It is a worldwide trend analyzed by economists and pundits, with tons of books published every year. Income inequality and lack of social mobility is a source of worry particularly among US analysts. Now it's the IMF's turn to weigh in, with a new report mentioning also the ramifications of income inequality in Greece.
In a report entitled “Fiscal Policy and Income Inequality”, the Fund warns of the dangers income deficiency causes in world economic growth and the political instabilities it creates. The report mentions that, particularly in the US, inequality levels are worse than the ones during the Great Depression of 1929.
Few would disagree with the IMF conclusions but, given the fact that it was them who insisted on most austerity measures in Greece, a bit of irony can hardly be missed
For Greece in particular, the IMF report mentions that recession has devastated the poorest 10% of the population, via the decrease of untaxed income from 12,000 to 5,000 euros a year in 2011. It also mentions that measures of fiscal adjustment has led to gradual cuts in wages and pensions, while the elimination of the 13th and 14th salary and certain allowances has made things even worse.
If that wasn't enough, the report continues, austerity measures, uneven in their intensity and target, are undermining the standard of living. The design of these measures could be such as to be more representative, decreasing the burden on low income citizens.
In social terms, income inequality, both in Greece and the world, is causing unrest and is responsible for violent outbursts, the report concludes. Income inequality which, alongside developed economies, is also influencing economies in the Middle East, northern Africa and Asia, is responsible for demonstrations in Athens, Lisbon, Caracas and Tripoli.
Few would disagree with the IMF conclusions but, given the fact that it was them who insisted on most austerity measures in Greece, a bit of irony can hardly be missed. Perhaps the Fund representative in the Troika auditors in Athens, Poul Thomsen, could learn a thing or two from his employers' report.