Wednesday 22 January 2020
 
»
 
»
'ECONOMIES WORK FOR RICH 1pc'

8 men control same wealth as poorest half of world: Oxfam

DAVOS, January 16, 2017

New estimates show that just eight men own the same wealth as the poorest half of the world and as growth benefits the richest, the rest of society – especially the poorest – suffers, says an Oxfam report.

The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point, said the report titled "An economy for the 99%".

"Our economy must stop excessively rewarding those at the top and start working for all people. Accountable and visionary governments, businesses that work in the interests of workers and producers, a valued environment, women’s rights and a strong system of fair taxation, are central to this more human economy," said Oxfam, an international confederation of charitable organisations focused on the alleviation of global poverty.

It is four years since the World Economic Forum in Davos identified rising economic inequality as a major threat to social stability and three years since the World Bank twinned its goal for ending poverty with the need for shared prosperity, it noted.

Since then, and despite world leaders signing up to a global goal to reduce inequality, the gap between the rich and the rest has widened. This cannot continue, it said.

The report highlighted that:
• Since 2015, the richest 1 per cent has owned more wealth than the rest of the planet.
• Eight men now own the same amount of wealth as the poorest half of the world.
• Over the next 20 years, 500 people will hand over $2.1 trillion to their heirs – a sum
larger than the GDP of India, a country of 1.3 billion people.
• The incomes of the poorest 10 per cent of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1 per cent increased 182 times as much.
• A FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh.
• In the US, new research by economist Thomas Piketty shows that over the last 30 years the growth in the incomes of the bottom 50 per cent has been zero, whereas incomes of the top 1 per cent have grown 300 per cent.
• In Vietnam, the country’s richest man earns more in a day than the poorest person earns in 10 years.

Left unchecked, growing inequality threatens to pull our societies apart. It increases crime and insecurity, and undermines the fight to end poverty. It leaves more people living in fear and fewer in hope, the report said.

From Brexit to the success of Donald Trump’s presidential campaign, a worrying rise in racism and the widespread disillusionment with mainstream politics, there are increasing signs that more and more people in rich countries are no longer willing to tolerate the status quo. Why would they, when experience suggests that what it delivers is wage stagnation, insecure jobs and a widening gap between the haves and the have-nots? The challenge is to build a positive alternative – not one that increases divisions.

The picture in poor countries is equally complex and no less concerning. Hundreds of millions of people have been lifted out of poverty in recent decades, an achievement of which the world should be proud. Yet one in nine people still go to bed hungry. Had growth been pro-poor between 1990 and 2010, 700 million more people, most of them women, would not be living in poverty today, it said.

Research finds that three-quarters of extreme poverty could in fact be eliminated now using existing resources, by increasing taxation and cutting down on military and other regressive spending.

The World Bank is clear that without redoubling their efforts to tackle inequality, world leaders will miss their
goal of ending extreme poverty by 2030.

It doesn’t have to be this way. The popular responses to inequality do not have to increase divisions. An Economy for the 99 per cent looks at how large corporations and the super-rich are driving the inequality crisis and what can be done to change this. It considers the false assumptions that have led us down this path, and shows how we can
create a fairer world based on a more human economy – one in which people, not profit, are the bottom line and which prioritises the most vulnerable.

THE CAUSES OF INEQUALITY
There is no getting away from the fact that the biggest winners in our global economy are those at the top. Oxfam’s research has revealed that over the last 25 years, the top 1 per cent have gained more income than the bottom 50 per cent put together.

Far from trickling down, income and wealth are being sucked upwards at an alarming rate. What is causing this?

Corporations and super-rich individuals both play a key role. Big businesses did well in 2015/16: profits are high and the world’s 10 biggest corporations together have revenue greater than the government revenue of 180
countries combined.

Squeezing workers and producers
While many chief executives, who are often paid in shares, have seen their incomes skyrocket, wages for ordinary workers and producers have barely increased, and in some cases have got worse. The CEO of India’s top information firm earns 416 times the salary of a typical employee in his company. In the 1980s, cocoa farmers received 18 per cent of the value of a chocolate bar – today they get just 6 per cent.

Across the world, corporations are relentlessly squeezing down the costs of labour – and ensuring that workers and producers in their supply chains get less and less of the economic pie. This increases inequality and suppresses demand.

Dodging tax
Corporations maximise profit in part by paying as little tax as possible. They do this by using tax havens or by making countries compete to provide tax breaks, exemptions and lower rates. Corporate tax rates are falling all over the world, and this – together with widespread tax dodging – ensures that many corporations are paying minimal tax. Apple allegedly paid 0.005% of tax on its European profits in 2014.

Developing countries lose $100 billion every year to tax dodging. Countries lose billions more through providing tax holidays and exemptions. It is the poorest people who lose out the most, as they are most reliant on the
public services that these forgone billions could have provided. Kenya is losing $1.1bn every year in tax exemptions for corporations, nearly twice its budget for health – this in a
country where women have a 1 in 40 chance of dying in childbirth.

What is driving this behaviour by corporates? Two things: the focus on short-term returns to shareholders and
the increase in ‘crony capitalism’.

Together we need to create a new common sense, and turn things on their head to design an economy whose primary purpose is to benefit the 99 per cent, not the 1 per cent. The group that should benefit disproportionately from our economies are people in poverty, regardless of whether they are in Uganda or the United States. Humanity has incredible talent, huge wealth and infinite imagination. We need to put this to work to create a more
human economy that benefits everyone, not just the privileged few, it said.

"A human economy would create fairer, better societies. It would ensure secure jobs paying decent wages. It would treat women and men equally. No one would live in fear of the cost of falling sick. Every child would have the chance to fulfil their potential. Our economy would thrive within the limits of our planet, and hand a better, more sustainable world to every new generation," the Oxfam report added.  - TradeArabia News Service




Tags: economy | wealth | rich | Oxfam |

More Finance & Capital Market Stories

calendarCalendar of Events

Ads