The wealth of the entire world is now divided in two, with almost half going to the richest one percent, and the other half to the remaining 99 percent.

In November 2013 the World Economic Forum released a 49-page report titled Outlook on the Global Agenda 2014. It says that, based on those surveyed, inequality is "impacting social stability within countries and threatening security on a global scale."

According to a 32-page study by Oxfam titled Working for the Few, they have calculated:

• In a world of 7 billion people, 85 of the richest people on the planet now have the combined wealth of 3.5 billion of the world's poorest people.
• The wealth of the richest 1% in the world is $110 trillion, and this is 65 times the total wealth of the bottom 50% of the world's population.
• 1,426 individuals have a combined net worth of $5.4 trillion.

This massive concentration of economic resources in the hands of fewer and fewer people presents a real threat to inclusive political and economic systems, and compounds other inequalities. Left unchecked, political institutions are undermined and governments overwhelmingly serve the interests of  the economic elites—to the detriment of ordinary people.

When wealth captures government policymaking, the rules bend to favor the rich, often to the detriment of everyone else. The consequences include the erosion of democratic governance, the pulling apart of social cohesion, and the vanishing of equal opportunities for all.

Oxfam’s polling from across the world captures the belief of many that laws and regulations are now designed to primarily benefit the rich. A survey in six countries (Spain, Brazil, India, South Africa, the U.K. and the U.S.) showed that a majority of people believe that their laws are skewed in favor of the rich.

As U.S. Supreme Court Justice Louis Brandeis famously said, "We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both."

In the U.S., the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

Those gathered at Davos for the World Economic Forum have the power to turn around the rapid increase in inequality. Oxfam had called on them to (among other things) pledge that they would:

• Not dodge taxes in their own countries or in countries where they invest and operate, by using tax havens;
• Not use their economic wealth to seek political favors that undermine the democratic will of their fellow citizens;
• And demand a living wage in all the companies they own or control.

Global elites are increasingly becoming richer. Yet the vast majority of people around the world have been excluded from this prosperity. For instance, while stocks and corporate profits soar to new heights, wages as a percentage of gross domestic product (GDP) have stagnated. 

The top one percent in the U.S. have more than doubled their share of national income since 1980, and the situation is getting worse. It is likely that the full concentration of wealth is in fact even worse, as a significant amount of wealth among those at the top of the scale is hidden away in tax havens. It is estimated that $18.5 trillion is held unrecorded and offshore.

Since the late 1970s, weak regulation of the role of money in politics has permitted wealthy individuals and corporations to exert undue influence over government policy making. A pernicious result is the skewing of public policy to favor elite interests, which has coincided with the greatest concentration of wealth among the richest one percent since the eve of the Great Depression.

As policies favoring corporations gained ascendancy, the bargaining power of labor unions had plummeted and the real value of the minimum wage and other protections eroded. It is now harder for unions to organize, and easier for big businesses to suppress wages and erode workers' benefits. Wealthy interest groups have also used their financial might to influence legislators and the general public to keep downward pressure on the top income tax rates and capital gains, and to create corporate tax loopholes. Because capital is taxed at lower rates than regular  income earned with wages, millions of average working Americans pay higher tax rates than the ultra-rich.

From the 1980s onwards, the financial and banking sectors pumped millions of dollars into undoing regulations put in place after the stock market crash and the Great Depression of the 1930s. Deregulation has had two major ramifications: corporate executives associated with the banking and financial sectors have become exceptionally wealthy, and global markets have become much more risky, culminating in the global economic crisis that began in 2008.

As the graph below demonstrates, there is a direct correlation between financial deregulation and economic inequality in the U.S.

In 2010, President Obama signed into law the Wall Street Reform and Consumer Protection Act (known as the Dodd-Frank Bill). The objective of this legislation is to regulate financial markets to protect the economy from a second major crash. However, the financial industry has spent more than $1 billion on hundreds of lobbyists to weaken and delay the Act’s full implementation. In fact, in 2012 the top five consumer protection groups sent 20 lobbyists to defend Dodd-Frank, while the top five finance industry groups sent 406 to defeat it. Even though Dodd-Frank was signed into law more than three years ago, only 148 of its 398 rules have been finalized, and the financial system remains just as vulnerable to crash today as it was in 2008.

In the last 30 years, a global network of tax havens have evolved that has far-reaching implications for increased economic inequality. Large amounts of wealth are hidden from view, and are largely untaxed, denying national treasuries vital resources that could be used to benefit society. Oxfam has conservatively estimated the amount held offshore at $18.5 trillion.

By comparison, the GDP of the U.S., the richest country on earth, is $15.8 trillion. At the same time, the "race to the bottom" effect of these very low tax jurisdictions has further contributed to lower and lower corporate and personal tax rates for the richest individuals and corporations.

Wealth begets wealth, and once the political and institutional system is rigged in favor of an elite, the consolidation of their privileges cascades down through different mechanisms.

Oxfam's report says the evidence highlights one aspect as "opportunity hoarding"—or the process through which disparities become permanent. This occurs when a certain defined groups take control of valuable resources and assets for their own benefit, and then seeks to secure rewards from sequestered resources. And this might be different types of resources—such as public expenditure, access to quality education, and/or profitable jobs.

It post-World War II America, while writing in 1952, Frederick Lewis Allen appraised the U.S.'s experience of the first half of the 20th century with the following words:

"At the turn of the century America seemed in danger of becoming a land in which the millionaires had more and more and the rest had less and less, and where a few financiers had a stranglehold, not only on the country's economic apparatus, but on its political apparatus, too. Through a combination of revisions of the systems—tax laws, minimum wage laws, subsidies and guarantees and regulations of various sorts. We repealed the Iron Law of Wages. We had brought about virtual automatic redistribution of income from the well-to-do to the less well-to-do. That, it seems to me, is the essence of the Great American Discovery."

During this time, the U.S. created the largest middle class the world has ever seen. The U.S. economist, Robert Reich, calls this era "The Great Prosperity". It was made possible through a tacit agreement reflecting the interdependence between labor, big business, and the federal government, known as the Reuther's Treaty of Detroit. Owing to the economic power of middle-class consumers, big business recognized the utility of paying good wages, with cost-of-living increases (as well as health insurance and pensions, which had been primarily management perks until the 1950s). Importantly, big business agreed to productivity-based wage increases too, aligning the interests of labor and management together to ensure rising productivity and growing profits. 

The U.S. government’s role was to maintain the balance between labor and big business. For instance, fearing that a tax cut on investment and income would spur inflation, President John F. Kennedy’s Council of Economic Advisers printed "guideposts" to link wages and prices, which unions and big corporations largely adhered to. Walter Heller, the Chairman of Kennedy’s Council, reflected with satisfaction years later that industry came to realize that linking wages to productivity increases still brought significant rewards for capital, as corporate after-tax profits doubled between 1961 and 1966.

The era of "Great Prosperity" fostered by the "Treaty of Detroit" came to an end as big business increasingly concentrated its economic power to lobby policy makers in Washington DC throughout the 1970s and 1980s, eventually edging out labor, and fighting otherwise popular policies impacting working families, like increasing the minimum wage. As laws making it more difficult for unions to organize increased, average wages stagnated, auguring in the trend of rising inequality that has been evident for the past 30 years.

The large and rising concentrations of income and wealth in the U.S. and many other countries represents a global threat to stable, inclusive societies for one simple reason: the unbalanced distribution of wealth skews institutions and erodes the social contract between citizens and the state. The checks and balances that were put in place to ensure that the majority of the population are heard, now tend to be weaken. Concentration of income and wealth actually hampers the realization of equal rights and opportunities because it makes political representation harder for disadvantaged groups (to the benefit of affluent groups). It has happened in the past, and unless we pay close attention to the worrying trends outlined here, it will happen again.

Some of those who are among the richest in the top one percent recognize the need to reduce these inequalities, including Bill Gross, founder of PIMCO (a global investment management firm), who said recently that those in the one percent should be willing to support higher taxes on carried interest, and certainly capital gains readjusted to existing marginal income tax rates. And Warren Buffett too, who has said he should never pay a lower tax rate than the office cleaner.

Oxfam called on leaders at the 2014 World Economic Forum at Davos to make the commitments needed to counter the growing tide of inequality. In the U.S. we have a minimum wage, but as Oxfam's report demonstrates, we might also need tax reform and caps on CEO pay as well (or a "maximum wage") to help reduce the cash hoarding by the top one percent.

The time to act on inequality is now. Rising inequality, a trend that has grown apace over the past 30 years, must be reversed—starting today—but members of Congress refuse to budge one inch.

But it might be too late—the peasants with pitchforks may already be coming, or at least, some of America's wealthiest seem to think so. Forbes reports outlays for home security for the ultra-rich have increased markedly over the last five years. Some are building multi-million-dollar bunkers deep underground that come with their own geothermal power and sustainable food supplies. A wealthy family, notes Forbes, could survive in the best-planned of these luxurious strongholds for up to three generations.

This cute little 60,000-square-foot home in Los Angeles County was just built, and is valued at $100 million—but that is without the optional bunker. (Building permits list the owner as Jeffrey A. Kaplan, a Los Angeles lawyer and real estate investor.)

"If I were to remain silent, I'd be guilty of complicity." ~ Albert Einstein