There has always been a wide gap between the rich and the poor in most countries of the world. The rich accounted for a very small proportion of the population but possessed the larger part of wealth and income.
And it clearly appears that the gap is all set to widen.
In many countries the top 10% of the adult population accounted for nearly 80% of the income and wealth. Over time this has been increasing, giving rise to a new breed of super-rich. These new super-rich who constitute less than 1% of the population control as much as a tenth of the money.
Not rich with inherited wealth
It is not inherited wealth that creates this class – rather these new fortunes are amassed by perceptive businesspeople who see themselves as deserving victors in a cut-throat internationally competitive world.
This phenomenon, while more prevalent in the capitalistic Western world has also affected countries as diverse as China, Russia, Indian, Germany, Sweden and Finland. Economic inequality of an extremely large magnitude and one which is growing rapidly, has become a global matter affecting people across the world. While the rich have been growing richer there has not been a corresponding improvement in the wealth of the middle classes. In many instances the middle class has perhaps stagnated or even regressed to lower economic status.
What is it that drives the growth of the super-rich?
One major reason is political in nature. The rich in any economy either pays lower taxes or evades taxes. In countries like India, the rich are well-known for taking advantage of loop-holes in the tax laws and paying lower taxes than they should.
Nepotism and knowing the right people help the rich and famous get richer and more famous in terms of jobs, income, business and wealth. This is similar to the concept of crony capitalism in the rich capitalist economies of the west where all the benefits are cornered by the few at the top while the rest of the population get zilch. This is not an easy situation to get out of unless the super-rich themselves decide to distribute and share their wealth.
Revolution in information technology
The other reason for the rise of the super-rich is the revolution in information technology and the liberalization of global trade. The internet and the mobile have made the world smaller and more accessible and lifted millions out of poverty. Newer products are available at lower more affordable prices. But new technology is also killing traditional businesses and driving older employees out of jobs. The number of jobs are decreasing as technology takes over what humans had been doing so far.
The global market, the new technologies have given birth to a new class of international business stars who demand and get exorbitant pay packets and perks, thanks to their technological and analytical skills.
Meritocracy wins but very often this meritocracy also changes into crony plutocracy – when people have the power of money to bend rules in their favor they do so – to give their children a leg-up in this competitive world. So in the race for meritocracy those with greater wealth have a built in advantage which they do not hesitate to exploit.
The super-rich are here to stay and the rich-poor gap is set to widen unless those with economic power decide to share their wealth with the rest of society and create a more equal world.