French economist Thomas Piketty.FRED DUFOUR (AFP/Getty Images)
The most relevant characteristic of capitalism in the last 20 years has been the unstoppable growth of the weight of finance in the economy, which has resulted in an incessant increase in inequalities. The relevance of inequality in the distribution of income and wealth has been the subject of valuable research by Thomas Piketty and Gabriel Zucman. The latest of these works, World Inequality, prepared in 2022, by Lucas Chancel, Emmanuel Saez, Piketty and Zucman has highlighted an unfair and unsustainable situation: the poorest 50% of the world's population only owns 2% of global wealth, while the richest 10% holds 76%.
The driver of this imbalance has been the expansion of the financial world. A recent study by the McKinsey Global Institute has put figures on the runaway growth of global finance and its impact on the increase in inequality. In The Future of Wealth and Growth Hangs in the Balance, he points out that asset-price inflation over the past two decades has created $160 trillion of "paper wealth." Almost double the output of the world economy, €88 trillion in 2022 in terms of GDP. It highlights that the growth of the so-called global balance sheet, which includes all the assets and liabilities of the economy (real estate, infrastructure, deposits, capital, debt, investment and pension funds) has been much faster than that of the real economy.
For everyone to understand, the study summarizes: the rise in "paper wealth" means that "every dollar of net investment has generated $1.90 of new debt." And it specifies that the generation of new debt multiplied in 2020 and 2021 due to the measures adopted by governments to face the pandemic. During these two years, the debt grew at the highest rate in the last 50 years. It accelerated to $3.4 of debt for every dollar of investment.
The most disturbing aspect of this drift has been "the increase in inequality and the decrease in the participation of workers in income". In 2022 alone, households lost eight trillion of wealth. A panorama with "high uncertainty" that could change "boosting consumption in relation to savings". The study considers four scenarios for the future and concludes that "only an acceleration of productivity can support long-term economic growth and a healthy and sustainable global balance."
Spain has also registered a decline in the share of wages in national income from 49.7% in 2020 to 46.9% in 2022, according to the INE and Funcas. The profits of companies grew by 15.4% last year and the gross operating surplus of financial institutions by 30.2% in the last quarter of last year, according to the INE.
In the context of financial expansion, the announcement of the leader of the PP, Alberto Núñez Feijóo, to abolish taxes on banks and energy companies, which would mean greater profits and even more inequality, is nonsense.
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