Capitalism needs an overhaul

The Financial Times summarized the past year in one word: inequality, and explained it as a parlous state of unfairness into which solipsistic Western societies are inexorably being dragged despite strenuous attempts by politicians to be seen opposing it.

A widening wealth gap is not a new problem for the world. The reason that it seems to be a new problem is because it became a normal state in many developed countries last year, even providing shocks to some countries' political situations and stifling growth.

According to the latest report of the Organization for Economic Cooperation and Development, the income gap between the richest and the poorest in its 34 member states is now the biggest in 30 years. In the United States, the income of the richest 10 percent is 16.5 times that of the poorest 10 percent. The gap is 9.6 times in the United Kingdom, and 10 times in Japan and South Korea.

The global crisis in 2008 exposed the seeds of social crises in capitalist countries. The unchecked widening income gap damages mutual trust in society and threatens social stability.

Narrowing the wealth gap will necessarily influence the interests of the rich people, so it will take decisive and resolute government actions to initiate the necessary reforms to redistribute national wealth. The middle and lower classes need more special care from social security and the job market while the whole society's cake is made bigger.

In brief, Western countries should strike a new balance between fairness and efficiency. It cannot be attained only through reform in distribution. In the increasingly fragmentized and frictional societies, the fragility and limitation of vote politics will take their toll when vested interests are touched.

Capitalism needs an overhaul reform of itself.