With 48 hours left as vice president of the United States, Joe Biden delivered his final speech yesterday to an assembly of the world’s wealthiest and most powerful people. “The top 1 percent is not carrying their weight,” he said. And while “external actors” pose a threat to democracy, inequality is “undermining support for the liberal international order from inside.”
“Here in this exclusive alpine tower, where CEOs of multinational corporations rub elbows with leaders, it is easy to embrace the intellectual benefits of a more open and integrated world,” Biden told his audience, gathered at the World Economic Forum in Davos, Switzerland.
Although unprecedented growth spawned by a globalized economy has “lifted millions of people in the developing world out of abject poverty,” Biden warned of the simultaneous “hollowing out of the middle class” in developed countries, as manufacturing communities watch robots and factories in Asia take their jobs.
“Globalization has not been an unalloyed good,” Biden said. “I am a free trader, I am a strong supporter of globalization. But, it has deepened the rift between those racing ahead at the top and those struggling to hang on in the middle, or falling to the bottom.”
What Biden doesn’t mention is that the developing countries that have benefited so greatly from globalization are also beginning to experience the perils of inequality.
Vietnam, for example, has experienced a laudable decline in poverty, with nearly 30 million people rising above the official poverty line since the 1990s. However, in 2014, just 210 super-wealthy individuals held 12 percent of the country’s GDP (around $20 billion), while 12.3 million people lived in poverty, according to a recent report by Oxfam.
That same report noted that across Asia, the average inequality rate (Gini coefficient) rose twice as fast as the rest of the world between 1990 and 2013. It rose even faster in countries with larger populations, such as China, India and Indonesia, and has hindered poverty reduction efforts across the region.
Another report by Oxfam this week showed that only eight men hold as much wealth as the poorest half of humanity. Inequality, then, is a global problem not just a Western one.
Biden warned that a reactionary response to globalization would lead to war – especially as other powers seek to assert their spheres of influence. (“I will not mince words,” Biden said. “This movement is principally led by Russia.”)
“The impulse to hunker down, shut the gates, build walls and exit at this moment is precisely the wrong answer,” Biden said. “It offers a false sense of security in an interconnected world.”
Instead, he urged his audience to take “common-sense steps” like investing in education and job training, protecting workers rights, increasing access to capital and “implementing a progressive, equitable tax system where everyone pays their fair share.”
“The top 1 percent is not carrying their weight,” Biden told his audience. “You’re not bad guys. You’re good guys.” But massive tax breaks, like on inheritances, are not fulfilling their only two purposes: to increase productivity or promote a social good, according to Biden.
For example, free college education could easily be provided if the wealthy paid their fair share of taxes. “We can afford to do that in a heartbeat,” Biden said.
“We can’t undo the changes technology has wrought in our world – nor should we try. But we can and we must take action to mitigate the economic trends that are stoking unrest…” he said. “Our goal should be a world where everyone’s standard of living is rising.”