The implications of rising inequality


Extreme levels of inequality breed social unrest and violence.  This is not a political statement.  It is a statement of fact.  Add to this three other facts:

 1. Inequality is on the rise in the U.S. as well as throughout much of the developed and developing world.  This may well be the inevitable result of the evolution of our global economy.  The “haves” have always been able to use their resources to accumulate more – but with globalization they are able to do so on an even grander scale. 

 2. Technology-fueled people power is enabling those at the bottom of the income distribution to organize, and in so doing disrupt the status quo as never before. 

 3. This disruption is contagious. 

 Left unfettered, this process leads to a tipping point that wrenches control and assets from the most privileged.  The historic events of the last two months in the Middle East (and now China) make it clear that autocratic forms of governance, while still dangerously powerful, are a threatened species. 

 This new political, social and economic reality has vast implications for every form of governance – including corporate.  And the U.S. and other highly developed democracies are not immune to these implications.  At a minimum this means that:

  • Inclusivity in decision-making is an increasingly necessary strategy.
  • Improving equality of opportunity is essential for stability.
  • Enhancing the management and development of “human capital” is the path forward at both a micro- and macroeconomic level.

 Those entities – governments and commercial – that take to heart the implications of this defining moment in humanity’s evolution will be the ones that endure, create prosperity, and contribute to a more peaceful world. 

 Those that don’t will be increasingly be viewed for what they are – the bad guys.

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Equality and organizational health


In the NY Times, Nicholas Kristof discusses compelling evidence compiled by two well-known epidemiologists (Kate Pickett and Richard Wilkinson, The Spirit Level: Why Greater Equality Makes Societies Stronger) about the relationship between a nation’s degree of income inequality and a wide array of societal and individual health indicators.

“There’s growing evidence,” Kristof writes, “that the toll of our stunning inequality is not just economic but also is a melancholy of the soul. The upshot appears to be high rates of violent crime, high narcotics use, high teenage birthrates and even high rates of heart disease.” 

This raises important questions about inequality and health at an organizational level as well.  To what extent does our propensity to pay CEOs and other senior executives so generously in relationship to the median (or lowest) paid employee create not just unhealthy employees, but also unhealthy organizations?