The rich get richer and the poor get poorer is an adage we’ve all heard countless times. Sadly, it is absolutely true. Just 62 people own as much as the poorest half of the global population, which is 3.6 billion people, an Oxfam report revealed on Monday.
The gap has been increasingly widening. Last year, it was 80 and in 2010 it was 388 — a 44 percent increase. The report, published before the annual World Economic Forum in Davos, where the world’s political and financial powers that be gather, also found that the wealth of the global population’s poorest half has decreased by a trillion dollars since 2010 — a 41 percent decrease. This decrease in the wealth of the world’s poorest occurred while the global population increased by about 400 million people since 2010. Last year before Davos, Oxfam predicted that the 1 percent would own more than everyone else by 2016. The prediction came true in 2015.
Since 2000, the global population’s poorest half received only 1 percent of the total increase in global wealth, but half of that increase went to the top 1 percent. The average annual income of the poorest 10 percent of the global population increased by less than $3 each year in nearly a quarter of a century. Their daily income increased by less than a single cent a year.
From 1990 to 2010 the inequality within countries has increased, despite the “fantastic progress” that has helped reduce the amount of people living below the extreme poverty line by half. If the inequality within countries had not increased, 200 million more people would have escaped poverty, the Oxfam report pointed out. That number “could have risen to 700 million had poor people benefited more than the rich from economic growth.”
While some argue that wealth trickles down to the poorest, Oxfam reveals the opposite. One big example is tax avoidance by the wealthiest. Consider that $7.6 trillion of individual wealth is held offshore. That is more than the combined gross domestic product (GDP) of the U.K. and Germany. Oxfam’s analysis of 200 companies, including the world’s biggest and the strategic partners of the World Economic Forum, found that 9 out of 10 companies have a presence in at least one tax haven. Corporate investment in tax havens in 2014 was nearly four times bigger than it was in 2001.
Tax avoidance by the wealthiest is harmful to both rich and poor countries. It is “sucking the life out of welfare states in the rich world,” as the report states. But it also prevents poor countries from having the funds they need to deal with poverty.
This is not sustainable
Oxfam gives recommendations to the world leaders who will meet at Davos. Those recommendations include:
- Closing the gap with executive rewards through three ways: increasing minimum wages towards livings wages, having transparency on pay ratios, and protecting workers’ rights to unionize and strike.
- Promoting women’s economic equality and women’s rights by providing compensation for unpaid care, ending the gender pay gap, promoting equal inheritance and land rights for women, and improving data collection to assess how women are affected by economic policy.
- Keeping the influence of powerful elites in check. One way to do this is by building mandatory public lobby registries and stronger rules on conflict of interest.
- Agreeing to a global approach to end the era of tax havens.
A world in which only 62 people have as much as half of the global population is not a sustainable one. For one thing, the average carbon footprint of the richest 1 percent could be up to 175 times higher than that of the poorest 10 percent. In other words, the richest 1 percent are using resources at a pace that is vastly higher than the poorest 10 percent.
The world’s population deserves an economy that works for all and not just for the 1 percent. It is high time for world leaders to pay attention to Oxfam’s recommendations. Whether they will remains to be seen.
Image courtesy of Oxfam