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In his remarks, Gurria repeatedly underlined the importance of reducing the wealth gap in order both to enhance overall economic performance and reduce social friction, stressing that the implications of current trends were “very serious”.

“(G)rowing inequality raises political challenges because it breeds social resentment, it questions the ultimate role of democracy and generates political instability,” he said. “It also fuels populist, protectionist and anti-globalization sentiments…Ignoring increasing inequality is not an option,” he added.

Among OECD countries, social mobility as measured by the relative earnings of fathers and sons was highest in the Nordic countries where the rich-poor gap was narrow, and lowest in Italy, Britain and the U.S. — all countries where the gap was significantly wider.

The report noted that while poverty among the elderly has fallen in OECD countries, poverty among young adults and families with children, particularly single-parent families, has increased over the same period. On average, one child out of every eight living in an OECD country in 2005 was living in poverty. For the U.S., the ratio is closer to one in five.

In a companion article published by the OECD ‘Observer’, Oxford University economist Anthony Atkinson argued that government will have to take a stronger role in reducing the wealth gap and creating jobs, particularly if the world economy goes into recession.

“If the government can take on the role of lender of last resort [for troubled financial institutions], then we should think about the government taking on the role of employer of last resort,” he wrote. “Put bluntly, governments have to step up to the plate, as [U.S. President Franklin] Roosevelt did in the Great Depression.
“© 2008 Inter Press Service

URL to article: http://www. commondreams. org/headline/2008/10/22-7

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