Inequalities rise, society not breaking down: OECD

Tue Oct 21, 2008 6:12am EDT
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By Crispian Balmer

PARIS (Reuters) - The gap between the rich and poor has grown in most wealthy nations, but not as quickly as many people believe and not enough to raise fears of social upheaval, the OECD said in a report released Tuesday.

The 30-nation Organization for Economic Co-operation and Development said governments were off-setting widening disparities by increasing taxes and boosting welfare spending.

According to latest data, the OECD said Denmark had the lowest inequality ratings, just in front of Sweden, while Mexico had the worst ratings, followed by Turkey.

"The increase in inequality, though widespread and significant, has not been as spectacular as most people probably think it has been," the 309-page report said.

"This difference between what the data shows and what people think no doubt partly reflects the so-called 'Hello magazine effect'," it added, saying that people read widely about the super rich and imagined many people lived the life of luxury.

Across the 24 OECD nations for which data was available, the cumulative increase in inequality was around 7 percent from the mid-1980s to mid-2000s, with most of the rise accounted for in the first decade.

It said this expansion was "not one that would justify ... talk about the breakdown of society."

However, the Paris-based group said government intervention had helped temper the increase in inequality.   Continued...

<p>A man walks past a homeless man on the streets of Madrid October 2, 2008. REUTERS/Susana Vera</p>