Contemporary Economic Inequality
Imagine living each day with little food to nourish you and your family. This is a reality for over 800 million severely food insecure children and adults around the world, while “moderate … food insecurity disrupts the lives of an additional 1.47 billion individuals.”1 The data shines a light on the world’s enormous disparities in wealth and income, which not only divide countries into haves and have nots, but also segment the globe into rich and poor nations.2 According to a pioneering study3 conducted by the World Inequality Lab in 2022, 76% of the world’s total wealth belongs to just 10% of its inhabitants, with just 2% of all wealth belonging to half of the world’s population.4 And while there may be disagreement over research methodology5 and the technical understandings of “wealth” and “income,”6 there is no denying that in many countries across the world, the richest are getting richer and the poorest are getting poorer.7
Many workers in the world are simply unable to improve their economic situation, more often in poorer countries, but increasingly in wealthy nations like the U.S. and U.K. as well.8 Much of the economic inequality present in our society is not the result of meritocratic competition but rather the result of systems that foster power imbalances and unequal opportunities for those with power and privilege.9 The technological and political processes responsible for wealth and income disparities are varied and rooted in hundreds of years of human history.10 They affect billions of lives worldwide11 and continue to evolve as we move into the future.12 From endemic poverty13 to political instability14 and catastrophic climate change,15 economic inequality is connected with the most pressing matters of our time and poses profound threats to future generations both rich and poor.
Economic inequality dates back to the beginning of human civilization.16 But around “a third of income inequality in the world today” can be traced directly to European colonial expansionism.17 From the 15th century onward, prominent Western countries used imperialism, colonialism, and slavery to exploit the labor power and resources of Latin America, Africa, Asia, and the Pacific and Caribbean Islands.18 As a result parts of the Western world were able to accelerate the process of industrialization, while many colonized nations fell into poverty.19 Power imbalances between former colonizers and colonies extend into contemporary times,20 as harmful trade and financial arrangements21 continue to enable industrialized nations to extract trillions of dollars’ worth of raw materials and profits from less-developed nations each year.22 The divide between haves and have nots is further shaped by the extensive outsourcing of “environmentally and socially detrimental [jobs] to low-income nations,”23 as well as forced labor hidden within international supply chains,24 problems that sometimes turn western consumers into unwitting accomplices in perpetuating economic inequalities. Haiti and the Democratic Republic of Congo, two of the least economically secure countries in the world, provide striking illustrations of how past exploitation has created long-lasting inequality.25
Haiti has recently been in the news for intensifying gang violence,26 but the country has suffered from severe political and economic instability since its formation.27 The Caribbean nation occupies the western portion of the island of Hispaniola, which, as its name suggests, was colonized by Spain shortly after the arrival of Columbus in 1492.28 Control of the area was eventually transferred to the French, who transformed it into a prominent coffee and sugar colony during the 1700s.29 The French imported close to 800,000 slaves from Africa to work on coffee and sugar plantations in the region,30 with countless dying from overwork and abuse.31 Enslaved Haitians eventually overthrew France and declared independence in 1804, but they could not throw off the shackles of economic oppression.32 At the barrel of a gun, Haiti was coerced into paying the French government “the equivalent of $21 billion” in trumped-up damages that resulted from the Haitian Revolution.33 Haiti was forced to take French bank loans to cover the costs, and for over a century, the French remained the recipients of the vast majority of Haitian government spending— not Haiti’s economy, infrastructure, or welfare, but its one-time colonizer.34 Today, Haiti is one of the most impoverished countries in the world and suffers from endemic social instability.35
The long lasting effects of colonialism were further exacerbated by the African slave trade which caused economic and political damage to countries across Africa.36 One of the African nations that has suffered most as a result of slavery and colonialism is the Democratic Republic of the Congo (DRC),37 considered to be one of the poorest nations in the world.38 This has not always been the case though,39 as the DRC partially occupies the territory40 of a precolonial commercial and bureaucratic “superpower,” the Kingdom of Kongo.41 In the 1480s, the Kingdom entered into the slave trade with the Portuguese. The Portuguese eventually betrayed their trading partner and began to foment insurgencies and civil war within Kongo.42 The machinations of the Portuguese were effective, gradually dissolving Congolese society and the nation’s economic prosperity.43 In the 19th century, the region fell into the personal ownership of Belgium’s King Leopold.44 Under Leopold, Belgian colonizers created a brutal rubber colony that claimed the lives of up to 10 million people, or roughly 50% of the Congolese population at the time.45 Even after the DRC achieved independence in 1960, Belgium returned to the colonial playbook: in an effort to continue benefitting from Congolese mineral wealth,46 Belgium supported “the secession of the strategic mineral-rich province of Katanga,” then conspired with Katangan forces to abuse and murder the democratically elected Congolese Prime Minister Patrice Lumumba and others.47 “A Belgian police officer led a group that … [took] the bodies, hacked them to pieces, and dissolved as much of the body parts as they could in sulphuric acid,” explains Encyclopedia Britannica. “Anything that remained was set on fire.”48 Lumumba’s replacement was the “Western-friendly” military dictator Joseph-Desire Mobutu.49 The Congolese people lost billions under his corrupt rule,50 which lasted until the Congo Wars of the 1990s.51 After Mobutu was deposed during the First Congo War, the new government, rebels, and several nearby nations spent years fighting for authority and natural resources in the Second Congo War,52 “the deadliest conflict since World War II.”53 Influenced by the ethnic hostilities once fostered under Belgian colonialism,54 foreign companies took advantage of the unrest to collude with local insurgents in appropriating Congolese wealth and resources.55 As of 2024, violence continued between roughly 100 insurgent groups and the DRC government, with human rights violations being committed by government and rebel groups alike.56 Recently, foreign companies have been accused of engaging in illegal mining projects,57 manipulating local politics,58 and mistreating Congolese workers.59 Inequality, violence, and severe poverty persist in Congo,60 while the country’s mineral resources continue to primarily benefit foreign actors.61
As stark as postcolonial inequalities are in the third world, the recent growth of inequality within industrialized nations is no less startling.62 According to Oxfam, the policy choices of 90% of all national governments are expected to worsen inequality.63 Cuts to social programs have increased disparities in nations like Italy,64 while both China and India have seen intense economic growth coupled with rapid growth in inequality.65 The U.S. serves as a particularly extreme example:66 a cumulative 6% of American wealth belongs to half of the population, with nearly 70% of American wealth going to just one tenth of Americans.67 “The … stagnant minimum wage, and decline of the union movement make up only a few of the factors contributing to the issue. Other factors include …. deregulation of various industries, automation, trade policy, [and] corporate tax cuts.”68 Indeed, the past 40 years have seen American union membership halved to only 10% of laborers,69 while wages for low-skilled male workers have fallen by nearly 9%, largely as a result of workforce automation.70 The amount of government revenue lost annually to private and corporate tax avoidance amounted to hundreds of billions of dollars in 2021,71 while the number of industrial jobs lost over the past three decades stands in the millions.72 As a result of the disproportionate growth in the earnings of the wealthy, researchers estimate that “the bottom 90%” of Americans have cumulatively lost 50 trillion dollars in theoretical wages to the upper echelons of society.73
Across both industrialized and developing nations, the impacts of wealth inequality are striking. “Despite progress, nearly 241 million workers globally still lived in extreme poverty in 2023,” says the U.N.,74 with the total number of impoverished people closer to 648 million.75 In many cases, poverty persists across generations.76 According to the National Academy of Sciences “on average, a child growing up in a family whose income is below the poverty line experiences worse outcomes than a child from a wealthier family in virtually every dimension, from physical and mental health, to educational attainment and labor market success, to risky behaviors and delinquency.”77 Inequality is not the only cause of poverty,78 but in a world where malnourishment contributes to almost 50% of early childhood deaths,79 inequality is also directly related to food insecurity and childhood mortality.80 Deadly inadequacies in nutrition, sanitation, and medical care occur disproportionately in impoverished regions like sub-Saharan Africa,81 but the U.S. has also seen worsening income-based discrepancies in categories such as life expectancy.82 Following recent federal budget changes, up to fifty-one thousand more Americans annually could die from lack of medical treatment or insurance, according to sources at Yale and the University of Pennsylvania.83
While the humanitarian implications of rising inequality are dire, there are purely utilitarian reasons to worry about the wealth gap as well. Not only do economic growth and innovation suffer under greater inequality,84 but certain forms of criminality,85 political violence,86 polarization,87 preference for revolution,88 corruption,89 and democratic backsliding90 have all been shown to correlate with higher inequality and/or lower social mobility. Issues like inequality embolden populist political figures, who seem to offer easy answers.91 “Populism often involves a politician who claims to have direct charismatic connection to the people,” explains Stanford political scientist Francis Fukuyama. “This presents a challenge to democracy, since such leaders tend to be anti-institutional: they oppose courts, the media, bureaucracies and any check-and-balance institution that stands in their way.”92 In Italy, populist leadership under Prime Minister Giorgia Meloni has already begun working to subvert freedom of the press, court power, and LGBTQ+ rights.93 In Britain, France, and Germany, current surveys suggest that right-wing populists are those countries most popular politicians,94 including the Alternative für Deutschland (AfD), a far-right German party associated with Nazi views.95 And while the underprivileged tend to suffer the most from “conflict and instability,”96 the destruction of personal liberties is a net negative for everyone, rich and poor.
Political deterioration is only one of the outcomes linked to pervasive wealth inequality; equally concerning is man-made climate change. Experts note that environmental destruction and global warming are causing severe shifts in weather,97 and “some changes (such as droughts, wildfires, and extreme rainfall) are happening faster than scientists previously assessed.”98 These changes are aggravated by wealth disparities, as funds and power are amassed not by governments or concerned citizens, but by many of the very entities and individuals most responsible for climate change.99 Thanks to heightened inequalities, individual buyers might also waste more resources and emissions on status-affirming purchases, research suggests.100 The relationship between climate change and inequality is a self-perpetuating loop;101 hazards like flooding contribute massively to poverty102 andharm significantly more members of lower-class communities,103 while rising heat is directly responsible for a large portion of the economic inequality between developed and developing nations.104 In a largely impoverished nation like Chad,105 flooding made the homes of over 1 million people uninhabitable in 2022 alone.106 Among wealthy nations, economies benefit not only from the industrialization that is largely to blame for climate change,107 but from warmer growing seasons in the northern climates many of these nations call home.108 Dichotomies between rich and poor victims of climate change are not as black and white as they may seem. Flooding from sea-level rise is estimated to destroy approximately 80,000 New York residences over the next decade and a half,109 and the exacerbated conflict, “resource scarcity,” terrorism, and immigration linked to destructive weather present serious challenges for developed nations.110 An increasingly hostile planet will benefit no one, rich nor poor.
Economic inequality is one of the most pressing issues of our times and should concern us all. Rooted in centuries-old exploitative political machinations, wealth and income inequalities persist into the modern era. They contribute significantly to human suffering while simultaneously endangering societal stability and the global climate, with serious consequences across all economic classes. Many of the citizens living in developed nations who have been benefactors of longstanding global inequalities are at the same time starting to become victims of rising wealth disparities. And though advocacy groups and government agencies expend uncountable quantities of time and money fighting inequality, “income and wealth are increasingly concentrated at the top.”111 Proactive governance and economic reorganization are fundamental in undoing economic inequity.112 Without progressive systems that promote solidarity and economic fairness, humanity will continue to struggle in cycles of deprivation that endanger future civilizations and the health of our planet.
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