Page 78 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

BANKING
“Inequality is not good for anyone and results in
a reduction of mobility and deepening poverty...”
USD 21 million in 1961 – but used hard work to make it into the USD 100 billion conglomerate it is today. is equates to a compound annual growth rate (CAGR) of more than 16.8 percent for a period of 54 years. ese entrepreneurs lead the way to technological change and advances in productivity, which lower costs and increase real wages.
Somewhat unfortunately, though, Piketty’s argument around patrimonial capitalism holds more weight when analysing the world’s richest women. e top 10 richest women are either widows or heiresses and include Bettencourt, and Steve Jobs’ widow, Laurene Powell Jobs.
When looking at the richest South Africans, one nds the majority coming from old money. Nicky Oppenheimer, the richest South African, comes in at 174 on the Forbes’ list followed by retail industrialist Christo el Wiese, who surpassed the diamond magnate for a time, post-Brexit.
Inequality and Democracy
After the work of American economist, Simon Kuznets, many economists postulated that inequality was essential for economic development. In the early stages of a country’s economic growth, inequality needs to be high, but as economies develop, and skills’ bases expand, inequality should fall. In recent decades, this has not been observed to be true. In some developed countries such as the USA, inequality levels remain as high as they’ve been for the past century. On the other hand, developing countries such as Brazil and Latin America have had reduced levels of inequality. Inequality has become a major topic for research and most major economists are now addressing this particular issue due to its great importance in a democracy.
e Financial Times’ Martin Wolf said that rising inequality is “incom- patible with true equality as citizens” which is a central principle of democracy. Inequality is not good for anyone and results in a reduction of mobility and deepening poverty as well as peripheral symptoms like increased crime rates.
Columbia University economist, Joseph E. Stiglitz, also argues that extreme inequality “threatens our democratic institutions”. Even in the political landscape surrounding the recent US elections, e New York Times notes that more than half of the early funding for both the Democratic and Republican parties came from just 158 families. is plays into Piketty’s argument that the accumulation of wealth creates an
76