Coverage of the World Economic Forum’s annual, global conference of political and business leaders at Davos has become so routine that it’s tempting to ignore it, except that this year something interesting is actually going on. The organization’s annual risk report cites “severe income disparity” as one of the most prevalent risks run by the global economy. An effort will be made to address the issue, and it will be interesting to see how it plays out.
This is not just lipservice, aspiring to show empathy with those who lack the means to get to Davos. It is a recognition that inequality can be downright dangerous, and can get in the way of progress.
According to Oxfam,, just 85 people in the world (you could fit them all together on a bus) now have wealth equal to that of the bottom half of the world’s population ($1.7 trillion).
So what kind of threat does this present?
Inequality within societies has demonstrable negative outcomes, including effects on health and well being of the individuals. As one well known study of 10,000 civil servants in England demonstrated , it is those at the bottom of the pecking order that have the least favorable health outcomes. Men in the lowest grade of work – messengers, doormen – had death rates three times higher than their bosses.
A recently published book, "The Spirit Level" supports the study findings. The epidemiologists who wrote it, based on 30 years of research, found that inequality is associated with higher crime rates, increased obesity and greater violence.
In countries or companies where there is a gross disparity between the top and the bottom, inequality starts to become an existential belief – I am at the top because I am essentially better – which both erodes cognitive and creative potential and makes the possibility of collaboration or communication impossible. Steep hierarchies produce higher levels of corruption and lower levels of innovation, and that’s before they collapse.
Globally, we are seeing many of these symptoms already, insofar as we seem unable to confer to collaborate on the biggest problems we currently face. Desperate to protect entrenched interests, political and business leaders cannot effectively negotiate on climate change, global tax structures or the movement of labor. The real question at Davos, therefore, will be -- is the risk posed by inequality big or present enough to inspire meaningful action?
The World Economic Forum conference at Davos gets underway Wednesday.