Look Who’s Dragging Down the Global Economy Though No One Is Allowed to Say it
“A bit of inequality is good as it creates incentives for hard work and rewards entrepreneurship,” explained Mohamed El-Erian, Chief Economic Advisor of Allianz and former CEO of PIMCO. “Lots of inequality is bad, disenfranchises segments of society, and erodes the social fabric,” he said, joining the chorus of voices that have been lamenting income and wealth inequality as an economic problem.
But none of these voices dare to mention the cause – though they all know it. And we just got numerical confirmation.
Hundreds of millions of people have been lifted out of abject poverty over the last two decades, mostly in Asia. In that respect, inequality has been reduced. But on a national level, “you get a different picture,” El-Erian said in the interview published on Monday:
Whether in the US, Brazil or China: there has been a significant increase in both income and wealth inequality, and so much so that it is now affecting access to equal opportunities. The minute you start talking about opportunities, you start making it a much deeper problem and harder to solve.
“Social cohesion is at risk,” said Allianz Chief Economist Michael Heise in the same interview. “That is a danger for industrialized and developing countries alike. In recent times we have seen social upheavals and conflicts where poverty played a major role.”
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