Inequality may destabilize global society, warns Klaus Schwab, the German economist who founded and chairs the World Economic Forum.
"If we continue to have un-inclusive growth and we continue with the unemployment situation, particularly youth unemployment, our global society is not sustainable," Schwab told CNBC. "It's as simple as that."
Political leaders should work to boost economic growth, he told CNBC.
Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.
"Now it is the task of the politicians, but it is also the task of business leaders."
Experts surveyed by the World Economic Forum labeled severe income inequality the world's greatest risk. The experts rated income inequality above chronic fiscal imbalances, greenhouse emissions, water supply issues and managing an aging population.
Severe income inequality might lead to mass migrations and popular uprisings, Branko Milanovic, lead economist for the World Bank’s research group, told CNBC.
Global inequality, according to Milanovic, includes both increasing inequality between nations, which causes migration, and rising inequalities within nations, which can prompt protests and revolts.
Inequality has increased as the U.S. and European governments have cut spending in response to fiscal crises, he said, according to CNBC. Plus, taxing the rich has become more difficult as globalization has made capital more mobile.
Income inequality is here to stay, Milanovic wrote in a Harvard Business Review blog.
Economist have proposed ideas for decreasing income disparity, such as higher inheritance taxes and higher tax rates on the highest incomes, but those ideas unlikely to be tried, he stated.
"Citizens seem to wish for things that are mutually inconsistent: lower inequality, greater equality of opportunity (so that inherited advantages matter less) and a continuation of current low-tax policies," the economist wrote. Yet it's hard to see, he added, how continuing low taxes can lead to outcomes different from the last 10 or 20 years.
Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.
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