This week, the advocacy group Oxfam released a report that generated some stunning headlines, mostly around one shocking statistic: “85 richest people as wealthy as poorest half of the world” was typical.
The Oxfam report Working for the Few quoted former US Supreme Court Justice Louis Brandeis: “We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.”
Everyone knows the richest today are fabulously wealthy and even Oxfam accepts that some level of inequality is necessary – and good, as a reward for innovation and initiative. But…
The level of inequality today has become harmful, the advocacy organization contends, for a number of reasons:
- Almost half of the world’s wealth is now owned by just one percent of the population.
- The wealth of the one percent richest people in the world amounts to $110 trillion.
- That’s 65 times the total wealth of the bottom half of the world’s population.
- The bottom half of the world’s population owns the same as the richest 85 people in the world.
- Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
- The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
- In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.
Oxfam timed the release of the report with this week’s World Economic Forum in Davos, the annual gathering of elite policymakers and corporate moguls, in a plea for them to begin to address economic inequality. The issue of the rising gap between rich and poor worldwide is, again, on the agenda for this gathering of the rich and powerful.
Wall Street Journal Why the billionaires of Davos must tackle inequality
Pope Francis echoed that call in a message to the forum attendees: “I ask you to ensure that humanity is served by wealth and not ruled by it.”
The fundamental problem with expecting the folks at Davos to do something to solve the inequality problem is that these are the same folks who have created and sustained the economic and financial systems that have fueled this growing imbalance.
Oxfam also argues that those at the top today are so saturated with wealth and power that they’ve been able to “capture” democracies around the world, through concerted lobbying efforts against regulation and the exploitation of gaping loopholes. Wealth inequality, in short, has undermined the role of government to correct these imbalances of power.
I asked Greg Adams, Oxfam’s Director of Aid Effectiveness, whether he really thinks this high-status crowd is willing to take action against some of their own class.
“Honestly, it’s gotta start there,” Adams said. “The case we try to make is that inequality has become so extreme, that it even threatens the things that the people at Davos care about.”
The World Economic Forum in November 2013 issued a report that said inequality is poised to impact “social stability within countries and threaten security on a global scale” this year. Adams points out that the International Monetary Fund (IMF) is on board. “They’re acknowledging the corrosive effect inequality has,” he says, to the point where it threatens macroeconomic stability.
Here’s another striking statistic from Oxfam’s report, however: $18.5 trillion is stashed in offshore tax havens. That’s $3 trillion more than the gross domestic product of the United States, the richest country in the world. Odds are, some folks at Davos rely on tax havens to shield their wealth from taxes that contribute to general welfare, or have friends that do.
Can they, or will they, act against their own interests?