The most toxic form of social inequality is unequal access to opportunity. Inequality of opportunity compounds the issue of inequitable distribution of wealth. This is very dangerous, because it reduces social mobility, and extended periods of low social mobility can result in disillusionment, which could culminate in radical revolutions.
Warren Buffett once said, "Someone is sitting in the shade today because someone planted a tree a long time ago". This is true. The efforts of a generation can - and often do - bear fruits for several generations. Well educated, wealthy individuals are likely to ensure that their children receive an excellent education, and are likely to be able to facilitate their offspring's extracurricular pursuits. In effect, the offspring of wealthy individuals have more capital invested into them to try to ensure their future success. So, they are more likely to be (financially) successful. Hence, their success compounds from one generation to the next. Meanwhile, parents who are struggling financially often do not have the means to allow their offspring to pursue passions, let alone the time to look after their offspring's physical and mental wellbeing. Thus, their families may become victims of the poverty trap. As if this were not enough, wealthy individuals are also able to bequeath more assets. As a consequence, the gap between the wealthy and the ‘less-privileged’ widens over time.
So, financial inequality is the most important driver of unequal distribution of opportunities, as the inequality of outcome for one generation affects the outcomes of the next generation.
Yet, we must not abandon the idea of unequal outcomes, as this would serve as disincentive for hard work. Indeed, we must embrace inequality of outcome with open arms. Those who have consistently worked hard see themselves benefit from these efforts, whilst those who have worked less hard enjoy fewer benefits; whilst there is luck involved, I am inclined to believe that in aggregate, and over a long period of time, the impacts of luck are insignificant in comparison with the impacts of persistent hard work. So, an unequal distribution is largely equitable.
Furthermore, it is not right to close a gap by pulling people back. Instead, we must pull people forward. So, the real cause of this problem lies in our inability and unwillingness to try to close the opportunity gap. In order to achieve this, governments must attempt to offer a high quality of universal healthcare and education. Collectively, these services would unleash people from the shackles of the poverty trap.
Thus, the question arises, “how will governments fund such extensive public services?” To me the answer is blindingly obvious: raise inheritance taxes. In addition to paying for the universal services, this would encourage people to spend money, and so would allow money to trickle through the economy. It would also force each generation to start afresh.
Unfortunately, this is an unpopular solution; people are strongly opposed to the ‘death’ tax. Thus, one significant cause of the multifaceted problem - unequal opportunity - is people's unwillingness to forgo the right to bequeath their wealth.
