The Price of Inequality

The chart says a lot about the world we are living in. Over the last decades, for example in the US, wages as a share of GDP have structurally declined, while the stock market’s share of GDP has moved relentlessly higher. In other words, capital has increasingly outperformed labor.

This is the essence of the “K-shaped economy”: those owning financial assets, businesses and real estate benefited massively from globalization, technology and monetary expansion, while large parts of the working population saw purchasing power and economic security stagnate relative to asset prices.

Joseph Stiglitz already warned in The Price of Inequality that such divergences are not only economic issues, but political and social ones. When wealth creation becomes too disconnected from wage growth, frustration builds, trust in institutions weakens and political polarization accelerates. History shows that extreme inequality rarely leads to long-term stability.

Financial markets continue to be supported by liquidity, AI-driven CAPEX and strong corporate profitability, but the social sustainability of this model increasingly becomes a central question for investors and policymakers alike.