The Guardian view on global inequality: the rising tide that leaves most boats behind | Editorial – The Guardian

Global Wealth Inequality: A Barrier to Sustainable Development

Executive Summary: 2024 Global Wealth Report Findings

A 2024 report by UBS highlights a significant increase in global personal wealth, which grew by 4.6%. However, this growth has exacerbated existing disparities, posing a direct challenge to the achievement of the Sustainable Development Goals (SDGs), particularly SDG 10 (Reduced Inequalities). The distribution of this new wealth remains profoundly unbalanced, widening the gap between asset holders and non-asset holders.

• Extreme Wealth Concentration: The top 1.6% of the world’s adult population, approximately 60 million individuals, now control $226 trillion, which constitutes 48.1% of total global personal wealth.
• Wealth Poverty at the Bottom: Conversely, the bottom 40% of adults, representing 1.57 billion people, collectively hold only $2.7 trillion, a mere 0.6% of the world’s wealth. This starkly undermines progress on SDG 1 (No Poverty).

Analysis of Inequality’s Drivers and a Challenge to SDG 10

The report indicates that wealth inequality is not an accidental byproduct of economic activity but a result of structural and political choices that contravene the principles of SDG 10 (Reduced Inequalities). Wealth accumulation is heavily influenced by institutional conditions and public policies rather than solely by income.

Key Drivers of Wealth Disparity

• Divergence of Capital and Labour Income: Policies have systematically boosted capital income derived from profits, rents, and interest, while wages have stagnated and the power of collective bargaining has diminished. This trend directly impacts SDG 8 (Decent Work and Economic Growth) by preventing productivity gains from translating into improved living standards for the wider population.
• Asset Inflation and Policy Choices: In regions like the United States, soaring financial markets have disproportionately benefited the ultra-rich. Globally, policies such as low taxation on wealth and systemic housing shortages have amplified returns for asset owners.
• Economic Unsustainability: High levels of inequality are economically unsustainable. They suppress aggregate consumption, deter productive investment, and slow overall growth, forcing economies to rely on debt and speculative bubbles.

Impact on Broader Sustainable Development Goals

The consequences of unchecked wealth inequality extend across the 2030 Agenda, threatening progress on multiple fronts.

1. SDG 16 (Peace, Justice and Strong Institutions): The report notes a correlation between extreme economic unfairness and the erosion of democratic institutions. This growing inequality aids the rise of autocratic political movements, risking democratic collapse and undermining the goal of building peaceful and just societies.
2. SDG 8 (Decent Work and Economic Growth): When capital income consistently outpaces labor income, the foundations of inclusive and sustainable economic growth are weakened. The economy becomes less resilient and more prone to financial instability.

Policy Recommendations for Achieving the SDGs

Addressing this profound inequality requires a multi-faceted approach involving both fiscal redistribution and structural economic reform. International cooperation, as envisioned in SDG 17 (Partnerships for the Goals), is critical.

Fiscal and Taxation Measures

• A global call for a tax on the super-rich has been advanced by countries including Brazil, Spain, and South Africa, successfully placing the issue on the G20 agenda.
• Seven Nobel laureates have issued a call for a minimum tax on the ultra-rich.
• Economists have developed frameworks for such taxes, leading to legislative action in France for a 2% minimum tax on wealth exceeding €100 million, although its final passage is pending.

Structural Reforms for Equitable Growth

• Boosting Labour Income: Policies must be enacted to ensure wages grow in line with productivity. This includes promoting full employment, strengthening labour unions and collective bargaining rights, and increasing public investment.
• Widening Asset Ownership: A fundamental reconception of private ownership is needed to widen public access to productive assets and social wealth, ensuring that the benefits of economic growth are shared more broadly.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 10: Reduced Inequalities

  This is the central theme of the article. It directly addresses the “starkly unbalanced” distribution of global wealth, citing specific figures on the gap between the richest and the poorest segments of the population. The entire article is a commentary on the causes and consequences of this inequality.

• SDG 8: Decent Work and Economic Growth

  The article connects wealth inequality to issues of labor and the economy. It discusses how “wages have stagnated,” “collective bargaining has weakened,” and “Productivity gains” no longer lead to better living standards for the general population. It proposes solutions like achieving “full employment” and boosting wages to create sustainable economic growth.

• SDG 1: No Poverty

  While not using the term “poverty” frequently, the article describes a state of extreme asset poverty. It highlights that “four in 10 adults – 1.57bn people – have only $2.7tn, or just 0.6% of all the world’s personal wealth.” This extreme lack of assets is a critical dimension of poverty.

• SDG 16: Peace, Justice and Strong Institutions

  The article argues that wealth inequality is a result of “political choices” and “favourable institutional conditions” such as low taxes for the rich. It calls for institutional reforms through “Progressive taxation” and warns that extreme inequality aids “far-right autocrats whose rise brings the risk of democratic collapse,” linking economic fairness to institutional stability and justice.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 10: Reduced Inequalities

   • Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average. The article implicitly addresses this by showing the extreme concentration of wealth at the top (1.6% of adults own 48.1% of wealth) and the minuscule share held by the bottom 40% (0.6% of wealth), indicating that their economic standing is not improving relative to the average.
   • Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality. This is a core recommendation of the article, which explicitly calls for “Taxes on wealth,” policies that “boost wages,” and strengthening “collective bargaining.” It cites specific proposals like a “global tax on the super-rich” and a “2% minimum tax on wealth” in France.

2. SDG 8: Decent Work and Economic Growth

   • Target 8.5: By 2030, achieve full and productive employment and decent work for all… and equal pay for work of equal value. The article points to the failure to meet this target by noting that “wages have stagnated” and proposes achieving “full employment” as a necessary policy solution.
   • Target 8.8: Protect labour rights and promote safe and secure working environments for all workers… The article directly relates to this target by stating that “collective bargaining has weakened” and advocates for “stronger labour unions” to ensure workers can bargain for a fair share of economic gains.

3. SDG 1: No Poverty

   • Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions. The article’s focus on the bottom 40% of the world’s adult population owning almost no wealth addresses the dimension of asset poverty, a key component of multidimensional poverty.

4. SDG 16: Peace, Justice and Strong Institutions

   • Target 16.6: Develop effective, accountable and transparent institutions at all levels. The article critiques existing institutions for creating “favourable institutional conditions” for the wealthy through policies like “low taxes and housing shortages.” It calls for institutional reform through progressive tax laws, implying the current systems are not effective or accountable to the wider population.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article mentions several quantitative and qualitative indicators that can be used to measure progress:

1. Wealth Distribution Statistics (Proxy for Indicator 10.1.1)

   The article provides precise figures from the UBS global wealth report: “just 60m of the world’s adults – 1.6% of the population – have net personal wealth of $226tn, or 48.1% of all the world’s riches.” In contrast, “four in 10 adults – 1.57bn people – have only $2.7tn, or just 0.6% of all the world’s personal wealth.” These figures are direct indicators of wealth inequality and can be tracked over time to measure progress towards Target 10.1.

2. Labor Market Conditions (Relates to Indicators 8.5.1 and 10.4.1)

   The article points to “stagnated” wages and “weakened” collective bargaining. Tracking the labor share of income (the proportion of national income going to employee compensation) and the rate of unionization or collective bargaining coverage would serve as indicators of progress. The article notes that “capital income… has been boosted by design” while wages have not, highlighting the imbalance.

3. Implementation of Fiscal Policies (Relates to Indicator 10.4.2)

   The article mentions specific policy proposals that can be used as indicators of institutional change. These include the call by “Brazil, Spain and South Africa” for a “global tax on the super-rich” and the law passed by the “French national assembly… for a 2% minimum tax on wealth over €100m.” The adoption and enforcement of such progressive tax policies are measurable indicators of a government’s commitment to reducing inequality.

4. Table of SDGs, Targets, and Indicators

Source: theguardian.com