What we’ve also seen is that this global integration is increasing the tendencies towards inequality, both between nations and within nations, at an accelerated pace. And when we see people — global elites, wealthy corporations — seemingly living by a different set of rules, avoiding taxes, manipulating loopholes — when the rich and the powerful appear to game the system and accumulate vast wealth while middle and working-class families struggle to make ends meet, this feeds a profound sense of injustice and a feeling that our economies are increasingly unfair.
This inequality now constitutes one of the greatest challenges to our economies and to our democracies. An inequality that was once tolerated because people didn’t know how unequal things were now won’t be tolerated because everybody has a cellphone and can see how unequal things are. The awareness that people have in the smallest African village, they can see how people in London or New York are living. The poorest child in any of our countries now has a sense of what other people have that they don’t. So not only is there increasing inequality, but also there is greater awareness of inequality. And that’s a volatile mix for our democracies.
And this is why addressing inequality has been one of the key areas of focus for my economic policy. In our countries, in America and in most advanced market economies, we want people to be rewarded for their achievement. We think that people should be rewarded if they come up with a new product or a new service that is popular and helps a lot of people. But when a CEO of a company now makes more money in a single day than a typical worker does in an entire year, when it’s harder for workers to climb their way up the economic ladder, when they see a factory close that used to support an entire city or town, fuels the feeling that globalization only benefits those at the top. And the reaction can drag down a country’s growth and make recessions more likely. It can also lead to politics that create an unhealthy competition between countries. Rather than a win-win situation, people perceive that if you’re winning, I’m losing, and barriers come up and walls come up.