Social inequality adversely affects economy

Widening gap in social inequality has adversely affected the performance of the US economy, a US economist has said.
American economist Joseph Stiglitz, professor at Columbia University and author of many of the leading researches on income, growth, economy and education, said the statistical study launched recently by Oxfam International, revealing that the wealth of the richest eight people is equivalent to the wealth of the poorer half of the world, was shocking to many — and a strong witness on the enormous wealth earned by the richest category in the world compared to the crumbs earned by the poor.
Speaking on the topic “Global Economic Governance: Where to?” at the World Government Summit 2017 in Dubai, Professor Stiglitz commented on the current economic conditions in the United States: pensions earned by the working class in the country, is relatively equivalent to same pensions they used to earn 60 years ago.
This means that working groups did not get a real increase in their pensions, resulting in feelings of anger and congestion, which led to the recent presidential election results in the US.
Stiglitz also noted that the data in the United States show a decrease in the average age as a result of the spread of social diseases and rates of suicide and drug addiction.
Stiglitz stressed that social inequality adversely affect the performance of the economy, resulting in a growing political divide in the society, which reduces the volume of investments in infrastructure and basic social services.
Technical advances, more unemployment
On the role of globalisation in such effects, Stiglitz pointed out that globalisation plays a small role in this matter, but technical advances have a much bigger role because they contribute to reducing the demand for unskilled labour and consequently leads to high unemployment rates.
Stiglitz said the rise of populism in the United States came as a result of three factors: the growth of inequality, people’s feeling that the ruling system is unfair, especially that the same persons who were directly responsible for the occurrence of the global financial crisis in 2008 were appointed to solve the crisis rather than be held accountable; and, finally, the loss of confidence in the elite layer of society.

Source: Gulfnews