Inequality, a scourge of the XXI century

Social and economic inequality is a plague of the XXI Century. The gap between rich and poor people is continuously widening, as the wealth of a relatively small group increases and, therefore, the rest of the world shares a shrinking fraction of resources. As an example, in 2016, the wealthiest 1% of US citizens held 40% of the nation's wealth, while in 2007 they had less than 35% [1]. Considering the world's population, the richest 1% bear today 50% of the total wealth. This situation has been predicted and denounced by economists and econo-physicists. The latter ones have widely used models of market dynamics which consider that wealth distribution is the result of wealth exchanges among economic agents. A simple analogy relates the wealth in a society with the kinetic energy of the molecules in a gas, and the trade between agents to the energy exchange among the molecules during collisions. However, while in physical systems, thanks to the equipartition of energy, the gas eventually arrives at an equilibrium state, in many exchange models the economic system never equilibrates. Instead, it moves toward a condensed state, where one or a few agents concentrate all the wealth of the society and the rest of agents shares zero or a very small fraction of the total wealth. According to Piketty [2], many American countries, but also some European ones, are following this path. Here we discuss two ways of avoiding the condensed state. First, we consider a regulatory policy that favours the poorest agent in the exchanges, thus increasing the probability that the wealth goes from the richest to the poorest agent. Furthermore, we study a tax system and its effects on wealth distribution. We compare the redistribution processes and conclude that complete control of the inequalities can be attained with simple regulations or interventions. (C) 2020 Elsevier B.V. All rights reserved.

Automated summary

Social and economic inequality is worsening in the 21st century, with wealth becoming concentrated among a small group while the rest of the world shares only a fraction of resources. Economic models suggest that wealth distribution results from exchanges among economic agents, leading to a condensed state where a few agents possess the majority of wealth. Regulatory policies favoring the poorest agents and tax systems can help prevent this condensed state and address inequalities.