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Inequality as a factor in social unrest

The extremes of wealth and income inequality that have developed within the OECD countries, and particularly in the United States, since the early 1980s, have created unbalanced societies, which are by their nature more unstable than was the situation in the 1950s and 1960s. Arguably the mass of the OECD populations have little idea just how extreme the levels of inequality are, but the increasing pressures on the bottom 40% of the population will result in higher levels of social volatility. The London riots of August 2011, and the increasingly violent reaction to police shootings in the United States, notably the repercussions of the killing of Michael Brown on the 9th August 2014, in Ferguson, Missouri, give a clue to what may happen if a large percentage of the disadvantaged gave up hope in the system and decided to vend their anger. If large sections of the population in any country decided that civil unrest was their only opinion when dealing with a system that was seen as biased to the ultra wealthy and unjust, then the police and security authorities would ultimately be unable to contain the violence, and social breakdown could be the outcome. This is the first reason why governments need to reduce inequality, but there are other arguments, related to the operation of the economy. There is some evidence from the United States that there is a correlation in that country between poverty and race. Massey found “A strong interaction between rising rates of poverty and high levels of racial segregation [which] explains where, why, and in which groups the underclass arose.”[1] In 2014 it was estimated that 31.82%, or 101.41 million, of the American population[2] was either black, American Native, or Hispanic, a group that was disproportionately poor and disadvantaged.

It is important to consider the impact of inequality on the average wage earner, and on those who live in poverty or extreme poverty, rather than only focus on the incomes of the ultra wealthy, although the size of these incomes is one of the causes of the problem. Piketty noted that “…there is no natural, spontaneous process to prevent destabilising, inegalitarian forces from prevailing permanently.”[1] The OECD found evidence that, “the biggest factor for the impact of inequality on growth is the growing gap between lower income households and the rest of the population. This is true not just for the very lowest earners – the bottom 10% – but for a much broader swathe of low earners – the bottom 40%. Countering the negative effect of inequality on growth is thus not just about tackling poverty but about addressing low incomes more broadly.”[2]

[1] Massey, Douglas S – “American Apartheid: Segregation and the Making of the Underclass”, American Journal of Sociology, Vol. 96, No. 2, (Sept., 1990), p. 329.

[2] Colby, Sandra L and Ortman, Jennifer M – “Projections of the Size and Composition of the U.S. Population: 2014 to 2060, Population Estimates and Projections, Current Population Reports, US Census Bureau, issued March 2015


[1] Piketty, Thomas – “Capital in the Twenty-First Century”, The Belknap Press of Harvard University Press, Cambridge, Massachusetts, 2014, p.21

[2] “In It Together: Why Less Inequality Benefits All”, OECD Publishing, Paris, 2015, doi: 10.1787/9789264235120-en, p.26

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