Even the OECD says inequality is bad. But making it go away is much tougher
It almost feels like an old story. Ever since the economy crashed in 2008 a growing chorus of voices has warned that inequality was wiping out the middle class and damaging society.
This week the Organization for Economic Co-operation and Development, the rich countries` think-tank, made headlines for declaring that growing inequality is not only bad for social cohesion, but is actually cutting points off economic growth.
- Precarious jobs holding back young workers, OECD finds
- Canadian cities unlikely to mimic L.A. on minimum wage
If we all agree, why is it such an intractable problem? The story is complex, but here are just a few reasons why inequality is so hard to fix.
1. Equality where?
While inequality within rich countries has been getting worse, many point out that global inequality has been shrinking.
Countries like the U.S. and Canada used to consume a majority of the world’s wealth. As the rich and middle class in places like China and India get a bigger piece of the action, some argue that morally, increasing global equality outweighs a relative decline in wealth by some people in the rich world.
2. Free trade and globalization
The push to create open trade between countries means that the low- and unskilled workers of rich countries are increasingly competing directly with workers in China, Bangladesh, Vietnam and India. Even within North America, industrial jobs often move to where wages are lowest, meaning middle class industrial jobs disappear.
3. Automation
Even in developing countries, manufacturers are replacing jobs withrobots and automation. Here in North America, computerized processes are already taking jobs done by factory workers, clerical workers and even professionals as clever software learns to search legal titles and write simple news stories.
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