Growing global wealth inequality is becoming a fundamental risk to democracy and to economies around the world as more people feel government rules "rigged" in favor of the rich leave them with few options, investors and governance experts said Friday.
"It's very dangerous," said Ngaire Woods, dean of the Blavatnik School of Government at the University of Oxford. "If people can't aspire to succeed within the system, they will aspire … outside the system, in ways that break the system."
That frustration is feeding into everything from the contentious U.S. presidential race to growing dissatisfaction over the amount of aid money that lands in the hands of rich-nation consultants rather than reaching the poor, experts said at the Skoll World Forum on Social Entrepreneurship in Oxford.
In the United States, for example, "trickle down" economic policies that support tax cuts for the rich with the aim of boosting economic growth and jobs have led to a US$2-trillion annual redistribution of wealth from the bottom 99 percent of earners to the top 1 percent over the last 30 years, said Nick Hanauer, a former venture capitalist and now head of Civic Ventures, which aims to drive social change.
If the trend continues, by 2030, the top 1 percent of Americans will earn 37 to 40 percent of the country's income, with the bottom 50 percent getting just 6 percent, he said.
Globally, half of the world's wealth is now held by just 1 percent of the world's population, according to a 2015 report by Credit Suisse, a financial services company.
Many people feel that "the political apparatus of democracy is corrupted" and the result is "dissatisfaction by huge swathes of the population about the potential of democracy to deliver anything of value and meaning to their lives,” Darren Walker, president of the U.S.-based Ford Foundation.
Reversing growing inequality will depend largely on revamping government policies and making rules fairer, changes that often need to be driven by public pressure, panelists said.