Global Courant
Poverty inequality around the world is exploding, with the rich hoarding a disproportionate share of global wealth while leaving the already vulnerable with fewer resources.
This is evident from a new report published this week by the non-governmental organization Oxfam. The charity publishes an annual report on global poverty to coincide with the annual World Economic Forum (WEF) in Davos, Switzerland. The forum is a gathering of the world’s business elite – from CEOs of major corporations to self-made billionaires – to discuss global trade issues.
The five richest men in the world – LVMH CEO Bernard Arnault, Amazon’s Jeff Bezos, investor Warren Buffet, Oracle co-founder Larry Ellison and Tesla CEO Elon Musk – have seen their wealth double since 2020, earning $14 million an hour , the Oxfam report said.
But as the world’s few wealthy elite accumulate wealth, global poverty has increased for the first time in almost three decades, according to Oxfam.
Here’s why the charity says inequality is widening, and how this suggests wealth needs to be redistributed:
Multiple crises lead to the rich getting richer and the poor getting poorer
The disruptions that followed the COVID-19 pandemic shutdowns – as well as the inflation that hit many parts of the world in 2022 due to the war between Russia and Ukraine, which also disrupted supply chains – have helped push more people across the whole world poorer.
At least 1.7 billion workers worldwide saw inflation rise faster than their wages in 2022, limiting their ability to buy food and pay their energy bills, according to Oxfam’s analysis.
At the same time, the small elite group that is the richest people in the world has only become richer, according to Oxfam’s findings.
Over the past decade, more than half of the new wealth created worldwide has ended up in the pockets of the richest one percent of humanity. But between 2020 and 2021 alone, that rate accelerated even further, with the richest one percent gaining 63 percent of all new wealth, leaving 99 percent of the world’s population with just 37 percent of new global income.
These inequalities also have gender and racial influences, Oxfam found. Men owned $105 trillion more wealth than women, while black families in the United States owned only 15.8 percent of the wealth of a typical white household.
“While ordinary people make daily sacrifices on essentials like food, the super-rich have surpassed even their wildest dreams,” said Gabriela Bucher, director of Oxfam, in a press release. “Just two years later, this decade is shaping up to be the best yet for billionaires – a roaring 2020s boom for the world’s richest.”
In the past, these were Oxfam’s annual inequality reports criticized because they included indebted individuals in their calculations of the world’s poorest people. The organization used data from Credit Suisse, the Institute for Policy Studies and Forbes, among others, for its calculations.
But one October 2023 report of the International Rescue Committee (IRC) found that while the number of people living in poverty has fallen globally, the number of people living in extreme poverty has increased by 80 percent in 13 of the least developed countries, confirming some of Oxfam’s findings.
What drives the inequality?
According to the Oxfam report, billionaires have benefited enormously from the pandemic. As rich countries pumped money into their economies to support families and those who were out of work or earning low wages, they also drove up the value of the assets and wealth already held by the super-rich.
Oxfam also found that wealthy people who own shares in the world’s largest food and energy companies made dramatic gains in 2022. Because those companies made huge returns and doubled their profits that year, they also paid out large amounts of dividends.
One of the key factors driving the inequality gap even further, Oxfam found, was the lack of progressive taxation of the new wealth being generated. The report shows that rich people in several countries pay much less tax than ten years ago. Half of the world’s billionaires, the report said, also live in countries where they don’t have to pay taxes on inherited wealth, meaning $5 trillion of wealth will be passed on tax-free.
All these elements have helped the world’s billionaires grow from a combined worth of $6 trillion in 2012 to about $14 trillion in 2022, the report said.
Oxfam warned that the continued accumulation of wealth in the hands of a few could slow countries’ economic growth, contribute to political divisions and lead to corruption in all sectors.
It could also lead to more climate pollution, the report found, because billionaires are more likely to invest in fossil fuels.
Is there a solution?
Higher taxes are one way to redistribute concentrated wealth and close the inequality gap, according to the Oxfam report.
In many countries, the rich have seen their wealth taxed less in recent decades, as politicians argue that lower taxes will allow companies to hire more workers, create more job competition and raise average wages, ultimately sending more wealth to can trickle down to ordinary people. person.
According to Oxfam data on countries belonging to the Organization for Economic Co-operation and Development (OECD), average tax rates for the richest people have fallen from 58 percent in 1980 to 42 percent today.
Elon Musk, founder of Tesla and owner of X, formerly Twitter, paid a “real tax rate” of about 3 percent between 2014 and 2018, Oxfam found.
But several reports have documented how tax cuts for wealthy corporations in the US, for example, have only further entrenched inequality levels.
In 2017, former US President Donald Trump promised Americans that his Tax Cuts and Jobs Act would deliver benefits to the working class. The law aimed to reduce corporate taxes for large organizations from 35 percent to approximately 20 percent. Trump has passed $1.5 billion in tax cuts, the largest corporate tax cut in American history.
However, in their book The Triumph of Injustice – How the Rich Dodge Taxes and How to Make Them Pay, economists Emmanuel Saez and Gabriel Zucman found that the 400 richest families in the US paid an average tax rate of 23 percent in 2018. 2018, while the poorest households paid 24.2 percent in taxes, higher than the richest people.
A 5 percent annual wealth tax could help mobilize up to $1.7 trillion to tackle humanitarian crises around the world and support countries most affected by climate change, according to Oxfam.
