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Runaway inequality has created a world where 62 people own as much as the poorest half of the world’s population – a figure that has fallen from 388 just five years ago, according to an Oxfam report published today ahead of the annual gathering of the world’s financial and political elites in Davos.
The report, An Economy for the 1%, outlines how the wealth of the poorest half of the world’s population –more than 3.6 billion people - has fallen by a trillion dollars (38 percent) since 2010. Meanwhile the wealth of the richest 62 people has increased by more than half a trillion dollars to $1.76 trillion.
“Power and privilege are being used to rig the system to increase the gap between the richest and the rest of us to levels we have not seen before. Far from trickling down, income and wealth are instead being pulled upwards at an alarming rate,” said Raymond C. Offenheiser, President of Oxfam America. “While such extreme inequality is bad for all of us, it’s the poorest among us who suffer the grimmest consequences.”
Although world leaders have increasingly talked about the need to tackle inequality, the gap between the richest and the rest has continued to widen dramatically in the past 12 months. At last year’s Davos gathering, Oxfam predicted that the 1% would soon own more than the rest of us, a prediction that came true even before the year ended.
Oxfam is calling for urgent action to tackle the extreme inequality crisis that threatens to undermine the progress made in fighting global poverty during the last quarter of a century. Oxfam is especially calling for an end to the era of tax havens.
“Tax havens are at the core 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,” continued Offenheiser.
Globally, it is estimated that a total of $7.6 trillion of individual’s wealth sits offshore – a twelfth of the total. If tax would be paid on the income that this wealth generates, an extra $190 billion would be available to governments every year.
Oxfam also highlighted that 9 out of 10 of this year’s World Economic Forum corporate partners have a presence in at least one tax haven and estimated that tax dodging by multinational corporations costs developing countries at least $100 billion every year. Corporate investment in tax havens almost quadrupled between 2000 and 2014.
Allowing governments to collect the taxes they are owed from companies and rich individuals will be vital if world leaders are to meet their new goal, set last September, to eliminate extreme poverty by 2030.
Although the number of people living in extreme poverty halved between 1990 and 2010, the average annual income of the poorest 10 percent has risen by less than $3-a-year in the past quarter of a century. Had inequality within countries not grown during that time, an additional 200 million people would have escaped poverty.
One of the other key trends behind rising inequality outlined in Oxfam’s report is the falling share of national income going to workers in almost all developed and most developing countries and a widening gap between pay at the top and the bottom of the income scale. This is definitely true here in the United States, where the salaries of CEOs at the top firms have increased by half since 2009 but ordinary wages have barely moved. The minimum wage has been stuck at $7.25 since 2009, while all costs of living have increased – groceries have skyrocketed by 25 percent.
“Raising the minimum wage would not only help millions of Americans, but it would also pump money into the local economy and save billions in taxpayer dollars by reducing the number of low-wage workers receiving federal assistance,” said Offenheiser. “Given that a solid majority of voters across all political backgrounds support an increase, it seems an obvious thing to do, but Congress isn’t budging.”