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SECTION 1 2 3<br />
EXTREME INEQUALITY<br />
BUSTING THE<br />
INEQUALITY MYTHS<br />
Those who say that extreme inequality is not a problem,<br />
or that it is the natural order of things, often base their<br />
arguments on a number of myths.<br />
MYTH 1<br />
Extreme inequality is as old as humanity, has always been with us,<br />
and always will be.<br />
The significant variations in levels of inequality over time and between different<br />
countries demonstrates that levels of inequality are dependent on a number<br />
of external factors, such as government policies, rather than simply being<br />
the natural order of things.<br />
The 20 th century provides numerous examples of how inequality can be<br />
significantly reduced and how it can radically increase within the span of<br />
just one generation. In 1925, income inequality in Sweden was comparable<br />
with contemporary Turkey. But, thanks to the creation of the Swedish welfare<br />
state, which, among other things, included provisions for universal free<br />
access to healthcare and universal public pensions, by 1958 inequality in<br />
Sweden had reduced by almost half and continued to decrease for the next<br />
20 years. 303 The experience of Russia mirrors that of Sweden. At the end of the<br />
1980s, levels of inequality in Russia were comparable with its Scandinavian<br />
neighbours. However, since the beginning of the transition to a market<br />
economy in 1991, inequality has almost doubled. 304<br />
In more recent years, countries in Latin America have significantly reduced<br />
inequality. Between 2002 and 2011, income inequality dropped in 14 of the 17<br />
countries where there is comparable data. 305 During this period, approximately<br />
50 million people moved into the emerging middle class, meaning that, for<br />
the first time ever, more people in the region belong to the middle class<br />
than are living in poverty. 306 This is the result of years of pressure from<br />
people’s movements that have campaigned for more progressive social<br />
and economic policies. The governments that the people have elected<br />
have chosen progressive policies, including increased spending on public<br />
health and education, a widening of pension entitlements, social protection,<br />
progressive taxation and increases in employment opportunities and the<br />
minimum wage. Latin America’s experience shows that policy interventions<br />
can have a significant impact on income inequality.<br />
There is also a strong body of evidence which shows that extreme inequality<br />
has been rising in every other region of the world over the past three decades,<br />
which is why the negative consequences must be taken seriously, now more<br />
than ever. 307<br />
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