Extreme inequality: Only 8 men hold same wealth as half the world

A combination photo shows (top, L-R) Bill Gates, Warren Buffett, Jeff Bezos, Amancio Ortega, (bottom, L-R) Mark Zuckerberg, Larry Ellison, Carlos Slim and Michael Bloomberg. (Credit: Reuters/File Photos)

Shocking new data reveals an “obscene” level of global wealth inequality, far worse than previously thought: Only eight men hold as much wealth as the poorest half of humanity – more than 3.6 billion people. The finding is among other equally jarring numbers in Oxfam’s latest report, released today as political and business leaders gather for the annual World Economic Forum in Davos, Switzerland, this week.

“It’s almost hard to physically imagine how big [global inequality]is,” Gawain Kripke, director of policy at Oxfam America, said in an interview with Humanosphere. “This is a report that we’ve been updating for a few years now. … Each year we check back, the concentration of wealth is getting more extreme.”

In 2010, 388 of the world’s wealthiest individuals held as much wealth as the bottom half of humanity. By 2014, Oxfam told the wealthy in Davos it only took 85 of their peers to match the wealth of the bottom 3.5 billion people. In 2015, it took 80 individuals. Last year, it was 62 and 3.6 billion.

With a combined wealth of $426.2 billion, this year’s eight are few enough to list: Bill Gates, co-founder of Microsoft and the Bill and Melinda Gates Foundation; Amancio Ortega, founder of Spanish clothing chain Zara; Warren Buffett, CEO of multinational conglomerate Berkshire Hathaway; Carlos Slim Helú, Mexico’s telecom tycoon; Jeff Bezos, founder of Amazon; Mark Zuckerberg, founder of Facebook; Larry Ellison, co-founder of tech corporation Oracle; and Michael Bloomberg, former mayor of New York and founder of Bloomberg news and financial services.

Oxfam bases its annual calculations on Credit Suisse’s Global Wealth Databook and Forbes’ billionaires list. This year, Credit Suisse had access to new and better data from India and China that revealed even less net wealth among the bottom 50 percent than previously estimated. Had the data been available for last year’s report, Oxfam said in a press release, it would have shown nine individuals with the same wealth as the bottom half, not 62.

This year’s report called for “urgent action” on the part of governments and business leaders to catalyze a fundamental shift from an economy that systematically works for the rich to a human “economy for the 99 percent,” as the report is titled.

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“Unless we can resume faster global growth and reduce inequality, we risk missing our … target of ending extreme poverty by 2030,” World Bank President Jim Yong Kim said in October. “The message is clear: to end poverty, we must make growth work for the poorest, and one of the surest ways to do that is to reduce high inequality.”

Although it is true that recent efforts have lifted hundreds of millions of people out of extreme poverty – “an achievement of which the world should be proud,” Oxfam said – 10 percent of the world’s population still lives below the extreme poverty line of $1.90 a day, and one in nine people go to bed hungry. A fairer comparison shows that nearly half of the global population lives below the “ethical poverty line,” which is the amount per day needed to reach a normal life expectancy of just over 70 years.

Growth comparisons also reveal the depth of inequality. According to the report, between 1988 and 2011, the incomes of the poorest 10 percent increased by less than $3 a year. Meanwhile, the incomes of the richest 10 percent increased by average of $11,800 per year.

The gap is not just between poor and rich countries; inequality is entrenched in both. The richest man in Vietnam, for example, makes as much in one day as a the poorest person makes in 10 years. In the U.S., new research shows that the incomes of the bottom 50 percent have grown by zero over the last 30 years, while incomes of the top 1 percent have grown 300 percent.

“The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point,” the report said, and “corporations play a massive role in this whole scenario,” Kripke added. “They’re not the only stakeholder, but they are a big factor and arguably a big part of the solution as well.”

According to the report, the world’s 10 biggest corporations together have revenue greater than that of the poorest 180 countries combined. Yet, the driving goal of corporations to maximize returns to their shareholders has led to “squeezing down” on cost of labor and evading taxes, which the super-wealthy often do as well.

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Developing countries lose $100 billion every year to tax evasion, according to the report, and Africa alone loses $14 billion in tax revenues to tax havens. That amount would be enough to pay for health care that could save 4 million children’s lives and employ enough teachers for every African child to attend school, the report said.

Additionally, the system self-perpetuates. Although the American dream of turning hard work into fortune certainly has played out for a number of billionaires, according to Oxfam, one-third of the world’s billionaire wealth is inherited, while nearly half of it can be linked to cronyism. Over the next 20 years, 500 people will give their heirs $2.1 trillion – more than the GDP of India, a country of 1.3 billion people.

Through lobbying and influence, corporations and the super-rich also ensure that government policies work for their interests and wealth. “In such an environment, if you are already rich you have to try hard not to keep getting a lot richer,” the report said.

Last week the World Economic Forum released a risk report that pointed to rising income and wealth inequality, climate change and societal polarization as the three most significant trends that will shape global development for the next 10 years.

“President Obama described rising inequality as the challenge of our time, and I think there’s some truth in that,” Kripke said. “This isn’t a problem that we’re just going to fix. This is a generational problem that is going to take years and many different strategies to solve.”

Already the public has begun to express their dissatisfaction with the system through referendums and political upsets, such as the election of Donald Trump and Brexit. But unless the political and business leaders in Davos this week commit to serious reforms on taxes, wages, even gender equality and climate change, the consequences could be devastating.

“Historically, what’s reduced wealth inequality is war,” Kripke said. “War is a massive destroyer of wealth, and of course we hope that that’s not the solution. But one could argue that without a better way of doing it, that may be the only way of doing it in the future.”

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Joanne Lu

Joanne Lu is a South Carolina-based writer and editor dedicated to global development, poverty alleviation and social justice. After a year in Rwanda, she now covers the Asia-Pacific and economics. Find her on Twitter @joannelu or email joanne@humanosphere.com.