by Dorothy Bishop and Rowan Tomlinson
In a lecture delivered at the University of West London on 7th July, Professor Roger Brown drew some important lessons for Higher Education from an analysis of economic inequality.
First, he established that economic inequality was greater in the US and UK than in many other OECD countries, and was continuing to rise. The evidence was summarised in Figure 1, using the Gini coefficient (which ranges from 1 – if all the income from a country went to one person – to zero – if everyone got the same). He went on to consider a range of reasons that have been proposed to explain rising inequality: these included globalisation leading to an increased labour pool, technological change reducing demand for less skilled workers, and the shift of economies from manufacturing to services, especially financial services. In addition, there are economic pressures that lead to the rich getting richer and the poor getting poorer – to some extent these are inherent in capitalism. Brown suggests that all these factors have played a part in determining inequality in major Western countries. There is, though, variation in economic inequality, and, strikingly, the highest level of inequality is found in those countries that have actively pursued neoliberal policies. These countries have prioritised freer markets, smaller government and lower taxes, and adopted macroeconomic policies that have reduced regulation and allowed international commercial banking to play a larger role in global finance.