The widening gap between the rich and poor has emerged as one of the biggest threats to the global economy.
According to a report by the World Economic Forum, the impact of Capitalism and its disruptive potential contributed heavily to the Brexit vote as well as the now controversial Donald Trump victory in the U.S presidential election.
Worsening income inequality can’t be remedied by higher economic growth alone and is casting doubt on the very future of capitalism, according to the report, which surveyed 750 business, government and academic leaders on the largest risks to the planet.
“There is a widespread sense that the growth model we’ve been following in past years does not deliver, in terms of increasing the incomes of the population,” said Margareta Drzeniek Hanouz, head of global competitiveness and risks at the World Economic Forum at a press conference.
“There is a call for a more fundamental rethink of how we generate growth and how we distribute growth.”
Income inequality has been declining for the last 30 years on a global level as countries in Asia, Africa and elsewhere play catch-up with more developed economies.
However, in large countries like the U.K., U.S., Canada, Ireland and Australia, the 1% have disproportionately benefited from economic growth.
The financial crisis only made matters worse, notes the World Economic Forum. In the U.S., economic growth has been slow, real wages have barely budged and many have missed out on an extended bull market that has been bolstered by massive quantitative easing.
“The growing mood of anti-establishment populism suggests we may have passed the stage where [reviving economic growth] alone would remedy fractures in society: reforming market capitalism must also be added to the agenda,” according to the report.
Wage disparity has also contributed to a “lack of solidarity” among people at opposite ends of the income spectrum, says the report. This polarization has manifested itself in politics and fostered concern about the ability of nations to properly function and for global collaboration to take place.
“The momentous political changes in 2016 raised worries about the health of liberal democracy that has underpinned global prosperity,” said Cecilia Reyes, chief risk officer at Zurich Insurance Group.
Politicians have blamed globalization for the loss of jobs at home, but the report emphasized the role of automation in displacing workers, calling it a key threat to the economy.
“While innovation has historically created new kinds of jobs as well as destroying old kinds, this process may be slowing,” noted the report.
With the reinvention of capitalism being a hot topic in many minds, enters to the world stage a new principle, Cause Capitalism.
According to the Father of Cause Capitalism Steve Down, many global problems can be addressed if individuals, businesses, companies and governments were to adopt his philosophy and implement it to the latter.
“We believe that a better future for the globe lies in empowering low-income and middle-income households to improve their cashflow. We believe this can only be achieved through the principle of Cause Capitalism, which is when a for- profit organization chooses as its partner a non-profit organization, not as a gimmick but as a true sustainable partner.’ Said Steve Down, Cause Capitalism Founder.
According to global reports, an estimated 698 million people, or 9% of the global population, are living in extreme poverty, that is, living on less than $1.90 a day. Over one fifth of the global population live below the higher $3.20 poverty line (1,803 million people), and over two-fifths (3,293 million people) live below $ 5.50 a day.
The goes to show that poverty is not entirely the problem of the poor, its implications affect any country’s security. Citizens unable to meet basic needs resolve to illegal activities to earn a living. Crime rate continue to soar as the living standards depreciate.
Through Cause Capitalism, Business, Entrepreneurs and Communities are brough together by the initiatives run by the nonprofit. These initiatives go a long way towards ensuring that each and every vulnerable household in the remote of places has an equal chance at wealth creation and being self-reliant in their own way.
“Through Cause capitalism, this future is safeguarded in community development. This is why our operations are not only focus on promoting financial literacy but also partnering with a non-profit like The Goat Foundation to achieve a cause for good.” Said Financially Fit, CEO Steve Down.
Governments can easily be faulted for the imbalance yet for-profit companies globally generate profits every fiscal year with out embedding safeguarding and developing the community in equal measure as a key priority. Some of the highest paid Founders and CEO walk away with millions of dollars, with the pretext of dangling a carrot in the name of corporate social responsibility, if any to the community.
“Cause Capitalism, dictates that for-profit companies set aside a fixed percentage of their gross income, to go towards community development and support” says Steve Down.
Cause Capitalism envisions countries where no one retires to bed hungry because they cannot afford food and a decent livelihood for themselves.
Additional Copy from Lauren Debter