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When Swiss tycoons handed Donald Trump a gold bar and a Rolex watch – gifts that were followed by a cut in US tariffs – it was no diplomatic nicety. It was a reminder of how concentrated wealth seems to buy access and bend policy. It may, alarmingly, become the norm if the global “inequality emergency” continues. That’s the message of the most recent work by the Nobel laureate Joseph Stiglitz. The economist sees the yawning gap between rich and poor as a human-made crisis which is destroying politics, society and the planet. He’s not wrong.
The problem is no longer confined to a few fragile states. It is a global harm, with 90% of the world’s population living under the World Bank’s definition of “high income inequality”. The US sits just below that threshold and is the most unequal country in the G7, followed by the UK. Prof Stiglitz’s insight is that the current system’s defenders can no longer explain its mounting anomalies. Hence he wants a new framework to replace it. His blueprint for change is contained within the G20’s first-ever inequality report, endorsed by key European, African and middle-income nations.
It warns that the richest 1% captured 41% of all new wealth since 2000, while the bottom half gained just 1%. On average, someone in the global top 1% became $1.3m richer; a person in the poorest half gained $585. Meanwhile, 2.3 billion people are now moderately or severely food insecure – 335 million more than in 2019. Wealth concentration far outstrips income concentration, with billionaires’ assets worth one-sixth of global GDP. Shockingly, billionaire wealth is rising almost in lockstep with global food insecurity.
The report argues that extreme inequality is a policy choice – produced by specific economic, political and legal decisions rather than by “globalisation” or technology. Financial deregulation, weakening labour protections and privatisation all aid rising inequality, as does cutting corporate and top income tax rates. The report stresses that the most dangerous consequences are political, with highly unequal countries seven times more likely to experience democratic backsliding or authoritarian drift. The Nobel prize winner points out that the super-rich account for a disproportionate share of carbon emissions, worsening climate risks borne by the poor. Crucially, Prof Stiglitz rejects the pro-market argument that inequality is good for growth.
The G20 inequality report lays out a comprehensive redesign of global economic governance reminiscent of 1944’s Bretton Woods settlement. What led to that overhaul is being identified again today: global rules and institutions that are generating crises, instability and inequality. Prof Stiglitz wants structural change – suggesting a rewrite of intellectual property rules as well as trade and investment treaties, a reform of global lenders, and an update of tax systems as well as sovereign debt arrangements.
A fairer global order must start where every paradigm shift begins: with knowledge, scrutiny and shared facts. The Intergovernmental Panel on Climate Change – the UN-backed body assessing scientific opinion – was created in 1988 to give global authority to that knowledge. It reshaped climate politics. Prof Stiglitz argues that the time has come for an International Panel on Inequality. Hundreds of experts agree. Endorsing it is not radical; it is simply the first step towards a saner world. Without it, the gold-bar diplomacy circling Mr Trump will spread.
