An explosion in global inequality threatens progress against poverty.
If current trends continue, the richest one percent of people on our planet will own more global wealth than the remaining world population in 2016. Such extreme inequality will not only stall the fight against poverty, but could also stymie economic growth.
“Do we really want to live in a world where the one percent own more than the rest of us combined,” asked Winnie Byanyima, Oxfam International’s executive director. “The scale of global inequality is quite simply staggering.”
Our new report notes that in 2014, 48 percent of global wealth sat in the pockets of just one percent of the world’s people. In the next tier down, 20 percent of the world’s richest own most of what’s left, leaving a scant 5.5 percent of total global wealth for the other 80 percent of the population.
And the very richest are getting richer: Last year, we made headlines by revealing that just 85 individuals had the same amount of wealth as the world’s poorest 50 percent, or about 3.5 billion people. This year, our updated calculations show that same enormous amount of wealth now belongs to just 80 people. In cash terms, their wealth doubled between 2009 and 2014.
Income inequality is an issue that strikes close to home, too. During his State of the Union address this evening, President Obama is expected to take the matter up. According to the New York Times, President Obama will present proposals calling for, among other things, a tax increase on the wealthy in order to fund programs that open opportunities for people to climb out of poverty, such as free community college.
The cost of inequality
Why does all of this matter? It matters because extreme inequality destabilizes global economies and pushes more people into poverty. Hardworking people at the bottom of the income curve don’t make enough money to put food on the table or buy medicine when their kids get sick. They have little money to buy a home, start a business, or save for the future.
“Business as usual isn’t a cost-free option,” says Byanyima. “Failure to tackle inequality will set the fight against poverty back for decades. 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.”
None of this is inevitable. It is the consequence of political choices. Extreme poverty and inequality are the result of a skewed economic and political system that favors the few at the expense of everyone else.
Minding the gap
To help call attention to the widening inequality gap, Byanyima is serving as co-chair of the annual World Economic Forum in Davos, Switzerland, set to begin tomorrow. She’ll use her post to call for urgent action to stem the rising tide of inequality. The meeting represents an opportunity to present some of the world’s most powerful people with the stark facts of inequality and its consequences.
Our work to fight inequality aims to shine a light on the way extreme wealth is passed down through the generations and how big corporations and billionaires use their immense influence on political leaders to drown out the voices of hardworking people and rig the rules to their advantage. But there are practical, smart reforms that can help reduce inequality here and around the world so people everywhere can prosper.
Among those reforms is an increase in the federal minimum wage in the US—to $10.10—which would give at least 25 million workers a raise, lift millions of families out of poverty, save taxpayers billions of dollars by decreasing the need for public assistance, and boost the economic recover here.
We are also calling for a close on tax loopholes so that countries can fund the basic services that their citizens need, like schools, hospitals, and roads. And we want to see countries rich in natural resources use more of their wealth to reduce poverty.
“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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