Bridging the wealth inequality gap will deliver economic, social and political benefits. Why then is the divide between the haves and the have-nots widening? It’s time to look beyond finances and to address the social aspects of wealth.
One of the most pressing issues of our time, the statistics around wealth inequality are quite grim: The bottom 50% of the world population currently own less than 2% of global wealth, and the top 1% own approximately 38%. The reasons for, and implications of, this imbalance are complex. Tackling the wealth inequality gap requires more than addressing income inequality. For a more just society we need a more just distribution of the access to opportunity that comes with wealth.
The right chances and the right connections
Put simply: wealth gives access to opportunity. As wealth is mostly inherited, this means it is commonly amassed over time through a familial context. History and inheritance patterns are among the factors that have resulted in wealth becoming inextricably linked to issues of gender and race inequity.
Unequal distribution of wealth lies at the core of most inequality issues – its roots are not only often engrained in socio-cultural norms, but institutionalised, making it hard to tackle.
If people and entire communities do not have access to basic assets – such as infrastructure, quality food, and safety – they clearly don’t start at the same point as those who do. Access to education is among the crucial assets that any government should guarantee in order to develop and leverage its talent and give all citizens a chance to thrive in society through social mobility.
Unfortunately, access to education is, however, not equally distributed. It’s not one’s individual talent or capabilities that usually open doors but one’s birthplace on the social and wealth spectrum. Breaking down wealth inequalities not only benefits human development but also unlocks potentially promising human capital.
Why should we level the playing field?
There are multiple answers, but the bottom line remains the same: We should address wealth inequality because it’s the right thing to do.
It’s fundamental human nature to aspire to peace, safety, trusted and collaborative relationships, and the opportunity to contribute and perform at our full potential. Wealth inequality undermines these aspirations and creates an uneven playing field, posing a threat to economic growth and social and political stability.
Wealth inequality is a complex challenge and there’s no ‘one size fits all’ solution. Structural changes belong to policy makers. However, investments in more subtle areas can make large differences when it comes to bridging the wealth inequality gap.
Facilitated access to banking services through technology may be the starting point to help many escape the poverty trap. Investing in the economic empowerment of minorities is arguably one of the most important global economic drivers in the current phase of demographics-driven secular stagnation.
Covid-19 is deepening the disparities between the advantaged and the disadvantaged by affecting the bottom 40% disproportionately. The impact on developing countries and specific groups has been particularly harmful: the low-skilled, women, minorities, the young and small business all have suffered, while those linked with the few industries thriving due to the pandemic have benefited. In Namibia, which currently ranks as one of the most unequal countries in the world and 60% of its population relies on subsistence farming, the Covid-19 pandemic has seen the poverty level skyrocket to 64%.
Ways to fight wealth inequality
For systemic and structural change to take place, the wider social aspects of wealth must be addressed. Greater equality has been proven to increase the duration of countries’ economic growth spells more than factors such as free trade, low government corruption, foreign investment or low foreign debt.
But positive steps toward change will not last if made in a vacuum. We live in an extremely interconnected world: We collectively face the impact of threats such as climate change and pandemics and a joint effort is required to stabilise our societies by addressing inequity.
For this reason, the Wealth Inequality Initiative aims to develop entrepreneurial and social competencies and networks that lead to wealth redistribution, social mobility, and structural changes that break the inequality cycle. Details of their projects can be found here – and each undergoes the following five steps:
- Exposure and understanding of the problem and its complexity
- Identification of those who can make a difference as partners
- Construction of a clear rationale for change
- Bridging the gap through sharing expertise, networks and resources
- The development of a precise action plan with clear success measures.
Some of the projects in partnership with the Julius Baer Foundation
The chain of change: Are you the missing link?
Strong and lasting change comes about through collaboration, knowledge sharing and the joining of forces. Approached alone, the quest of minimising wealth inequality is overwhelming. Yet, approached together, we can make a difference.
Dr Nathalie Jean-Baptiste stresses the importance of all voices being heard in the quest to address inequity. It is for this reason that the Julius Baer Foundation wants to connect with philanthropists, aspiring philanthropists, entrepreneurs, other foundations, researchers and organisations pitching for grants. As the wealth gap is ever-widening, a collective approach is needed, and the floor should be open for all to pitch ideas for research, action-plans, projects and wealth redistribution.