As has been widely observed, we are living in a period of economic inequality that has not been seen since the first “gilded age” of the early 20th century. Not even the people who benefit from it think that it can last.

The Swiss bank UBS is a world leader in managing the financial assets of the very rich. The bank’s new report on the world’s billionaire class—which, of course, uses language rather sympathetic to the “entrepreneurial” class throughout, given the fact that UBS is trying to win these people’s business—is notable for its prediction on the future of inequality. UBS predicts that our current gilded age is peaking, and that wealth inequality is bound to begin to shrink as the backlash to the past 30 years begins to take hold in earnest.

Here is the relevant section from the report, bolding ours:

We believe that, like economic growth, great wealth creation has cycles. Wealth creation tends to move in S-curves, rather than growing linearly. At the end of the first ‘Gilded Age’, economic depression, higher taxes and the emergence of large public companies suppressed the opportunities for creating great wealth. The ‘entrepreneurial age’ yielded to a ‘managerial economy’ phase which lasted 50 years (1930-1980). In this time, a few big, established companies dominated economies leaving little room for entrepreneurialism. Consequently, we believe that current growth in great wealth cannot be extrapolated out forever with any certainty. In our opinion, current extreme growth is likely to level off in the next 10-20 years, although Asia’s economic momentum may signal that the cycle lasts longer there than in the US.

Two developments that may hinder the growth of great wealth are slowing economic growth in emerging markets (especially in the BRIC countries) and the significant share (approximately two thirds) of the current generation of billionaires that is in the corridor of wealth transfer (i.e. are over 60 and approaching the time when it is prudent to plan their legacies). As our data shows (see chapter three), once wealth gets handed over to the next generation it tends to fragment and dissipate rapidly.

Beyond these factors, there are a number of others that may slow down the entrepreneurial era. Rising inequality concerns may spur punitive rises in wealth/inheritance taxes (which are under discussion in countries such as the US, Germany and Switzerland). Regulators in some regions are looking into reining in monopolistic market structures (e.g. the EU’s investigations into technology firms), echoing restrictions that helped to end the first ‘Gilded Age’ (e.g. US Sherman Anti-Trust Act).

If you leave aside the bank’s inherently complimentary tone towards the rich, what you have is a clear acknowledgment from within the system that serves the 1% that our current state of inequality is unsustainable. Though the rich have successfully controlled the U.S. political economy since the Reagan era, at some point the populist backlash will swell enough that it changes the conditions (deregulation, tax rules, etc.) which allowed this inequality to flourish in the first place.

That time is drawing nearer, and the rich know it.

[Download the full report here. Pic via]

Contact the author at Hamilton@Gawker.com.