Inequality and

democracy

I Inequality

Wealth and Poverty

Family 3 children

average disposable income:

2.900 euro monthly

Wealth (savings, property, …):

125.000 euro

= more than sufficient to provide sanitation, electricity, potable water and a comfortable house

⇕

• 1 in 3: no basic sanitation•1 in 4: no electricity •1 in 7: lives in a slum •1 in 8: hungry•1 in 9: no drinkable water

In case of equal distribution each single person

$ 23 daily

⇕

one out of six < $ 1.25 daily.

Wealth and Poverty

= scandal

85 persons = 3,5 billion people

1% richest : ± 50% wealth ⇕70% poorest: 3% wealth

1% richest : $ 1,6 million = 700 x (majority)

Europe

Family 2 children

average disposable income:

6.000 euro monthly ⇕

Poverty 23% Risk poverty: + 20 à 30%

Europe

Unemployment: 26 million

⇕

Tax Fraud: loss = € 1.000 billion

= 20 million jobs

World’s priorities MDG

• Eradication of hunger• Eradication extreme

poverty• Basic health• Education• Potable water • Sanitation

• Narcotic drugs

• Military spending

• Publicity & marketing

• Daily speculation• Tax havens• Derivatives market

240 bn. $

400 bn. $

1750 bn. $

2000 bn. $

5300 bn. $

32000 bn. $

693000 bn. $

“If a Martian came to the Earth to do a report on us and started with the Millennial Goals and then read what we're doing, the Martian would get back into his spaceship and say there's really no worry about the Earth. They don't even do what they say they're going to do.”

James Wolfensohn (WB)

Beyond the bottom billion:

"We live in a time of

unprecedented inequality.

According to Unicef global

income inequality, as measured

by the Gini coefficient, is 64%

higher than it was 200 years

ago."

UNICEF

Two Gaps

• South as a whole vs North

• Tail ends: 10% richest vs 10% poorest

UNDP 2013

Increasing Gap

China

East Asia

South Asia

Lat. Am.

India

ex URSS

Arab states

SS Africa

-535

-142

-44

-19

-6

+5

+14

+82

Evolution extreme poverty 1990-2010 (in million)

UNDP 2013WB 2012

100

90

70

5 0

World Bank

1981 2002 2008

86.6

117.6

70.5

Evolution povertyLatin America ($2, in miljoen)

Neoliberal phase Left wave

Worldbank

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Construction of Welfare state

Neoliberal offensive

Top percentile in totale income US

1920 1930 1940 1950 1960 1970 1980 1990 2000 201020

25

30

35

40

Construction of Welfare state

Neoliberal offensive

Top decile in total income

Europe

Rate of return to capital vs growth rate of world

outputPiketty

Welfarestate

Neoliberalism

The crisis

64 million people into extreme poverty

high-net-worth individuals ($ 1 million) wealth: + 41%

Dictatorship of financial markets

The crisis as shock therapy

“That is why crises are also opportunities. We can get things done that we could not do without the crisis.”Wolfgang Schäuble, German finance minister

Loss of Purchasing power

• Greece: -40% • Portugal: > -20%• Spain: -22%• Great Brittain: -22% • Ireland: -14% • Italy: -10%

Change in Gini coefficient 2007-2011

“65 countries (43% of the 150) will be at a high or very high risk of social unrest in 2014. For 54 countries the risk of instability is medium and for the remaining 31 countries it is low or very low. Compared with five years ago, 19 more countries are now in the high-risk categories.”The Economist

Social unrest

II Democracy

Fundamental contradiction

• Inequality = rich minority poor(er) majority

• Democracy = the power lies with the people,

so with the poor(er) majority. • If the poor (numerical prevalence) assert

their (economic) interests the end of the inequal wealth and privileges of the elite

Elite = against ‘real’ democracy

Greek antiquity

Aristotle

“Democracy is rule to the advantage of the poor. None of the diverging systems aims at the profit of every type of citizen in common.”

“In democracy, the poor are they sovereign excluding the rich because they are the most numerous, and the opinion of the majority is law.”

Greek antiquity1. A small elite rules. The lower classes (the majority) are kept under the thumb. They have no voice in decision-making, control and awareness of the group is important. 2. Within the small elite adversarial debate is needed. Tyrants and dictators are excluded. 3. It is not the rich who exercise power (directly), which is done by a 'political' class or a small minority.

Bourgeois revolutions

Jacobins (left): universal suffrage (for men), a progressive tax system, free education, abolition of slavery in the colonies ...

Right wing: Law ‘Le Chapelier’: prohibition of unions and strikes

Bourgeois revolutions “A country governed by the owners is in the social order, one in which the rule is non-owners in the state of nature.”Boissy d’Anglas

“The supreme power cannot take from any man any part of his property without his own consent. Men, therefore, in society having property, they have such a right to the goods, which by the law of the community are theirs, that nobody have a right to take them, or any part of them, from them without their own consent.”

Locke

Bourgeois revolutions

“The people are not fit to govern on their own, so you need professionals of the power.”

Montesquieu bi-cameral system

Bourgeois revolutions

Napoleon: Only Senate + Census suffrage

weighted voting (multiple votes depending on taxes)

No taxation without representation

No representation without taxation

United States “All communities divide themselves into the few and the many. The first are the rich and well born, the other the mass of the people. The people are turbulent and changing; they seldom judge or determine right. Give therefore to the first class a distinct, permanent share in the government. They will check the unsteadiness of the second… Can a democratic assembly, who annually revolve in the mass of the people, be supposed steadily to pursue the public good?”

Alexander Hamilton (first U.S. Secretary of the Treasury)

United States Today

Almost half of Congress (Senate) = millionaires. median income = 3x House of Representatives = 25x median household income

Powerful lobbies ensure that 'wrong' proposals are blocked

Bourgeois revolutions

1. Political power limited to a small elite. = crucial to secure the possession of the rich2. A representative system such that the different fractions (the bourgeoisie) are represented and that the nobility no longer can dominate. 3. The majority of ordinary citizens is neutralized by: census suffrage; weighted voting or bicameral system.

Revolutions 1848 Lessons

Emerging labour movement demand universal suffrage skips to other countries

State: • monopoly on violence• Controle of brains • Limit organisations

October Revolution 1917 & WW1

• Abolition Ancien Regime: Germany, Austria• Universal suffrage (men):

Belgium: 1918; Netherlands 1917• Beginning of the emancipation of women:

Netherlands: voting right in 1919 Belgium: 1948 France: 1946

Revolutions 1848/1917 & WW1

1. Elite done everything to avoid universal suffrage: census suffrage; weighted voting; bicameral system exclude women, foreigners, blacks, …

2. Only through struggle never ceded power enforced (fight) or fright; 'despite' parliaments general strikes; dozens dead

3. Control media (concentration) = critical4. To curb or integrate parties and trade unions5. Everything revolves around wealth distribution

Today

Incredible concentration of economical and financial power 80% controlled by 737 companies40% ” ” 147 ”

50 ‘systems integrator firms’

‘silent take over’ of state & media

“Big business bought all the democratic space - with its parties, media and judicial institutions. Of course, even this democracy remains preferable to dictatorships and authoritarian regimes, but at the same time it is clear that the current form is not up to the task to tackle the present crises. Only when we envisage that problem and articulate it, we can begin to formulate alternatives.”Arundhati Roy

“The press is free if you can own

one.”

Al Pacino

Consequences for democracy

• The public debate is not done in the civil society but in and (managed) by the media (controlled by big capital)

• The electoral campaigns occur mainly in the mass media and are fashioned by the mass media

Elections = media spectacle It is no coincidence that the core issue of democracy / inequality, i.e. wealth tax is ignored in the media and in political debates.

Conclusions• So far the elite has managed (ups and downs) to

neutralize core contradiction of inequality and democracy; Democracy is shaped in such a way that it does not endanger the redistribution of wealth.

• Potential unrest = big risk • If we want to tackle inequality thoroughly; then we

have to address the issue of democracy and the ‘silent takeover’ of the media and the state.

• Not an easy task. The continent where they experiment most in that field is Latin America. Maybe we can learn from them.

To fight for more global tax justice is to reconquer fiscal

democracy in the service of the global general interest,

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Greek antiquity

Plato

Aristocracy = best political regime “In the last stage of degeneration, democracy, the most free city, descends into tyranny, the most enslaved.”

“Agitated by the stinging drones, the poor revolt, killing some rich, and expelling the rest. They set up a new constitution in which everyone remaining has an equal share in ruling the city.”

• FAO: yearly Investment $ 24 bn. return: $ 120 bn. (= 500% ) losing: $ 450 bn. + saving millions of lives

$ 24 bn. = 8% subsidy of farmers = 0.004% derivate markets

Market = Efficient?

• WHO: yearly Investment $ 35 bn. return: $ 360bn. (> 1000% ) + saving 8 millions of lives

$ 35 bn. = 1% spending EU & US

Market= Efficient?

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Evolution Official Development Aid (% GDP)

End S.U.

9/11