Nobel laureate economist Robert Shiller of Yale University warns economic inequality “could become a nightmare in the decades ahead” that “we are not well equipped to deal with it.”
He warns that “truly extreme” gaps in income and wealth could arise from many causes.
“Consider just a few: Innovations in robotics and artificial intelligence, which are already making many jobs uncompetitive, could lead us into a world in which basic work with decent pay becomes impossible to find. An environmental disaster like global warming, pollution or disease could sharply reduce the ability of people of ordinary means to live in specific regions or entire countries,” he wrote in the New York Times.
“Future wars using ever more highly destructive technology, including chemical, biological, radiological or nuclear weapons, could devastate vast populations. And it’s not out of the question that dire political changes, like the rise of racist or otherwise exclusionary social structures, could have terribly damaging consequences for less privileged people.”
He cites past history in which “taxes on the rich generally have not gone up when inequality and economic hardship have increased.
Instead, they found that taxes tend to rise when warfare increases, largely “because war mobilization changed beliefs about tax fairness.” These tax changes were generally aimed at ensuring national survival, not correcting economic inequalities,” he said.
“Despite past failures, we should not lose hope in our ability to improve the world. In a recent column, I described ways in which society might change a deep-rooted sense of entitlement by radically broadening wage and job insurance. Such a program would be a start in getting us prepared to deal with some of the immense challenges that may lie ahead.”
And new research indicates that indeed, income inequality helps to paint a bleak economic future for today's younger generation: ironically, the same generation arguably benefiting most from such technological advances.
The new report, entitled "Poorer Than Their Parents? Flat Or Falling Incomes In Advanced Economies," comes from the McKinsey Global Institute. The study examined the prospects for over 800 million workers in the 25 wealthiest countries and found that the rising generation is at serious risk of ending up poorer than their parents.
The report found that between 2005 and 2014, real incomes in those same advanced economies were flat or fell for 65 to 70 percent of households, or more than 540 million people.
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