With global inequality at extremely high levels and still rising, there is an emerging consensus that the international community needs to tackle this growing problem. In September 2015, the Member States of the United Nations endorsed 17 sustainable development goals, including a particular goal to reduce inequality within and among nations. And yet, there is one particular facet of inequality that has been frequently neglected: the links between economic inequality, financial crises and human rights.
In the report I presented to the UN Human Rights Council in March 2016, I argue that economic inequality can trigger financial crises, which in turn can entrench inequalities further. I explore in my report three broad questions: 1) Does inequality lead to more financial instability? 2) Does financial instability lead to higher levels of inequality? 3) What are the impacts of increased inequality on respect for human rights?
Inequality is both a direct and indirect cause of sovereign debt increase and financial crises. As increased levels of inequality mean that the income tax base of the state concerned is rather small—at least if income taxation is not progressive—inequality can exert a considerable direct influence on the structure and the level of government revenues and spending.
