About two thousand and three hundred years ago, while walking on the peripatos of the idyllic Lyceum, Aristotle noticed something very interesting. He saw that the interest being paid on lending from the fortunate to the miserable for the fulfilment of their personal needs is unfair, and that the wages paid to slaves are too low. All too obvious, there was no market mechanism. The loan repayment rate was an arbitrary decision of the lender, and the determination of reward to labor was not even important enough to be discussed: servants were paid the pittance required to be sustained. Immorality and inequality of decision and outcome remained, until there emerged market price and quantity.
Today, centuries later, a report from Prof. Joseph E. Stiglitz and his Extraordinary Committee of Independent Experts attempts to walk back the way Aristotle paved. Published by G20 in South Africa on November 4, 2025, the report emphasizes that inequality is a choice and that the sole functioning of free enterprise leads to unfairness and therefore we must, through governments, stop its rising trend. The main reasons suggested for government intervention are household indebtedness and democratic erosion. The main policies suggested are public provision and the global minimum corporate tax (GMCT).
Addressing the justification of the report for government intervention, the committee argues that inequality makes households less likely to be able to pay their debts back, and therefore, the financial system will be more inclined towards crises. In contrast, however, I believe that inequality is indeed the basis of the health of the financial systems. In the case of banking, one lends as he has more and the other borrows as he has less. If we all had the same level of purchasing power, banking would have collapsed. No rich could so generously deposit some of his surplus money to be lent to the poor to afford his shelter.
Additionally, it is risk that drives the economy, not certainty. The financial system is itself a clever means of creating inequality. One borrows to invest, hoping that the rate of return is higher than that of repayment, to outsmart the less clever investor. He wins and the other loses and, highly indebted, he stops investing. Therefore, the proposition that we must reduce inequality to protect the banking system seems to me like saying let us protect the fire from burning. Empirical evidence is on my side. Since the 1980s in the US—where the Gini Coefficient began rising from 0.37 until it reached as high as 0.42—indeed the financial crises have decreased in number, rather than increased.
Another astonishing argument made in the report is that inequality must be reduced to preserve democracy. It is very hard to agree with this statement. Democracy, to be truly executed, requires systematic order. In a society where there is no rule of order, no elections can be run. For order and social cohesion to exist, there must be some authority. If no authority exists, anyone can run elections for their streets and neighborhoods and practically no political decision can be made and thus democracy will be meaningless. For authority to exist, there must be hierarchy. There should be—whether based on earned or inherited merit—the ability to be better than another. This means one should be above or below another in their social status. That is inequality. And inequality is, indeed, the very basic prerequisite of democracy. Therefore, the justification of the report to combat inequality to save democracy, particularly in the re-distribution phase, is itself a violator of democracy.
Turning now to the proposed policies: of special attention in the report is the advocacy of public provision in healthcare, food, and education. Stiglitz and his fellows argue that access to opportunities that prevent intergenerational poverty such as education should be ensured for marginalized groups. In my opinion, however, public provision of education in particular is itself an intensifier of inequality.
Government mostly uses the revenue generated from income tax to fund free education. The problem is that the 18-year-old public school leavers—who might look into higher education at university—will not be able to go to university. The public school is of lower prestige and the top universities simply make excuses and reject the free-meal student. One might argue the university could also be funded and free to attend. Of course, but then the next stage is more horrifying: getting a job. Usually, the university that is free or cheap to attend is not good at building relationships with the job market because it does not have the funds to do so or cannot compete with the top-ranked university in networking. The consequent issue is that the poor-family student has now sacrificed years he could work to help his family financially with the wasted hope of earning much more when he graduates. Worse, is that he has been taxed for the funding of his education. He is now made poorer by the grace of the government.
It should be noted that this argument may not be true in all G20 countries but it is correct in the UK. Eton College—a posh private college in Berkshire, England—sends most students to Oxford and Cambridge Universities and then the graduates get into the highest-paying jobs. This is while it is usually of amazement if one from a public college makes his way to good universities and then jobs. Therefore, the blueprint of public provision will not only be ineffective in addressing the issue of inequality, but it will exacerbate it.
The other policy put forward in the report is the implementation of the global minimum corporate tax (GMCT) by all G20 countries and internationally. The report underscores the recent efforts of multinational companies (MNCs) in profit shifting, to evade paying corporate tax by transferring their profits from one account in a country with higher taxes to another account in another country with lower taxes. GMCT requires a corporate tax rate of at least 15 percent in each member jurisdiction imposed on enterprises with annual revenues of over 750 million euros.
This tax will then be spent on programs to reduce inequality. Although this policy could be less worrisome than the public provision, it has its own set of problems. The basis for the justification of this policy must technically be that the member governments believe that this 15 percent could be better spent if controlled by them than the companies. The question that then arises is how can a government know that its method for resource allocation is better than that of the company?
A common myth that should be avoided here is that the companies have so much money they do not need, therefore, we can tax them and spend the tax revenue on those who need it. There are two flaws in this argument. First, the company’s CEO will not store the extra money under his pillow when he goes to bed. The excess profits will be reinvested in the economy and will result in more jobs and so unemployment levels could fall. Second, even if the rich put all of his money under his pillow and does not need it, does that in any way imaginable imply that you and I or the government can take it from them?
Do you wish that we could eradicate wealth and income inequality? The reader, I have no doubt, answers yes. However, in reality, if the reader traces his economic behavior, he will realize that he is himself a contributor to inequality. People, particularly the middle-income class, do not work just enough to survive. They work hard and try to ensure their economic security in the long term. If they have children, they will work harder and receive some extra income to provide their children with a good life. Let us call that surplus income of a person his wealth. I do not assume that he is at all interested in giving up any portion of this wealth for the well-being of the poor. I do not think that Stiglitz himself would like the government to come and take his properties he does not currently use to promote equality. We only advocate for equality when we think it does not affect us but that it affects the evil oppressive firms.
The 2025 G20 Global Inequality Report was a timely attempt to address inequality. However, one must be critically aware that government intervention could render matters worse. After all, governments make mistakes.
