How to Avoid Worst of All Worlds: Pay Poorest More
Staff Writer, CNBC.com
The financial crisis, social unrest, and upcoming elections in some of the world’s biggest democracies have increased the risk of dystopia in the world, a panel of experts told the World Economic Forum Wednesday.
Dystopia – defined by the Oxford English Dictionary as “an imaginary place or condition in which everything is as bad as possible” – is usually the stuff of end-of-days science fiction novels.
Yet there is a chance that it could become reality unless governments around the world tackle employment and wage levels, according to high-level economists, human rights campaigners and union officials.
“There’s an important connection between social unrest and economic trouble, which we are seeing now,” Nouriel Roubini, the economist known as Dr. Doom, told CNBC.com.“There are major inequalities coming from the effects of the financial crisis.”
Tackling wage inequality is key to avoiding a state of dystopia for many, the panel agreed.
Jody Heymann, founding director of the Institute for Health and Social Policy, said that governments should make sure that they are spending on employment-generating infrastructure projects rather than just enforcing austerity – which has become a cause of social unrest in the euro zone.
“For our members, it looks like the winnertakesitall, changes the rules, and aborts the political process,” Philip Jennings, general secretary of UNI, the global union, said.
He believes that “new expectations” are needed.
“Inequality is dangerous because it creates more instability, but, most importantly, when inequality is rising you are shifting income from workers to corporates,” Roubini said.
He argued that when the highest earners get paid more, they are more likely to save than spend, whereas workers at the lower end of the pay spectrum will spend and put money back into the economy rather than save.
The effects of social upheaval are often positive, Salil Shetty, secretary-general of Amnesty International pointed out.
“What’s insecurity for some people might be security for others, if it means moving to a place where people’s basic human rights are being valued,” he said.
Shetty believes that governments and faith leaders have failed to provide the necessary leadership during the economic storms of the past few years.