Capital

Published in 2013, French economist Thomas Piketty's "Capital in the 21st Century" sounds a global alert on the ever-growing income gap. Following a thorough analysis of economic statistics over the past couple of centuries, Pikkety identifies the mechanisms that explain income inequality and the development of a society based on inherited wealth.

The study points to a "patrimonial capitalist" model that results in the accumulation and concentration of inherited assets - or capital - in the hands of a small group of families. Without measures of correction and redistribution, this asymmetry is heightened ad aeternum.

Pikkety's bestseller book led to an intense debate that also included opinions that challenged his findings.

In any case, it is worth paying attention to Pikkety"s main argument. Ever-increasing income inequality hints at an erosion of the social contract and risks jeopardizing social cohesion.

The economic model in place in Macau - a constitutionally guaranteed market economy - has many virtues in terms of resource allocation, wealth creation and modernization. The prosperity we have experienced is proof of that.

However, this has taken place to a large extent with little sense of redistribution of wealth on a long-term basis and without a genuine concern for social justice. The justification based on the "laissez faire laissez passer" argument is often used to justify the government"s non-intervention in certain areas of the economy, is groundless and often aims at protecting the interests of a small group whose greed seems to have no limits.

They are businessmen who thrive on artificially created intermediations and countless rent-seeking activities, without creating value, leaving little room for real entrepreneurs. The accumulation of wealth amassed by the city"s traditional business families and the nouveau riche is unstoppable, while long-term measures to meet the needs of the have-nots and disadvantaged groups such as low-income workers, migrant workers or elderly are slow to arrive.

Last week's announcement by the Statistics and Census Service of the increase in household income distribution inequalities, reflected in the rise in the Gini index from 0.35 to 0.36 - scale on which 0 corresponds to absolute equality and 1 to total inequality - compared with five years ago should be a wake up call to take action. It is of capital importance.

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