Dickson Igwe. Photo: Provided

Over the past 30 plus years, from the time Milton Friedman’s business driven economic ideas became dominant, over and above the theories of John Maynard Keynes and his stimulus and consumer demand led models, the world today is at the place where between sixty to eighty families own over half of global wealth. This is a reversal of post World War Two prosperity that saw the rise of the western middle class.

Supply Sided Economics has also benefitted global oligarchs. Vladimir Putin leads a country that was once the bastion of communism. Today the Russian Strongman is reputedly worth in excess of two hundred billion dollars. That is two hundred thousand million dollars. Putin and a Russian Oligarchy own the Russian State “hook, line, and sinker.” Russia today is in an economic and social hole. Paradoxically, Putin is extremely popular in Russia. His favourability ratings exceed 80%.

Now, the problem with inequality is cause and effect: the greater the level of inequality, the more the economic pressures that are heaped on the poor and middle classes. History has proven Trickledown to be fallacy. In fact, Trickle Up, where the wealth flow begins with the working and middle classes, is a more enduring prosperity. Trickle Up, another name for consumer led growth, is considered a more productive economic model by a number of the world’s most prominent economists.

Poverty and frustration are at the root of global conflict. “A hungry man is an angry man” is a well used cliché.

Paradoxically, wealth inequality is viewed as being at the root of a new nationalism and populism in the west that is seeing the rise of right wing types like Donald Trump in the US and Marine Le Penn in France. Donald Trump is an entertainment and hotel billionaire who is the spearhead of a working class movement of white families who have been pummeled by declining income and wealth, caused by globalisation and outsourcing.

Globalisation has enabled the wealthy to move their wealth around the planet very creatively. Outsourcing has given the wealthy capitalist classes in the USA and Europe mainly, the opportunity to move production to countries where the cost of labour is exponentially lower than in first world developed states.

Great inequality is also a feature of the developing world. However, it is much worse there, as it is buttressed by authoritarian governments, and tyrants. When one sees his children starve, it is much easier to pick up a Kalashnikov and fight for an “absurd” cause.

If, “necessity is the mother of invention” then poverty and hopelessness are the fathers of war and terror.

Boko Haram in Nigeria is a splendid example. Poverty in Northern Nigeria is the recruiter for this terrorist menace. Then the group is further aided by super corrupt governance and grotesque mismanagement. Recently, billions of dollars required to arm Nigeria’s military, was stolen by a number of public officials. This resulted in a recent defeat, and humiliation of Nigeria’s army, in the notorious Sambisa forests at the hands of this bloodthirsty band of Islamic terrorists.

That, inequality is the great new evil of the 21^st century is not in dispute. Even the mighty IMF, which was once the manifestation of the Supply Sided Economic Order of the Chicago School, has made a policy reversal.

A story in the Boston Globe Newspaper of January 28, 2016, was titled, “EQUALITY IS THE KEY TO ECONOMIC GROWTH.” The piece was written by Christine Lagarde the IMF Chief.

Ms Lagarde was at Davos where the world’s elite meet to thrash out the future of humanity annually. The meetings this January 2016 involved discussions focused on whether China’s transition to a new growth model will continue to unsettle markets, to whether the flow of refugees will fracture Europe’s unity. Or, whether robots will replace people and jobs, and whether the global economy can start to fire on all cylinders to produce more sustainable and inclusive growth.

Dr Lagarde questioned the traditional view that income inequality is a necessary by-product of growth, that redistributive policies to mitigate excessive inequality hinder growth, and that inequality will solve itself if you sustain growth at any cost.

In fact, what Lagarde’s IMF have found, is that countries that have managed to reduce excessive inequality have enjoyed both faster and more sustainable growth. In addition, IMF research shows that when redistributive policies have been well designed and implemented, there has been little adverse effect on growth.

SOCIALISM is not necessarily a bad word after all. Indeed, low growth and high inequality are two sides of the same coin: It is therefore accurate to assert that effective economic policies pay attention to both prosperity and equity.

Lagarde stated that what was crystal clear was that excessive inequality was a burning issue in most parts of the world. “Too many poor and middle-class households increasingly feel that the current odds are stacked against them. The overriding challenge facing policy makers in 2016 is to prove them wrong.”

Returning to cause and effect, and the continuing pull towards inequality is increasingly becoming manifest and the new order. This is creating a world that is growing more volatile, and increasingly combustible.

There is anger and frustration in Europe. In the USA, the economic pressures are being blamed on minorities and immigrants, and not on the one percent and its allies in congress and academia. In Africa and the Middle East, countries are teetering on the precipice of war and terror while a corrupt billionaire class fiddles away like the Legendary, NERO.

Will creating a fairer world in terms of wealth distribution, aid peaceful development internationally?

The answer has to be yes.

Is mankind wise enough to understand that: sadly the answer remains no!

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