The World Will Have 11 Trillionaires within Two Generations, Oxfam says that critical measures must be taken to curb excessive wealth disparity
Eighty-five people control the same amount of wealth as half the world’s population, according to a recently released report by Oxfam.
The report, published to coincide with the start of the World Economic Forum in Davos, Switzerland, points out that the world’s wealthiest people have not only recovered from the Great Recession, but they’ve thrived in its aftermath.
The 85 people cited in the report control about $1.7 trillion in wealth, roughly the same as the poorest half of the world’s population. Moreover, the richest 1 percent of the population has a net worth of approximately $110 trillion, which is 65 times the wealth of the bottom half.
The report, titled “Working for the Few” was released today by the international aid, famine relief and development organization. In the report, Oxfam concluded that such economic inequality poses major risks to human progress.
“Wealthy elites have co-opted political power to rig the rules of the economic game, undermining democracy,” Oxfam claims. “This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems,”
The U.S. Federal Reserve’s multi-billion dollar bond-buying program was cited as a major force behind the rapid increase in wealth inequality.
Oxfam is calling on the attendees of the World Economic Forum to take action. The organization says the wealthiest must pay their fair share of taxes and the political influence of their wealth must be limited. It also calls on those gathered at the forum to support progressive taxation and living wages, and to urge governments to use tax revenues to provide universal health care, education and social protection for their citizenry.
The richest 85 people in the world have as much wealth as the poorest 3.5 billion – or half the world’s entire population – put together. This is the stark headline of a report from Oxfam ahead of the World Economic Forum at Davos. Is there a reason why the world’s powerful, gathering at the exclusive resort to sip cognac and eat blinis, should care? Well, yes.
If one subscribes to the charitable view that neoliberal philosophy was simply naive or misguided in thinking that “trickle down” would work infinitely, then evidence that it doesn’t, should be cause for concern. It is a fundamental building block of supply-side economic theory – the tool of choice these past few decades for those in charge to make adjustments. The realization that governments have been pulling at economic levers which, for some time, have been attached to nothing, should be a wake-up call to the deepest sleepers.
Even if one subscribes to the cynical view that the elite knew what they were doing all along, observing that the “rising tide” is lifting fewer and fewer boats and leaving more and more to rot in the sediment – both at a personal and national level – must make most wonder “am I in the right boat and is it big enough?” Concentration is rampant. Credit Suisse estimates that the world will have 11 trillionaires within two generations.
It is not so much that the supply-side principle “if you build it, they will come” is no longer true. It is more that we appear to have passed a tipping point, where so much wealth has been concentrated at the top, they no longer need bother to “build” anything. In short, it has become more economically efficient to buy countries’ economic policy than to create value in order to sell it on. If one can control government to favour the richest, while raising barriers for new entrants, thus increasing their share of the pie exponentially, what is the incentive to grow the pie?
This applies to both companies and individuals. Small business gets clobbered by taxes and business rates, while big business turns around and says to the state: “This is how much tax I fancy paying this year, take it or leave it”. The rich no longer create jobs, through a process of consolidation, takeover and merger, they actually destroy them. Zero-hours contracts are the way of the future; in a society that is hungry, desperate and devoid of political engagement or unionism, why would anyone offer terms and conditions that give individual workers any standing?
And yet, the realization must dawn soon – one hopes – that this model is unsustainable because its effects are uncontrollable. The more unequal we become as a society, the faster the top’s earnings diverge from the bottom’s. “When so much of the purchasing power, so much of the economic gain, goes to the very top,” Bill Clinton’s former labour secretary Robert Reich explains in the film Inequality For All. “There’s simply not enough purchasing power in the rest of the economy.” At the same time, there is far too much loose cash sloshing around at the top, leading to unwise risks and toxic investments. Wealth inequality in the US was at its highest levels, historically, in 1928 and 2007, one year before its two biggest financial crises, notes Reich. The base of the pyramid atrophies and begins to crumble.
Then why are most governments continuing to fiddle with supply-side levers in order to revive the economy, when it is abundantly clear it does not work? The simple answer is in two parts. First part: habit. The second was perfectly expressed by the creator of The Wire, David Simon: “That may be the ultimate tragedy of capitalism in our time, that it has achieved its dominance without regard to a social compact, without being connected to any other metric for human progress.”