62 people owning as much as the 3.6 billion poorest isn’t the most shocking fact in new global wealth study
You may have seen the headlines from Davos, Switzerland, where Oxfam’s latest global inequality report found the world’s richest 62 billionaires have as much wealth as the poorest 3.6 billion people. But what’s most shocking is not what is happening at the top of the economic ladder, but at the bottom.
“The gap between rich and poor is reaching new extremes,” Oxfam said. “The richest 1 percent have now accumulated more wealth than the rest of the world put together… Meanwhile, the wealth owned by the bottom half of humanity has fallen by a trillion dollars in the past five years.”
This gap “is just the latest evidence that today we live in a world with levels of inequality we may not have seen for over a century,” they said. But the fine print of Oxfam’s analysis of wealth trends between 2010 and 2015 finds the poor are getting much poorer.
“The wealth of the richest 62 people has risen by 44 percent in the five years since 2010—that’s an increase of more than half a trillion dollars ($542 billion), to $1.76 trillion,” Oxfam noted. “Meanwhile, the wealth of the bottom half fell by just over a trillion dollars in the same period—a drop of 41 percent. Since the turn of the century, the poorest half of the world’s population has received just 1 percent of the total increase in global wealth, while half of that increase has gone to the top 1 percent.”
Oxfam continued, “The average annual income of the poorest 10 percent of people in the world has risen by less than $3 each year in almost a quarter of a century. Their daily income has risen by less than a single cent every year.”
Oxfam, which combats poverty globally, said “apologists” for the rich often cite the numbers of people worldwide living in extreme poverty was cut in half between 1990 and 2010 “as proof that inequality is not a major problem.” However, that “misses the point,” because “had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty.”
Wealth trickles up, not down, says Oxfam, because the richest individuals use a system of global tax-avoidance schemes to avoid paying taxes to their governments. “Once [wealth is] there, an ever more elaborate system of tax havens and an industry of wealth managers ensure that it stays there, far from the reach of ordinary citizens and their governments.”
These disparities do more than keep the world’s poor living in harsh and primitive settings. Oxfam cited other studies that have found countries with the greatest economic disparities also see other social inequities reaching into higher social classes.
“The International Monetary Fund (IMF) recently found that countries with higher income inequality also tend to have larger gaps between women and men in terms of health, education, labour market participation, and representation in institutions like parliaments,” it said. “The gender pay gap was also found to be higher in more unequal societies. It is worth noting that 53 of the world’s richest 62 people are men.”
But the world’s poor face many additional challenges. Most of the very poor live in regions that will be most heavily impacted by rising sea levels and other expected climate change consequences, even though the carbon footprints of these individuals is minuscule compared to “the average footprint of the richest 1 percent globally,” Oxfam said.
The biggest reason the rich are getting richer while the poor are getting poorer—and wages for the middle-class in countries like the U.S. have stagnated in recent decades—is because investments have been rewarded, but not labor. “One of the key trends underlying this huge concentration of wealth and incomes is the increasing return to capital versus labour,” the report said. “In almost all rich countries and in most developing countries, the share of national income going to workers has been falling.”
“This means workers are capturing less and less of the gains from growth,” they explained. “In contrast, the owners of capital have seen their capital consistently grow (through interest payments, dividends, or retained profits) faster than the rate the economy has been growing. Tax avoidance by the owners of capital, and governments reducing taxes on capital gains have further added to these returns.”
This wage stagnation and disparities also has a large gender component—with women losing out, Oxfam reported. “Women make up the majority of the world’s low-paid workers and are concentrated in the most precarious jobs,” they said. “Meanwhile, chief executive salaries have rocketed. CEOs at the top US firms have seen their salaries increase by more than half (by 54.3 percent) since 2009, while ordinary wages have barely moved. The CEO of India’s top information technology firm makes 416 times the salary of a typical employee there. Women hold just 24 of the CEO positions at Fortune 500 companies.”
The report said the most powerful companies “often use their power and position to capture economic gain for themselves,” pointing to policy changes in the U.S. and elsewhere that have become a mainstay of the major political parties and their defenders in the media, “including privatization, deregulation, financial secrecy and globalization, especially of finance.”
The global oil and gas industry has resisted political changes that would respond to climate change, the report said, as one example, while the global garment sector has “consistently” used its dominant position “to insist on poverty wages.” The U.S.-based pharmaceutical industry has also pushed medical costs higher across the globe due to international trade agreements.
“All these are examples of how and why our current economic system—the economy for the percent—is broken,” Oxfam said. “It is failing the majority of people, and failing the planet. There is no dispute that today we are living through an inequality crisis—on that, the IMF, the OECD, the Pope and many others are all agreed. But the time has come to do something about it. Inequality is not inevitable. The current system did not come about by accident; it is the result of deliberate policy choices, of our leaders listening to the 1 percent and their supporters rather than acting in the interests of the majority.”
“Our world is not short of wealth,” Oxfam concluded. “It simply makes no economic sense—or indeed moral sense—to have so much in the hands of so few. Oxfam believes humanity can do better than this, that we have the talent, the technology and the imagination to build a much better world. We have the chance to build a more humane economy, where the interests of the majority are put first. A world where there is decent work for all, where women and men are equal, where tax havens are something people read about in history books, and where the richest pay their fair share to support a society that benefits everyone.”