Global Inequality, Poverty and Economy for the 99%

Global Inequality, Poverty and Economy for the 99%

Global Inequality, Poverty and Economy for the 99% – Wealth, poverty and inequality have been at the heart of human history ever since we discovered how to tame plants and produce enough food to live on without risking our lives hunting. It was Jean Jacques Rousseau in ‘A Discourse on the Origin of Inequality’ who said, “The first man who, having enclosed a piece of ground, bethought himself of saying This is mine, and found people simple enough to believe him, was the real founder of civil society.  From how many crimes, wars and murders, from how many horrors and misfortunes might not anyone have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows, “Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.”

Rousseau was on the right track, for a January 2017 Oxfam report1 has revealed that just 8 men in the world own as much wealth as the poorest half of the world, about 3.6 billion people. In 2016, the figure was 622 people who had as much wealth as half the world’s population, while 803 people owned as much wealth as half the world in 2015. This means that in only two years, global wealth disparity has increased tenfold, a rather shocking revelation.

Mark Goldring, chief executive of Oxfam GB, said4: “This year’s snapshot of inequality is clearer, more accurate and more shocking than ever before. It is beyond grotesque that a group of men who could easily fit in a single golf buggy own more than the poorest half of humanity.”

The state of Inequality in the world

The 8 men worth more than 3.6 billion people include:

  • Bill Gates: Founder of Microsoft
  • Amancio Ortega: Founder of Zara
  • Warren Buffet: Berkshire Hathaway
  • Carlos Slim Helu: Conglomerate Grupo Carso
  • Jeff Bezos: Amazon
  • Mark Zuckerberg: Facebook
  • Larry Ellison: Oracle
  • Michael Bloomberg: Former mayor of New York, owner of Bloomberg news

Global Inequality, Poverty and Economy for the 99%

 

This chart shows the wealth of the richest people on the planet in 2016 compared to that of the less fortunate

Global Inequality, Poverty and Economy for the 99%

When you dig deeper into the murky waters of global wealth disparity, you’ll find that there are countries with worrying levels of inequality, like Russia and India, where the top 1% own 74.5% and 58.4% of the total wealth in the country, respectively.

Global Inequality, Poverty and Economy for the 99%

Global Inequality, Poverty and Economy for the 99%

99% of all dollar millionaires are in just 13 countries, with the rest of the world sharing the 1% left.

Global Inequality, Poverty and Economy for the 99%

All this goes to show how deep wealth inequality is in the world, and how wealth has increasingly been concentrated in the hands of a few people and a cluster of countries.

Goldring4 puts it best when he remarks, “While one in nine people on the planet will go to bed hungry tonight, a small handful of billionaires have so much wealth they would need several lifetimes to spend it. The fact that a super-rich elite are able to prosper at the expense of the rest of us at home and overseas shows how warped our economy has become.”
Global Inequality, Poverty and Economy for the 99%

Extreme poverty – Global Inequality, Poverty and Economy for the 99%

The World Economic Forum, in its recently released Global Risks Report5 has identified that rising income and wealth disparity is the most important trend in determining global developments over the next 10 years, and that reforming market capitalism must be on the global agenda.

As inequality gets worse, domestic and global politics will continue to be poisoned as economic populism fuels the rise of divisive and controversial leaders such as Donald Trump, Britain’s Brexit and the rise of xenophobia and Islamophobic rhetoric on both sides of the Atlantic. With elections in the offing for numerous EU bulwark countries such as Germany, France and the Netherlands, the very future of European unity and cohesiveness is under threat of disintegration. The anti-establishment wave is growing stronger by the day, and as each leader of the old order falls, a new world order is emerging. This new order is hostile to globalization and foreigners, protectionist and dangerous to global peace.

The world is improving, but not fast enough for the 99%

While the rich are richer faster than the poor, it wasn’t long ago that the rich got richer while the poor got poorer6. There has been some good news in global poverty decline, health and nutrition, access to water and sanitation and an increase in literacy.

Global poverty has been declining for decades: Global Inequality, Poverty and Economy for the 99%

Hunger, famine and malnourishment have also been on the decline:

Global Inequality, Poverty and Economy for the 99%

There have been gains in access to improved water and sanitation, an essential element in preventing the spread of water-borne diseases:

Global Inequality, Poverty and Economy for the 99%

Global Inequality, Poverty and Economy for the 99%

Infant mortality is one of the best indicators for well-being, and this too has experienced tremendous progress due to vaccination programs that have been adopted by almost all nation states on the globe:

Global Inequality, Poverty and Economy for the 99%

Literacy levels have risen consistently throughout the years:

Global Inequality, Poverty and Economy for the 99%

What does all this mean? Even as wealth continues to be concentrated in a small percentage of the world’s population, remarkable progress has been made in improving the conditions of human beings all over the globe.

However, if global wealth disparity were not as bad as it is now, it could be argued that our rate of progress and development as a species would be faster and better than what we’re currently experiencing at the moment. Yes, there’s progress, but we could do so much better if inequality was not as stark as it is.

What are the causes of Inequality?

The Oxfam 2017 report1 had the following statistics on global inequality:

  • Since 2015, the richest 1% has owned more wealth than the rest of the planet.7
  • Eight men now own the same amount of wealth as the poorest half of the world8.
    • 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 people9.
    • The incomes of the poorest 10% of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1% increased 182 times as much.10
    • A FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh11.
    • 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% has been zero, whereas incomes of the top 1% have grown 300%12.
    • In Vietnam, the country’s richest man earns more in a day than the poorest person earns in 10 years13.

Left unchecked, growing inequality threatens to pull our societies apart. It increases crime and insecurity, and undermines the fight to end poverty

The causes are many and varied, but they all boil down to an economy that is structured to benefit a small group of people while ripping off the majority.

Corporations are working only for those at the top

The Oxfam 2016 report14 titled: Economy for the 1% notes that “between 1990 and 2010, the bottom 40 percent of people in many developing countries saw their incomes grow more slowly than the average rate of growth nationally. If their incomes had grown at the same rate as the average in all countries, 200 million fewer people would have been living below the extreme poverty line by 2010.If growth had been pro-poor, with the incomes of the bottom 40 percent growing by 2 percentage points faster than the average, poverty could be at half the level it is today.”

Global Inequality, Poverty and Economy for the 99%

Businesses are the engines that run society, providing work and income for people to carry on with their lives. However, if corporations make tidy profits but keep most of that money for the top leaders while denying their employees and the economy much needed funds, then the whole house of cards will come crashing down, bringing chaos and violence to the world.

Global Inequality, Poverty and Economy for the 99%

Corporations are busy squeezing workers and producers, with wages remaining stagnant or declining while top executives continue receiving fat checks and bonuses. As companies fanatically drive down the costs of labor, workers and suppliers in the supply chain earn less, increasing inequality and suppressing demand in the market.

Global Inequality, Poverty and Economy for the 99%

Tax evasion and avoidance – Global Inequality, Poverty and Economy for the 99%

Corporations have also perfected the art of dodging tax in whichever jurisdiction they’re operating in. tax revenues help finance any country’s budget, and this money is important for paying for social needs and projects like health, education, infrastructure and security. When huge multinationals use tax havens and legal loopholes that they have bought for by influencing politics, governments find themselves strapped for cash. Government budgets get leaner and meaner, with important investments in society being passed over. This means many people will miss opportunities for growth and development, dooming them to a life of misery and deepening the inequality that already exists.

Global Inequality, Poverty and Economy for the 99%

Crony capitalism – Global Inequality, Poverty and Economy for the 99%

Corporations that are powerful enough use their money and influence to lobby lawmakers and government officials to pass laws that are conducive to the company’s agenda of hoarding cash, paying as little tax as possible (preferably none) and squeezing employees and producers, all in a bid to provide as much value to a select group of shareholders. This ends up exacerbating inequality by withholding revenues and opportunities that would have helped communities and countries grow and develop. Nigeria’s oil industry is a perfect example of this phenomenon:

Global Inequality, Poverty and Economy for the 99%

The Snowball effect of wealth concentration

Gatesnotes15, a blog by Bill Gates, reviewed Thomas Piketty’s ‘Capital in the Twenty First Century’ and summarized the main points of the book thus:

  • High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal.
  • Capitalism does not self-correct toward greater equality—that is, excess wealth concentration can have a snowball effect if left unchecked.
  • Governments can play a constructive role in offsetting the snowballing tendencies if and when they choose to do so.
What can be done to reverse the glaring global wealth disparity? – Global Inequality, Poverty and Economy for the 99%

In order for humanity to reverse the worsening trends of inequality and get on track to a more equal and prosperous society, several false assumptions have to be overcome:

  • The market is always right, and the role of governments should be minimized. What has been clearly demonstrated is that markets are full of crony capitalism and corruption, which is always at the expense of the weak and vulnerable members of society.
  • Corporations need to maximize profits and returns to shareholders at all costs. Instead of disproportionately increasing the wealth of a few at the expense of the many, companies should focus on models that spread the wealth throughout the value chain, which will mean greater prosperity for all.
  • Extreme individual wealth is harmless and is a sign of success, and inequality is not relevant. This is false, as growing inequality has only made the world economy inefficient and made our politics more corrosive and divisive. A more equal distribution of wealth would ensure our collective progress.
  • GDP growth should be the primary goal of policy making. This is false because GDP fails to measure important aspects, such as the unpaid work done by women. It also fails to account for inequality, where a country might have a high GDP though the number of poor people in the country might have actually increased.
  • Our economic model is gender neutral. Our economy is structured in a way that heavily disadvantages women, and we cannot increase our collective progress if half the team isn’t allowed to show up and play.
  • Our planet’s resources are limitless. We need to move away from an economy that is built on exploiting the environment and causing global warming.

A quote from the Oxfam 2017 report1 illustrates the need for a new model succinctly, “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%, not the 1%. The group that should benefit disproportionately from our economies is 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.” Thanks for reading Global Inequality, Poverty and Economy for the 99%!

Reference Links:
  1. https://www.oxfam.org/en/research/economy-99
  2. https://www.theguardian.com/business/2016/jan/18/richest-62-billionaires-wealthy-half-world-population-combined
  3. https://www.oxfam.org/en/pressroom/pressreleases/2015-01-19/richest-1-will-own-more-all-rest-2016
  4. https://www.theguardian.com/global-development/2017/jan/16/worlds-eight-richest-people-have-same-wealth-as-poorest-50
  5. https://www.theguardian.com/business/2017/jan/11/inequality-world-economy-wef-brexit-donald-trump-world-economic-forum-risk-report
  6. http://www.valuewalk.com/2017/01/oxfam-report-inequality/?all=1
  7. Credit Suisse (2016) ‘Global Wealth Databook 2016’. http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD6F2B43-B17B-345E-E20A1A254A3E24A5
  8. Oxfam calculations using wealth of the richest individuals from Forbes Billionaires listing and wealth of the bottom 50% from Credit Suisse Global Wealth Databook 2016.
  9. UBS/PWC (2016) ‘Billionaires Insights: Are billionaires feeling the pressure?’ http://uhnw-greatwealth.ubs.com/media/8616/billionaires-report-2016.pdf
  10. Hardoon, S. Ayele and R. Fuentes-Nieva. (2016). ‘An Economy for the 1%’. Oxford: Oxfam. http://policy-practice.oxfam.org.uk/publications/an-economy-for-the-1-how-privilege-and-power-in-the-economy-drive-extreme-inequ-592643
  11. Calculations by Ergon Associates using CEO pay data from the High Pay Centre and the minimum wage of a Bangladeshi worker plus typical benefits packages offered to workers.
  12. Cohen. (2016, December 6). ‘A Bigger Economic Pie, but a Smaller Slice for Half of the U.S’. New York Times. http://www.nytimes.com/2016/12/06/business/economy/a-bigger-economic-pie-but-a-smaller-slice-for-half-of-the-us.html?smid=tw-nytimesbusiness&smtyp=curhttp://www.nytimes.com/2016/12/06/business/economy/a-bigger-economic-pie-but-a-smaller-slice-for-half-of-the-us.html?smid=tw-nytimesbusiness&smtyp=curhttp://www.nytimes.com/2016/12/06/business/economy/a-bigger-economic-pie-but-a-smaller-slice-for-half-of-the-us.html?smid=tw-nytimesbusiness&smtyp=cur
  13. Nguyen Tran Lam. (2017). ‘Even It Up: How to tackle inequality in Vietnam’. Oxford: Oxfam. http://oxf.am/ZLuU
  14. https://www.oxfam.org/en/pressroom/pressreleases/2016-01-18/62-people-own-same-half-world-reveals-oxfam-davos-report
  15. https://www.gatesnotes.com/Books/Why-Inequality-Matters-Capital-in-21st-Century-Review

Global Inequality, Poverty and Economy for the 99%

In-depth review of wealth inequality by David Peterson,  Australia Unwrapped, look forward your comments and engagement.

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