The OECD has release a new report: Divided We Stand: Why Inequality Keeps Rising
In the three decades prior to the recent economic downturn, wage gaps widened and household income inequality increased in a large majority of OECD countries. This occurred even when countries were going through a period of sustained economic and employment growth. This report analyses the major underlying forces behind these developments
Inequality in society is not necessarily equal to a bad economy. The US has been an unequal society for a long time. However, generally speaking, inequality is a sign of problems in society. It is said about Henry Ford, when he was asked why he paid his workers so much more than other employers, that he answered: "This way they can afford to buy my cars."
Economically speaking this is largely true. A population with money to spend tends to be healthy for business.
For me the much more important issue is one of social coherency. Inequality, a large difference between rich and poor, usually also signifies a large number of poor. This creates societies like Brazil, where the rich have to protect themselves by having bodyguards, bullet proof cars and hiding in special buildings. A lot of Brazilians - and not only the poor - have left Brazil because of this.
Also societies tend to function better with a large middle class. A high level of education tends to lead to a large middle class. Most of the most wealthy and best functioning countries tend to have less inequality. They are generally speaking more civilized and the perceived level of life quality is higher for all, poor and rich.
Thus this study is extremely worrisome looking at the numbers for Portugal.
Portugal is the country with most inequality in Europe.
Now, if you are a socialist, your way of fixing this is trying to redistribute wealth. You take it from the wealthy and give it to the poor. I think this could be catastrophic. For the rich generate much of the wealth of society. Of course there has to be some redistribution - but only the minimal necessary - in the the form of taxes to guarantee the functioning of the state.
The main problem is not the rich being rich, it is the poor being poor. I believe it is much better to focus on making the poor richer. You do that, by giving incentives and possibilities to the poor to become middle class and giving the middle class incentives to become rich by becoming entrepreneurs.
In Portugal's case some of the rich are a problem as their wealth has been generated illicitly by participating in corruptness. The money has been stolen and the wealth generated has not been of much benefit for society. These rich we can live without. Tax them to death if possible and instead give the licit rich job makers incentives to make more. Pay them if necessary!
You have perhaps in my writings noticed I do not care much for socialists. That is a fact. But on the other hand I do not care for inequality to a degree seen in Portugal. A true socialist I see as a somewhat naive "do-gooder". An idealist believing in the communist utopia. We humans may one day get there and will be able to live according to the teachings of religion. But for now, we must work with what we have.
The reason to why I mention my socialist phobia is because it gives me a chance to criticize the so called "Socialist Party" of Portugal. Despite 20 years of socialist presidents and nearly as much of socialist governments - there sure is not much equality in this country. The same goes for the partner in crime, "The Social Democratic Party". The two parties of the nearly pure two party system are anything but social and have created one of the most unequal and most unhappy countries - and not very rich at that!
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