Widening wealth gap creates more social and economic risks

A Chinese woman shows credit cards and other bank cards in Qionghai city, South China's Hainan province, April 14 2012. [Photo/IC]

The world's 62 richest people have as much wealth as the poorest 3.6 billion people, half the world's population, according to a new report by Oxfam International. Half of the 62 richest people are from the US, 17 from Europe, with the remainder from China, Brazil, Mexico, Japan and Saudi Arabia. The mega-rich have seen their net worth soar over the last five years and the top 1 percent now own more than all the rest combined. Huanqiu.com on Wednesday says:

China also faces risks from its excessive concentration of wealth.

First, its continually widening wealth gap threatens social stability. In both developing and developed countries, as societies develop a more evident pyramid structure it gives rise to increasing social discontent.

Second, the more money rich people have, the more risks they face, and the more speculation they make to offset the risks, the more they increase the risks. As a result, governments are afraid of setting off a chain reaction so they rescue financial institutions at risk of failure with government money, thus further widening the inequality.

Third, in some developed countries employers take advantage of the free flow of capital to drive down labor costs. If the workers complain about their wages or working conditions, employers can simply relocate their factories. The average wage of a blue-collar worker in the United States, taking into account inflation and other factors, is no higher than it was in the 1970s.

It is harmful to a society's sustainable development when the majority of the wealth is the hands of a few, and China is now trying to more equitably distribute wealth.