Bill Gates rightly said that things are getting better around the world. It is the case for the majority, but not for the extreme poor.
Inequality has become a sort of international topic du jour. President Obama mentioned it in his State of the Union, the Pope brought up the issue at the end of 2013 and Nobel prize winning economist Joseph Stiglitz is concerned by inequality.
Oxfam made the point by citing that the world’s 85 richest people have the same amount of money as the poorest ~3.5 billion in the world, in a recent report. It called for immediate action to halt the progress of inequality.
“Without a concerted effort to tackle inequality, the cascade of privilege and of disadvantage will continue down the generations,” said Winnie Byanyima, Executive Director for Oxfam International.
“We cannot hope to win the fight against poverty without tackling inequality. Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table.”
Oxfam recommended policies including cutting off the tax havens that are home to some $21 trillion, untying political power from wealth and companies providing a living wage. The organization has been campaigning strongly on the issue of tax havens, putting extensive pressure on the UK for the favorable tax
The report caught plenty of attention. The clever Guardian said that the 85 super-rich can fit into one of the country’s famed double decker buses. It would be quite the sight to see the uber-rich taking a spin around London in a big red bus.
While the incomes of the super right have gone up over the past few decades, so have those of the majority of people around the world, especially the poorest.
Branko Milanovic of the World Bank put together the above graph. It shows how different income percentiles have seen incomes improve between 1998 and 2008. The wealthiest few do fabulously well, but people in the 25th to the 65th percentile did better. The graph gives a lot of credence to the claim by Bill Gates that the world is getting better.
There are two possible ways forward, either poor countries get better or people start to leave the poor countries. The latter option is not a likely option at the moment, so it means economic growth is needed. In other words, developing countries need to develop.
The two groups that are missing out are the extreme poor and the middle class living in the West. UNITAID’s Philippe Douste-Blazay picked up on the dichotomy between the optimism of Gates and the concern of Oxfam.
“Bill Gates is correct that the progress we’ve made needs to be better acknowledged, in order to inspire leaders to move on to the next level in the fight against global poverty,” blogged Douste-Blazay in the Huffington Post. “Yet Oxfam’s call rings true in today’s worrying climate.”
Meanwhile, economist Tim Harford is ‘baffled’ by Oxfam’s report on inequality. His column for the Financial Times concedes a lot of points to Oxfam, but questions what real solutions exist. A response from Alex Evans on Global Dashboard references the Milanovic graph. Specifically the lack of growth the for the extreme poor.
“The people still remaining in poverty will be much harder to reach than those who escaped poverty in the MDG era,” says Evans.
This presents a whole set of challenges going forward. For international development, the trend is stunning for the majority, but a few are left behind. Goals set in the wake of the Millennium Development Goals are all the more important when facing the reality of a stagnating extreme poor.