For many, massive and growing income inequality feels like a fatal flaw baked into capitalism – that the rich are always destined to get richer while the poor always get poorer. But while income inequality has exploded in the U.S. and the U.K., it isn't skyrocketing in many other capitalist countries around the globe. So, what’s their secret?

In a recent episode of Pitchfork Economics, we talked to Dr. Faiza Shaheen of the Pathfinders for Peaceful, Just and Inclusive Societies to find out how other capitalist nations are combating income inequality – and what the U.S. can learn from them. 

Here are three kinds of policies that can reverse income inequality:

+ Visible change. According to Shaheen, the first type of action is "policies that elicit very clear, visible material change" for the majority of citizens, such as welfare programs, affordable or free health care, and, perhaps most critically, "good job creation." When people see that the government produces material benefits, that creates a positive feedback loop, she added.

+ Building solidarity. Studies have long shown that racial and political unrest rises in areas with growing income inequality. Shaheen’s research argues that the opposite is equally true: Inequality shrinks in nations with "active efforts to build solidarity between groups and to address historic prejudices." Those efforts can take many different forms, from politicians rejecting divisive and inflammatory language to forcing change by seriously reforming the police and criminal justice systems.

+ Securing credibility. Lastly, governments in areas with reduced inequality rebuilt their credibility with the public by "tackling corruption," Shaheen said. In unequal societies, people believe that wealthy elites have access to leaders and legal privileges that most citizens don't. Citizens in more equal economies, meanwhile, believe that the government treats everyone the same, and that belief is backed up through transparency mandates in the government and the financial industry and through a strong free press.

The bottom line is this: When societies are bound together through understanding, purpose, and prosperity, everyone is happier – not just the wealthy few at the top.

Thanks for reading,

Paul Constant

P.S. You can listen to the podcast episode or read the transcript with Dr. Faiza Shaheen to learn more by clicking here now.

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