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How to combat the tightening grip of inequality around the globe

June 12, 2014 at 6:42 PM EDT
Income inequality has been rising over the past three decades, in the United States most of all, but also in the United Kingdom, Canada and France, according to new findings by the Organization for Economic Cooperation and Development. Judy Woodruff talks to Angel Gurria, secretary-general of the OECD, about how inequality depresses economic growth.
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JUDY WOODRUFF: Next: a conversation about the scope of growing inequality, not only in the U.S., but in other countries around the world.

It’s the focus of new research by the Organization for Economic Cooperation and Development, or OECD.

Among its findings: Income inequality has been rising over the past three decades, in the U.S. most of all, but also in other countries, including the United Kingdom, Canada, and France. The OECD also said the share of income going to the richest citizens grew in many countries, with the wealthiest 1 percent of the population in the U.S. more than doubling their share since 1980 to nearly 20 percent of all income.

Secretary-General Angel Gurria is the head of the OECD. He was in Washington today for a speech on the subject.

And he joins me now.

Welcome to the NewsHour.

ANGEL GURRIA, Secretary-General, Organization for Economic Cooperation and Development: Thank you.

JUDY WOODRUFF: So, the first thing I have to ask you is, this OECD, an organization founded in Europe, principally around European countries, interested in inequality in the U.S. Why?

ANGEL GURRIA: Well, first of all, the organization was founded by the United States because it’s a successor to the Marshall Plan. The United States are heavily invested in the organization and heavily invested in Europe, of course.

And, second, it happens to be based in Paris, but it has 34 members, 20 of which are European. The rest are non-Europeans. They’re from all over the world, and of course the United States is a very important member.

JUDY WOODRUFF: So, tell me, what did you find in terms of inequality that disturbed you so much? This is a big focus for you.

ANGEL GURRIA: Before the crisis, inequality had been rising already.

In 2008, after three years of research — we started 10 years ago — and then in 2008, we issued a report “Growing Unequal?” — with a question mark.

Well, a little later, we removed the question mark because it was very obvious that we were growing unequally and that the differences in fact were growing very fast. In 2011, after three years of crisis, we found that inequality had grown faster in those — 2009, 2010 and 2011 than the 12 years before.

It accelerated, to the point where it was becoming a very serious social, political and practical issue, besides the ethical and moral underpinning. So it is a problem to which no country is alien, but the speed and the situation today makes it a formidable obstacle for the recovery, for the economic recovery.

JUDY WOODRUFF: Well, quickly explain why that is. Why is that a worry for people who care about economic growth? And what do you think needs to be done about it?

ANGEL GURRIA: Because, for every 1 percent that inequality grows, you will have a drop in growth of about 0.2, 0.3 percent.

That means a more unequal society will grow less, and inequality becomes an obstacle to growth in and of itself. Second, the problem is not just a question of income. It’s also a question of inequality of opportunities, inequality of access to health services, inequality of access to education, inequality to access to employment opportunities.

And these have been also growing, and they have been polarizing. They have been concentrating on the wealthiest. And you have been left now with a legacy of a very large group of people with lower, dropping wages, and that are also missing opportunities. And the problem is they’re going to also leave their children a legacy with lower possibilities.

JUDY WOODRUFF: So what do you see as the main remedy?

ANGEL GURRIA: Main remedies are activation policies, meaning get services in the governments that will get the people who are unemployed or seeking for employment with the job opportunities.

This is not being done enough. The United States spends one-fourth of what the rest of the OECD countries spend on this particular service, getting the unemployed or seeking employment with the employment opportunities.

Second, skills, education and skills. There’s a big mismatch between the skills and what the market is demanding. Therefore, your — you have people have diplomas, but they can’t do very much with it. Third, use a tax structure and use a budget in order to support companies that may be providing jobs or better opportunities.

And last but not least, remember, this is a problem that is affecting the capacity of the United States to get the people at the lowest revenue levels and at the lowest education levels to get up in the ladder, in the social ladder, in the ladder of opportunities.

JUDY WOODRUFF: But these are all prescriptions that involve more government involvement and spending more tax dollars or raising taxes, solutions that politically in the United States not very popular. Conservatives would push back and say some of these things would hurt growth, they would not help, to raise taxes, for example.

ANGEL GURRIA: This is a great opportunity for bipartisan support of an agenda which maybe one or the other party, if they so choose to not support, would do at their peril, because we’re talking here about — not about government intervention, but about government doing what they were voted in to do, which is to protect the most vulnerable.

And, second, it is about leveling the playing field, something which Republicans, Democrats and governments, socialists and conservatives in other parts of the world, in Europe, et cetera, all are supporting.

And, last, which is a country, for example, where inequality has grown more in the last few years? Well, would you believe Sweden, a country that is reputed to be very equal in that sense? So, the problem is generalized. It’s not just in the United States. It’s just that inequality has grown faster in the United States, and also where this is now becoming very evident where we have to address it.

JUDY WOODRUFF: Well, it is an issue that is many-layered. The report is fascinating. I think it’s certainly worth discussing and debating.

The secretary-general of the OECD, Angel Gurria, we thank you very much for talking with us about it.

ANGEL GURRIA: Thank you very much. It’s a great privilege.

And, right now, the bestselling book in Amazon is a book about inequality. President Obama said the defining issue in the rest of his administration would be inequality. So we seem to be focusing on the right — on the right issues.

JUDY WOODRUFF: All the more reason we’re glad to have you.

ANGEL GURRIA: Thank you so much.