One reason that inequality has accelerated in recent decades is through no fault of the rich:
Central Banks, and especially the US Federal Reserve (‘the Fed’) have not worried about asset price inflation; they worry about consumer price inflation - higher prices for goods & service, and wage inflation.
When financial markets come under extreme stress, such as during the Global Financial Crisis in 2008, and Covid in 2020 – the Fed, with the stroke of a key, ‘prints’ trillions of dollars to restore financial institutions that have already gorged upon the Fed’s policies, back to health. Failure of these huge financial intermediaries would undermine the entire economy, whilst ‘failure’ of individual homeowners or small businesses is a price that must be paid.
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The brightest financial brains that exist are ensuring that asset holders (the rich) are cushioned in crises, whilst the asset-poor remain the same.
In the US the wealthiest 1% of the population own 31% of the nation’s assets, whilst the entire bottom half of the population owns only 2%.
A second reason for growing inequality is a result of concerted lobbying by the wealthy - to lower taxes.
In the US, taxes for the wealthy and for companies were lowered substantially during Trump’s reign.
It is extraordinarily difficult to have a reasonable debate about taxation in Australia. We have substantial tax benefits for the wealthy in:
- Superannuation Negative gearing
- Capital gains tax concession
- Trusts
- No wealth or inheritance taxes
We consider that a healthy society should have widespread financial health, and not be dominated by a brilliant few who may extend their power through philanthropy.