Skip to 0 minutes and 1 second NARRATOR: Inequality has increased over the last thirty years in most developed countries. Fuelled by financial and labour market deregulation richer households, especially the wealthiest 1% have taken an ever-growing share of the income and wealth produced by countries. With stagnant wages, households relying mainly on work have been left behind. People with assets such as housing have shared in growing prosperity. House prices rose dramatically in the UK and elsewhere at least until the financial crisis of 2008, delivering windfall profits to homeowners. Young people have not been so lucky. As house prices have soared they’ve struggled to get onto the housing ladder and to find affordable housing, even for rent. The picture for older generations is very different.
Skip to 1 minute and 0 seconds Back in the 1960s many pensioners lived in poverty. There are still big inequalities between those who can rely on comfortable occupational pension and housing wealth and others who barely manage on their state pension. On average pensioners have seen their income catch up with the rest of the population but in most developed countries faced with ageing populations, these improvements look unlikely to last. Today’s workers are being asked to support today’s pensioners but fear there will be nothing left in the pot when they themselves come to retire. Tension between generations and between rich and poor have been exacerbated by the financial crisis.
Skip to 1 minute and 48 seconds The combination of tax payers bailing out failed banks and a slump in their economies has put the pressure on governments to adopt austerity policies. Many reluctant to implement unpopular tax increases have opted instead for public spending cuts. As a result people on lower incomes, women and children, single pensioners and all those who relied more on public services and social benefits have been hit disproportionately, further widening the gap between rich and poor. A growing unease has emerged about rising inequality as the income of the rich, after an initial dip, has risen again to unprecedented levels untouched by austerity.
Skip to 2 minutes and 35 seconds Commentators on all sides of the political and economic spectrum, together with renowned academics, politicians and social activists are raising their voice to question the moral injustice of austerity policies and the continuing escalation of income and wealth inequality. New movements have sprung into action such as Occupy Wall Street and UK Uncut calling themselves the 99%, to signify the growing divide between the richest 1% of people and the rest of the population. Despite this controversy remains over what, if anything, should be done. While individuals grapple day to day with the challenges of living with inequality a key question is whether they have the willingness and the power to create a different, more equal society.
What is at stake?
Welcome to this exciting course on the thorny issue of inequalities in personal finance.
As the video explores, growing inequalities in affluent countries and greater reliance on the individual to provide for their financial security, especially in old age, have brought up significant issues. We will explore some of these over the next few weeks, including:
- Why inequality matters and how does it differ across countries and between groups or generations?
- Are younger people exposed to more risk and higher costs than their parents and grandparents when it comes to providing financial security in retirement in a context of ageing populations?
- Is access to property in general and housing in particular, an ever growing challenge for the young generations and is it the same in other countries? Is there too much wealth concentration and too many empty houses lying around that could be used more efficiently?
- What can people and governments do about the risks and tensions that inequalities lead to? Could there be better redistribution and sharing of resources and risk? Can it happen naturally? Does it need to happen?
Hopefully the next four weeks will bring some light to these important questions and you will be able to participate in the discussion which we are sure will be animated and passionate!
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