that the peak in the income share of the top 1%–as high as 23% in 1946–was concomitant with the war effort thus seems essentially due to a brief enrichment of the upper class.

In contrast, income growth in the 1950s was more inclusive, as average real income per adult increased by 29% between 1949 and 1961, while the average real income of the top 1% slightly decreased. By 1961 the income share of the top 1% had fallen to around 14%. In the 1960s, both averages grew approximately at the same rate such that inequality remained relatively constant. Following 60 years of successive increases, national average income was almost four times greater by the early 1970s than in 1913. Inequality resumed its downward sloping trend from 1973, but this also marked a period of overall income growth stagnation in South Africa until 1990 that culminated in a three-year recession.

For the first time in the previous 90 years, gold output started falling. Richer seams were exhausted and extraction costs increased rapidly. The industry that was once the engine of the economy started to weaken. Increases in oil prices and other commodities accelerated inflation dramatically, averaging about 14% per year between 1975 and 1992. In the 1980s, international sanctions and boycotts were placed on South African trade as a response to the apartheid regime, adding further pressure to that created by domestic protests and revolts, and contributed to the destabilization of the regime in place. White dominance was challenged on both economic and political grounds, to which the ruling government progressively made concessions, recognizing trade unions and the right to bargain for wages and conditions; this could partly explain why the average real income per adult of the top 1% decreased faster than the national average.

The progressive policies implemented after apartheid were not sufficient to counter a profoundly unequal socio-economic structure

There are no fiscal data to estimate top-income shares for the eight years that followed 1993. However, joining up the data points to the next available figure in 2002 suggests that income inequality has increased sharply between the end of apartheid and the present, even if the magnitude of the increase must be taken with caution, as the estimates in these two periods may not be totally comparable. The income share of the top 1% increased by 11 percentage points from 1993 to 2014. Part of the increase from 1993 to 2002 should come from changes in the tax code. In particular, before 2002, capital gains were totally excluded, which is very likely to downward bias the share of top-income groups. Also, the tax collection capabilities seem to have increased substantially in the last years. That being said, household survey data for the years 1993, 2000 and 2008 research has demonstrated that inequality increased significantly during the period for which we have no fiscal data.

At first, it might seem puzzling that the abolishment of a segregationist regime was followed by an aggravation of economic inequality. The establishment of a multiracial democracy, with a new constitution and a president of the same ethnic origin as the majority of the population, did not automatically transform the inherited socio-economic structure of a profoundly unequal country. Interracial inequality did fall throughout the eighties and nineties, but inequality within race groups increased: rising black per capita incomes over the past three decades have narrowed the black-white income gap, although increasing inequality within the black and Asian/Indian population seems to have prevented any decline in aggregate inequality. In explaining these changes scholars agree in that the labor market played a dominant role, where a rise in the number of blacks employed in skilled jobs (including civil service and other high-paying government positions) coupled with increasing mean wages for this group of workers.

Since 1994, several redistributive social policies have been implemented and/or extended, among which important unconditional cash transfers targeting the most exposed groups (children, disabled and the elderly). At the same time, top marginal tax rates on personal income were kept relatively high and recently increased to 45%. However, in spite of these redistributive policy efforts, surveys consistently show that top-income groups are still overwhelmingly white. Other studies further demonstrate that such dualism is itself salient along other key dimensions such as unemployment and education. Furthermore wealth, and in particular land, is still very unequally distributed. In 1913, the South African parliament passed the Natives Land Act which restricted land ownership for Africans to specified area, amounting to only 8% of the country’s total land area, and by the early 1990s, less than 70 000 white farmers owned about 85% of agriculture land. Some land reforms have been implemented, but with seemingly poor results, and it is likely that the situation has not improved much since, although precise data about the recent distribution of land still needs to be collected.

Given this socio-economic structure, the interruption of the international boycotts in 1993 might have more directly favored a minority of high skilled and/or richer individuals who were able to benefit from the international markets, which therefore contributed to increase inequality. This hypothesis would also explain the fact that income inequality in South Africa did not increase in the 1980s, while boycotts were put in place, contrary to other former Dominions (New Zealand, Canada and Australia) despite the country having so far followed a similar trend. Furthermore, the implementation of the Growth, Employment and Redistribution (GEAR) program in 1996, which consisted of removing trade barriers, liberalizing capital flows and reducing fiscal deficit might also have contributed, at least in the short run, to enrich the most well off while exposing the most vulnerable, in part by increasing returns to capital over labor and to skilled workers over unskilled workers.

The rapid growth experienced from the early 2000s until the mid-2010s was essentially driven by the rise in commodity prices and was not accompanied with significant job creation as the government hoped it would. The income share of the top 1% grew from just less than 18% in 2002 to over 21% in 2007, then decreased by about 1.5 percentage points and increased again in 2012–2013 as prices reached a second peak. The fact that these variations closely mirror the fluctuation in commodity prices suggest that a minority benefiting from resource rents could have granted themselves a more than proportional share of growth.

Lastly, it should be stressed that the top 1% only represents a small part of the broader top 10% elite which is mostly white. While the share of income held by the top 1% is relatively low as compared to other high inequality regions such as Brazil or the Middle East, the income share of the top 10% group is extreme in South Africa. The historical trajectory of the top 10% group may be different to that of the top 1%–potentially with less ups and downs throughout the 20th century. Unfortunately at this stage, historical data on the top 10% group does not go as far back in time as for the top 1% group.”

2.4 Income inequality in the United States

  • Income inequality in the United States is among the highest of all rich countries. The share of national income earned by the top 1% of adults in 2014 (20.2%) is much larger than the share earned by the bottom 50% of the adult population (12.5%).
  • Average pre-tax real national income per adult has increased 60% since 1980, but it has stagnated for the bottom 50% at around $16 500. While post-tax cash incomes of the bottom 50% have also stagnated, a large part of the modest post-tax income growth of this group has been eaten up by increased health spending.
  • Income has boomed at the top. While the upsurge of top incomes was first a laborincome phenomenon in 1980s and 1990s, it has mostly been a capital- income phenomenon since 2000.
  • The combination of an increasingly less progressive tax regime and a transfer system that favors the middle class implies that, even after taxes and all transfers, bottom 50% income growth has lagged behind average income growth since 1980.
  • Increased female participation in the labor market has been a counterforce to rising inequality, but the glass ceiling remains firmly in place. Men make up 85% of the top 1% of the labor income distribution.

Income inequality in the United States is among the highest of rich countries

In 2014, the distribution of US national income exhibited extremely high inequalities. The average income of an adult in the United States before accounting for taxes and transfers was $66 100, but this figure masks huge differences in the distribution of incomes. The approximately 117 million adults that make up the bottom 50% in the United States earned $16 600 on average per year, representing just onefourth of the average US income. As illustrated by table 2.4.1, their collective incomes amounted to a 13% share of pre-tax national income. The average pre-tax income of the middle 40%–the group of adults with incomes above the median and below the richest 10%, which can be loosely described as the “middle class”–was roughly similar to the national average, at $66 900, so that their income share (41%) broadly reflected their relative size in the population. The remaining income share for the top 10% was therefore 47%, with average pre-tax earnings of $311 000. This average annual income of the top 10% is almost five times the national average, and nineteen times larger than the average for the bottom 50%. …

Income is very concentrated, even among the top 10%. For example, the share of national income going to the top 1%, a group of approximately 2.3 million adults who earn $1.3 million on average per annum, is over 20%–that is, 1.6 times larger than the share of the entire bottom 50%, a group fifty times more populous. The incomes of those in the top 0.1%, top 0.01%, and top 0.001% average $6 million, $29 million, and $125 million per year, respectively, before personal taxes and transfers.

As shown by Table 2.4.1 , the distribution of national income in the United States in 2014 was generally made slightly more equitable by the country’s taxes and transfer system. Taxes and transfers reduce the share of national income for the top 10% from 47% to 39%, which is split between a one percentage point rise in the post-tax income share of the middle 40% (from 40.5% to 41.6%) and a seven percentage point increase in the post-tax income share of the bottom 50% (from 12.5% to 19.4%). …

National income grew by 61% from 1980 to 2014 but the bottom 50% was shut off from it

Income inequality in the United States in 2014 was vastly different from the levels seen at the end of the Second World War. Indeed, changes in inequality since the end of that war can be split into two phases, as illustrated by Table 2.4.2 . From 1946 to 1980, real national income growth per adult was strong–with average income per adult almost doubling– and moreover, was more than equally distributed as the incomes of the bottom 90% grew faster (102%) than those of the top 10% (79%). However, in the following thirty-four-year period, from 1980 to 2014, total growth slowed from 95% to 61% and became much more skewed.

The pre-tax incomes of the bottom 50% stagnated, increasing by only $200 from $16 400 in 1980 to $16 600 in 2014, a minuscule growth of just 1% over a thirty-four-year period. The total growth of post-tax income for the bottom 50% was substantially larger, at 21% over the full period 1980–2014 (averaging 0.6% a year), but this was still only one-third of the national average. Growth for the middle 40% was weak, with a pre-tax increase in income of 42% since 1980 and a post-tax rise of 49% (an average of 1.4% a year). By contrast, the average income of the top 10% doubled over this period, and for the top 1% it tripled, even on a post-tax basis. The rates of growth further increase as one moves up the income ladder, culminating in an increase of 636% for the top 0.001% between 1980 and 2014, ten times the national income growth rate for the full population.

The rise of the top 1% mirrors the fall of the bottom 50%

This stagnation of incomes of the bottom 50%, relative to the upsurge in incomes experienced by the top 1% has been perhaps the most striking development in the United States economy over the last four decades. As shown by Figure 2.4.1a , the groups have seen their shares of total US income reverse between 1980 and 2014. The incomes of the top 1% collectively made up 11% of national income in 1980, but now constitute above 20% of national income, while the 20% of US national income that was attributable to the bottom 50% in 1980 has fallen to just 12% today. Effectively, eight points of national income have been transferred from the bottom 50% to the top 1%. … This has increased the average earnings differential between the top 1% and the bottom 50% from twenty-seven times in 1980 to eighty-one times today.

Excluding health transfers, average post-tax income of the bottom 50% stagnated at $20,500

The stagnation of incomes among the bottom 50% was not the case throughout the postwar period, however. The pre-tax share of income owned by this chapter of the population increased in the 1960s as the wage distribution became more equal, in part as a consequence of the significant rise in the real federal minimum wage in the 1960s, and reached its historical peak in 1969. These improvements were supported by President Johnson’s “war on poverty,” whose social policy provided the Food Stamp Act of 1964 and the creation of the Medicaid healthcare program in 1965.

However, the share of both pre-tax and post-tax US income accruing to the bottom 50% began to fall notably from the beginning of the 1980s, and the gap between pre-tax and post-tax incomes also diverged significantly from this point onwards. Indeed, the data indicate that virtually all of the meager growth in the real post-tax income of the bottom 50% since the 1970s has come from Medicare and Medicaid. Excluding these two health care transfers, the average post-tax income of the bottom 50% would have stagnated since the late 1970s at just below $20 500. The bottom half of the US adult population has therefore been effectively shut off from pre-tax economic growth for over forty years, and the increase in their post-tax income of approximately $5,000 has been almost entirely absorbed by greater health-care spending, in part as a result of increases in the cost of healthcare provision.

Taxes have become less progressive over the last decades

The progressivity of the US tax system has declined significantly over the last few decades, as illustrated in Figure 2.4.6 . The country’s macroeconomic tax rate (that is, the share of total taxes in national income including federal, state, and local taxes) increased from 8% in 1913 to 30% in the late 1960s, and has remained at the latter level since. Effective tax rates have become more compressed, however, across the income distribution. In the 1950s, the top 1% of income earners paid 40%–45% of their pre-tax income in taxes, while the bottom 50% earners paid 15–20%. The gap in 2014 was much smaller. In 2014, top earners paid approximately 30%–35% of their income in taxes, while the bottom 50% of earners paid around 25%.

In contrast to the overall fall in tax rates for top earners since the 1940s, taxes on the bottom 50% have risen from 15% to 25% between 1940 and 2014. This has been largely due to the rise of payroll taxes paid by the bottom 50%, which have risen from below 5% in the 1960s to more than 10% in 2014.

Transfers essentially target the middle class, leaving the bottom 50% with little support in managing the collapse in their pre-tax incomes

While taxes have steadily become less progressive since the 1960s, one major evolution in the US economy over the last fifty years has been the rise of individualized transfers, both monetary and in-kind. Public-goods spending has remained constant, at around 18% of national income, but transfers–other than Social Security, disability, and unemployment insurance, which are already included in calculations of pre-tax income–increased from around 2% of national income in 1960 to 11% in 2014. The two largest transfers were Medicaid and Medicare, representing 4% and 3%, respectively, of national income in 2014. Other important transfers include refundable tax credits (0.8% of national income), veterans’ benefits (0.6%), and food stamps (0.5%).

Perhaps surprisingly, individualized transfers tend to target the middle class. Despite Medicaid and other means-tested programs which go entirely to the bottom 50%, the middle 40% received larger transfers in 2014 (totaling 16% of per-adult national income) than the bottom 50% of Americans (10% of per-adult national income). … These transfers have been key to enabling middle-class incomes to grow, as without them, average income for the middle 40% would not have grown at all between 1999 in 2014. By contrast, transfers have not been sufficient to enable the incomes of the bottom 50% to grow significantly and counterbalance the collapse in their pre-tax income.

The reduction in the gender wage gap has been an important counterforce to rising US inequality

The reduction in the gender gap has been an important force in mitigating the rise in inequality that has largely taken place after 1980. …The overall gender gap has been almost halved over the last half-century, but it has far from disappeared. …

Still, considerable gender inequalities persist, particularly at the top of the labor income distribution, as illustrated by Figure 2.4.9 . In 2014, women accounted for close to 27% of the individuals in the top 10% of the income distribution, up 22 percentage points from 1960. Their representation, however, grows smaller at each higher step along the distribution of income. Women make up only 16% of the top 1% of labor income earners (a 13 percentage point rise from the 1960s), and only 11% of the top 0.1% (an increase of 9 percentage points). There has been only a modest increase in the share of women in top labor income groups since 1999. The glass ceiling is still far from being shattered.

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Africa/Global: World Trends in Inequality
| January 17, 2018 | 8:36 am | Africa, Economy | No comments

Africa/Global: World Trends in Inequality

AfricaFocus Bulletin January 15, 2018 (180115) (Reposted from sources cited below)

Editor’s Note

“The divergence in inequality levels has been particularly extreme between Western Europe and the United States, which had similar levels of inequality in 1980 but today are in radically different situations. While the top 1% income share was close to 10% in both regions in 1980, it rose only slightly to 12% in 2016 in Western Europe while it shot up to 20% in the United States. Meanwhile, in the United States, the bottom 50% income share decreased from more than 20% in 1980 to 13% in 2016.” – World Inequality Report, 2018

The first World Inequality Report, just released, represents sustained work by over 100 researchers to collect the best data available from multiple sources on income and wealth inequality both within and between countries. The project is ongoing, and the availability of data for different countries is very uneven. But for the first time there is a common basis for comparison, and both data and analysis are available to the public.

Notably, the project is also stressing the implications of the research for policy, and exploring ways of presenting the data in user-friendly graphic formats. The measures most often used are the percentage of national income (or wealth) held by different percentile groups of the population. A striking regional comparison (see graph below) highlights the percentage of national income received by the top 10% in 2016, from 37% in Europe to 61% in the Middle East. The percentage held by the top 10% is 47% in North America, and around 55% in Brazil, India, and sub-Saharan Africa. Not shown in this graph, but noted in a separate chapter and available in the on-line database (http://wid.world/country/south-africa/), the top 10% in South Africa received 65% of national income in 2012.

The report stresses that the levels of inequality are highly dependent on the progressivity of tax policy, with the obvious implication that the Trump/Republican tax bill will undoubtedly make inequality in the United States even more extreme.

The full database is available to access on-line or to download at http://wid.world/data.

This AfricaFocus Bulletin contains excerpts from the executive summary of the report. Another AfricaFocus Bulletin sent out today, and available at http://www.africafocus.org/docs18/sa-us1801.php) contains excerpts from the chapters on South Africa and the United States.

For previous AfricaFocus Bulletins on inequality, tax evasion, and related issues, visit http://www.africafocus.org/intro-iff.php

Recent articles on closely related topics include:

Amanda Erickson, “The world’s 500 wealthiest people got $1 trillion richer in 2017,” Washington Post, December 27, 2017 http://tinyurl.com/y7splebt, and Gabriel Zucman, “Nearly 10% of the world’s wealth is held offshore by a few individuals. The rest of us pay the price for this theft.” Guardian, 8 Nov. 2017 http://tinyurl.com/y8apyp3v++++++++++++++++++++++end editor’s note+++++++++++++++++

World Inequality Report

Executive Summary

Full report and abundant additional information available at http://wir2018.wid.world/

II. #What are our new findings on global income inequality?

We show that income inequality has increased in nearly all world regions in recent decades, but at different speeds. The fact that inequality levels are so different among countries, even when countries share similar levels of development, highlights the important roles that national policies and institutions play in shaping inequality.

Income inequality varies greatly across world regions. It is lowest in Europe and highest in the Middle East.

Inequality within world regions varies greatly. In 2016, the share of total national income accounted for by just that nation’s top 10% earners (top 10% income share) was 37% in Europe, 41% in China, 46% in Russia, 47% in US-Canada, and around 55% in sub-Saharan Africa, Brazil, and India. In the Middle East, the world’s most unequal region according to our estimates, the top 10% capture 61% of national income (Figure E1).

In recent decades, income inequality has increased in nearly all countries, but at different speeds, suggesting that institutions and policies matter in shaping inequality.

Since 1980, income inequality has increased rapidly in North America, China, India, and Russia. Inequality has grown moderately in Europe (Figure E2a). From a broad historical perspective, this increase in inequality marks the end of a postwar egalitarian regime which took different forms in these regions.

  • There are exceptions to the general pattern. In the Middle East, sub-Saharan Africa, and Brazil, income inequality has remained relatively stable, at extremely high levels (Figure E2b). Having never gone through the postwar egalitarian regime, these regions set the world “inequality frontier.”
  • The diversity of trends observed across countries since 1980 shows that income inequality dynamics are shaped by a variety of national, institutional and political contexts.
  • This is illustrated by the different trajectories followed by the former communist or highly regulated countries, China, India, and Russia. The rise in inequality was particularly abrupt in Russia, moderate in China, and relatively gradual in India, reflecting different types of deregulation and opening-up policies pursued over the past decades in these countries.
  • The divergence in inequality levels has been particularly extreme between Western Europe and the United States, which had similar levels of inequality in 1980 but today are in radically different situations. While the top 1% income share was close to 10% in both regions in 1980, it rose only slightly to 12% in 2016 in Western Europe while it shot up to 20% in the United States. Meanwhile, in the United States, the bottom 50% income share decreased from more than 20% in 1980 to 13% in 2016 (Figure E3).
  • The income-inequality trajectory observed in the United States is largely due to massive educational inequalities, combined with a tax system that grew less progressive despite a surge in top labor compensation since the 1980s, and in top capital incomes in the 2000s. Continental Europe meanwhile saw a lesser decline in its tax progressivity, while wage inequality was also moderated by educational and wage-setting policies that were relatively more favorable to low- and middle-income groups. In both regions, income inequality between men and women has declined but remains particularly strong at the top of the distribution.

How has inequality evolved in recent decades among global citizens? We provide the first estimates of how the growth in global income since 1980 has been distributed across the totality of the world population. The global top 1% earners has captured twice as much of that growth as the 50% poorest individuals. The bottom 50% has nevertheless enjoyed important growth rates. The global middle class (which contains all of the poorest 90% income groups in the EU and the United States) has been squeezed.

At the global level, inequality has risen sharply since 1980, despite strong growth in China.

  • The poorest half of the global population has seen its income grow significantly thanks to high growth in Asia (particularly in China and India). However, because of high and rising inequality within countries, the top 1% richest individuals in the world captured twice as much growth as the bottom 50% individuals since 1980 (Figure E4). Income growth has been sluggish or even zero for individuals with incomes between the global bottom 50% and top 1% groups. This includes all North American and European lower- and middle-income groups.
  • The rise of global inequality has not been steady. While the global top 1% income share increased from 16% in 1980 to 22% in 2000, it declined slightly thereafter to 20%. The income share of the global bottom 50% has oscillated around 9% since 1980 (Figure E5). The trend break after 2000 is due to a reduction in between-country average income inequality, as within-country inequality has continued to increase.

III. Why does the evolution of private and public capital ownership matter for inequality?

Economic inequality is largely driven by the unequal ownership of capital, which can be either privately or public owned. We show that since 1980, very large transfers of public to private wealth occurred in nearly all countries, whether rich or emerging. While national wealth has substantially increased, public wealth is now negative or close to zero in rich countries. Arguably this limits the ability of governments to tackle inequality; certainly, it has important implications for wealth inequality among individuals.

Over the past decades, countries have become richer but governments have become poor.

  • The ratio of net private wealth to net national income gives insight into the total value of wealth commanded by individuals in a country, as compared to the public wealth held by governments. The sum of private and public wealth is equal to national wealth. The balance between private and public wealth is a crucial determinant of the level of inequality.
  • There has been a general rise in net private wealth in recent decades, from 200–350% of national income in most rich countries in 1970 to 400–700% today. This was largely unaffected by the 2008 financial crisis, or by the asset price bubbles seen in some countries such as Japan and Spain. In China and Russia there have been unusually large increases in private wealth; following their transitions from communist- to capitalist-oriented economies, they saw it quadruple and triple, respectively. Private wealth–income ratios in these countries are approaching levels observed in France, the UK, and the United States.
  • Conversely, net public wealth (that is, public assets minus public debts) has declined in nearly all countries since the 1980s. In China and Russia, public wealth declined from 60–70% of national wealth to 20–30%. Net public wealth has even become negative in recent years in the United States and the UK, and is only slightly positive in Japan, Germany, and France. This arguably limits government ability to regulate the economy, redistribute income, and mitigate rising inequality. The only exceptions to the general decline in public property are oil-rich countries with large sovereign wealth funds, such as Norway.

V. What is the future of global inequality and how should it be tackled?

We project income and wealth inequality up to 2050 under different scenarios. In a future in which “business as usual” continues, global inequality will further increase.

Alternatively, if in the coming decades all countries follow the moderate inequality trajectory of Europe over the past decades, global income inequality can be reduced– in which case there can also be substantial progress in eradicating global poverty.

The global wealth middle class will be squeezed under “business as usual.”

  • Rising wealth inequality within countries has helped to spur increases in global wealth inequality. If we assume the world trend to be captured by the combined experience of China, Europe and the United States, the wealth share of the world’s top 1% wealthiest people increased from 28% to 33%, while the share commanded by the bottom 75% oscillated around 10% between 1980 and 2016.
  • The continuation of past wealth-inequality trends will see the wealth share of the top 0.1% global wealth owners (in a world represented by China, the EU, and the United States) catch up with the share of the global wealth middle class by 2050.

Tax progressivity is a proven tool to combat rising income and wealth inequality at the top.

Research has demonstrated that tax progressivity is an effective tool to combat inequality. Progressive tax rates do not only reduce post-tax inequality, they also diminish pre-tax inequality by giving top earners less incentive to capture higher shares of growth via aggressive bargaining for pay rises and wealth accumulation. Tax progressivity was sharply reduced in rich and some emerging countries from the 1970s to the mid-2000s. Since the global financial crisis of 2008, the downward trend has leveled off and even reversed in certain countries, but future evolutions remain uncertain and will depend on democratic deliberations. It is also worth noting that inheritance taxes are nonexistent or near zero in high-inequality emerging countries, leaving space for important tax reforms in these countries.

A global financial register recording the ownership of financial assets would deal severe blows to tax evasion, money laundering, and rising inequality.

Although the tax system is a crucial tool for tackling inequality, it also faces potential obstacles. Tax evasion ranks high among these, as recently illustrated by the Paradise Papers revelations. The wealth held in tax havens has increased considerably since the 1970s and currently represents more than 10% of global GDP. The rise of tax havens makes it difficult to properly measure and tax wealth and capital income in a globalized world. While land and real-estate registries have existed for centuries, they miss a large fraction of the wealth held by households today, as wealth increasingly takes the form of financial securities. Several technical options exist for creating a global financial register, which could be used by national tax authorities to effectively combat fraud.

More equal access to education and well-paying jobs is key to addressing the stagnating or sluggish income growth rates of the poorest half of the population.

  • Recent research shows that there can be an enormous gap between the public discourse about equal opportunity and the reality of unequal access to education. In the United States, for instance, out of a hundred children whose parents are among the bottom 10% of income earners, only twenty to thirty go to college. However, that figure reaches ninety when parents are within the top 10% earners. On the positive side, research shows that elite colleges who improve openness to students from poor backgrounds need not compromise their outcomes to do so. In both rich and emerging countries, it might be necessary to set trans- parent and verifiable objectives– while also changing financing and admission systems– to enable equal access to education.
  • Democratic access to education can achieve much, but without mechanisms to ensure that people at the bottom of the distribution have access to well-paying jobs, education will not prove sufficient to tackle inequality. Better representation of workers in corporate governance bodies, and healthy minimum-wage rates, are important tools to achieve this.

Governments need to invest in the future to address current income and wealth inequality levels, and to prevent further increases in them.

Public investments are needed in education, health, and environmental protection both to tackle existing inequality and to prevent further increases. This is particularly difficult, however, given that governments in rich countries have become poor and largely indebted. Reducing public debt is by no means an easy task, but several options to accomplish it exist–including wealth taxation, debt relief, and inflation–and have been used throughout history when governments were highly indebted, to empower younger generations.

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AfricaFocus Bulletin can be reached at africafocus@igc.org. Please write to this address to suggest material for inclusion. For more information about reposted material, please contact directly the original source mentioned. For a full archive and other resources, see http://www.africafocus.org

Griselda Aguilera Cabrera: Women in Cuba: Our Achievements and Continuing Struggles
| January 17, 2018 | 8:34 am | Cuba, Education, Women's rights | No comments