Is anyone surprised that the US and UK are the most unequal of the western high-income countries?
The giveaway is the current state of their politics. Both have long been stable, rule-of-law democracies, but both are now allowing lying, chicanery, and demagogy to flourish.
According to Martin Wolf of the FT, in both countries, we increasingly seem to have “an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy.”
But the answer, he says, is not to overthrow the market economy or seek to undo globalisation (a la Trump).. Instead, capitalism should be reformed. In fact, he says, the situation demands something quite extreme. It was described as follows by Italian author Giuseppe Tomasi di Lampedusa: “If we want everything to stay the same, everything must change”.
So, what might be the “everything” that should change?
Mr Wolf lays out five areas that pretty much cover everything:
- Competition – With competition having weakened in both the US and the UK, the playing field is no longer level nor fair.
- Finance – There’s just too much credit and debt.
- The corporation – It’s focussing too much on maximising shareholder value and should not be allowed to profit from causing problems to the planet and the people.
- Inequality – It needs to be tackled with a proactive competition policy, attacks on tax avoidance and evasion; a fairer sharing of the tax burden, more spending on education, and decent minimum wages and tax credits.
- Politics – Reform is needed to rescue democracies from being plutocracies.
That really is everything.