Forget the record $1.5 billion Powerball last week, because the rich keep getting richer. Wealth inequality is growing with the wealthiest 62 people having as much as the poorest half of the world – roughly 3.6 billion people, according to Oxfam. Even more dramatic, the wealthiest 1 percent of people have as much as everybody else, combined.
While the global economy has recovered from the financial crisis that started in 2007, the wealthiest are reaping the benefits. In 2010, Oxfam estimated that 388 people had as much wealth as the bottom half. The reduction to just 62 individuals illustrates where the majority of the new wealth being created is going.
“Power and privilege are being used to rig the system to increase the gap between the richest and the rest to levels we have not seen before. Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” said Ray Offenheiser, president of Oxfam America, in a statement. “While such extreme inequality is bad for all of us, it’s the poorest among us who suffer the grimmest consequences.”
The dichotomy is stark. Just 1 percent of the global wealth increase this century went to poorest half of people. Those numbers are flipped at the top. The wealthiest 1 percent took in half of the global wealth over the same period. Oxfam says not to be distracted by the improvements against extreme poverty, which are important, and recognize that the global system is rigged to benefit the people at the top.
Having trouble imagining the mystical 1 percent who are reaping all the benefits? Look in the mirror. Most people reading this are a part of the global 1 percent. The World Bank’s Branko Milanovic estimated in 2012 that an income of about $34,000 per year puts people into that category, which is a Middle Class American salary. It may not seem like it, especially given the current political rhetoric, but life got a lot better for us as compared to the majority of the world over the last 15 years.
But that is not the focus on the Oxfam report. Its focus is on the extremely wealthy, like those who will attend the upcoming World Economic Forum in Davos, Switzerland. Business and political leaders will rub elbows with one another and celebrities as they discuss the global economy. They are not likely to discuss addressing the estimated $7.6 trillion in individual wealth held in offshore accounts.
“Tax havens are at the heart of a global system that allows large corporations and wealthy individuals to avoid paying their fair share, depriving governments, rich and poor, of the resources they need to provide vital public services and tackle rising inequality,” said Offenheiser.
Campaigners, like Oxfam, have pressed on countries to close tax loopholes and prevent avoidance through tax havens. The issue gained some public traction in the U.K. a few years ago, but did not lead to the kinds of changes the campaigns demanded. Another area to address is worker wages. In the U.S., the CEOs are bringing in the big financial gains while the average worker is experiencing stagnant wages.
If nothing is done, the trend of the rich getting richer will continue. The windfall from the Powerball win for three families is unique to the average American. Those kinds of massive gains are a regular occurrence for the world’s wealthiest individuals. And the odds are ever in their favor.