Lei Xiangping

    lagon235@163.com

    THE Gospel of Matthew in the Bible says, “These who have will be given more to have abundance, but these who have nothing even what they have will be taken away.” This quotation — an original description of the Matthew Effect, meaning the rich become richer and the poor become poorer — now can be observed with an astonishing reality: global income disparities have reached a new height, according to two new reports.

    The Organization for Economic Cooperation and Development (OECD) report says global per capita GDP has kept a fast growth in the past 30 years, albeit accompanied by a worsening income disparity never seen before: within the 34 OECD states, the richest 10 percent of earners make 9.5 times the amount of the poorest 10 percent; the global average household income had a 1.6 percent annual increase before the 2008 recession, but has remained stagnant since then.

    While the poor make less, wealth has been increasingly dominated by a tiny minority. The other report by Swiss Credit Bank shows that in 2014, global fortunes reached US$263 trillion, with 50 percent belonging to 1 percent of the earners and the richest 500 tycoons owning an aggregate wealth of US$5.2 trillion, equivalent to one held by the 3 billion lower-paid earners.

    Why is growth not equitably shared? Researcher Li Xiangyang from the Chinese Academy of Social Sciences explained that the free-market-oriented neoliberalism, still active globally, has loosened government intervention, so reducing inequality by taxing the rich more and redistributing it to the poor has become hard. French economist Thomas Piketty also wrote in his bestseller “Capital in the 21st Century” that “since the 18th century, free capitalism has exacerbated inequality and effective government intervention should have been implemented.”

    With laborers’ earnings disproportionately left behind and the return of capital growing dramatically, income inequality widened quickly, and in return, it has bitten into global growth, social harmony and even political systems. Policymakers must take this problem seriously before it trickles down and brings about more damage.

    Statistics have shown inequality has jeopardized sustainable growth. Low-income earners have to tighten their belts, and consumption spending, a main contributor to growth, has become more dependent on high-income earners, a situation not sustainable in the long run.

    Meanwhile, inequality upsets social harmony. In 2012, America’s top 5 percent of earners accounted for 38 percent of personal consumption expenditures while the share by the bottom 80 percent of earners dropped to 39 percent, which means low-income earners’ demands for education, health care and housing, among others, remained unleashed despite the fact that the high-income earners were overflown.

    Additionally, inequality has corroded democracy. In America, given the Supreme Court’s evisceration of campaign-finance restrictions, constraints on the rich who want to promote policies that enhance their superiority become harder. Even the former U.S. Secretary of State Hilary Clinton said this year, “Americans are bogged down by inequality, which is risking democracy.”

    Global inequality and its consequences are of great concern to China as well. Listed as a middle-income country, China’s inequality — the country’s Gini Coefficient has stayed above the warning line for the last 10 years — is at a risky point. Whether China can transcend the middle-income gap nearly depends on how China tackles inequality properly. As reform continues, China needs to enlarge the middle-class group, alleviate poverty and develop a consumption-driven economy.

    (The author is an editor with the News Desk at China Radio International.)