THE COST OF INEQUALITY
Statistics from the World Bank and the UN show, when comparing developed countries, that there is a direct and undeniable correlation between higher inequality within a country and higher levels of social problems.
These statistics show that countries with greater inequality, regardless of average wealth or GDP per capita, show lower life expectancy, lower math’s and language grades, lower levels of trust within communities and social mobility, and higher levels of infant mortality, rape, homicide, imprisonment, high school dropouts, teenage pregnancy, obesity, mental illness (including drug and alcohol addiction), and many other social ills than more equal countries!
Greater inequality also leads to less representative democracies and in turn even greater inequality, because governments are often persuaded through corruption and party election funding to pursue policies which benefit the rich elite and large corporations at the expense of the poor majority. The poorer the masses become compared to the elite, the less influence they have on their government.
The cost of our ever increasing inequality in South Africa is clear: Hundreds of billions lost in recent strike action, increased borrowing costs because of our ratings downgrade (blamed on uncertainty caused by inequality and industrial unrest), crime, violence, drug problems, racial animosity, poor education, loss of investor confidence due to the unrest, the damage to South Africa’s image etc.
Our growing inequality is simply unsustainable, and simple mathematics shows that inequality can’t decrease while income inequalities increase. Income inequality in South Africa has been rising steadily over the last 20 years despite the end of apartheid and despite the implementation of race-based affirmative action policies. We have simply not addressed the underlying cause of income inequality, which is the irresponsible manner in which salaries are decided.