World’s richest 1% closing in on holding half of world’s wealth

Bono still hasn't found what he is looking for, at the World Economic Forum in 2011. (Copyright by World Economic Forum, swiss-image.ch/Photo by Moritz Hager)

The richest in the world are getting richer and they are about the cross a significant threshold. The wealthiest 1 percent are poised to hold more than half of the world’s wealth by 2016, said Oxfam on Monday. The announcement comes ahead of meetings among the world’s leaders, from politicians to CEOs, in Davos, Switzerland.

Oxfam’s new report estimates that 48 percent of the world’s wealth is held by the richest 1 percent of people. That is up from 44 percent in 2009. The group had an average wealth of $2.7 million. It is well ahead of the $3,851 in wealth held by the poorest 80 percent of people. Their total share is only 5.5 percent of global wealth.

The continued accumulation of wealth at the top and little that is left at the bottom is evidence of the increasing problem of wealth inequality. The trend poses a threat not only to the majority of the world’s inhabitants, but to everyone.

Capture“Business as usual for the elite isn’t a cost-free option – failure to tackle inequality will set the fight against poverty back decades,” said Winnie Byanyima, executive director of Oxfam International, in a release. “The poor are hurt twice by rising inequality – they get a smaller share of the economic pie and because extreme inequality hurts growth, there is less pie to be shared around.”

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The U.K.-based non-governmental organization has made noise about income inequality for the past few years. It used the meetings in Davos last year to unveil the fact that the 85 wealthiest people in the world had as much as the poorest 50 percent. That club is now a bit smaller, says Oxfam, with the top 80 now holding as much as the bottom 50 percent. Projections from their new report show a trend where the rich keep accumulating more of the world’s wealth.

The report takes particular aim at the world’s billionaires who made their money through the stock market and the health-care industry. The largest increase in wealth came to the people with interests in the pharmaceutical and health-care sectors, between 2013 and 2014. The richest 10 people in the industry saw their wealth increase by double-digit percentages. Stefano Pessina, the largest shareholder of Walgreen’s pharmacies, saw his wealth grow by 63 percent to $10.4 billion in the past year.

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Oxfam is again calling for policies that will stop the progress of inequality growth. It want governments to adopt a seven-point plan that includes catching tax dodgers, enacting fair tax systems, increasing or introducing minimum wages and providing safety nets for the poorest in each country. The starting point, and possibly the most important at the moment, is for countries to agree on goals to reduce inequality. With discussions still under way regarding what will replace the Millennium Development Goals at the end of the year, that goal may join the discussions.

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Creating change will be difficult. As the report shows, billions of dollars are spent globally to lobby governments. The majority of the lobbying money in the United States is spent on issues regarding taxes and the federal budget. Ensuring that the recommendations set forward by Oxfam are met will require political leaders to take action.

“In the past 12 months we have seen world leaders from President Obama to Christine Lagarde talk more about tackling extreme inequality but we are still waiting for many of them to walk the walk. It is time our leaders took on the powerful vested interests that stand in the way of a fairer and more prosperous world,” said Byanyima.

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Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.