Global wealth is increasingly being concentrated in the hands of few. These wealthy individuals have generated and sustained their vast riches through their interests and activities in a few important economic sectors, including finance and pharmaceuticals/ healthcare. Excerpts from the Oxfam policy note “Wealth: Having It All and Wanting More”:
Global wealth is becoming increasing concentrated among small wealthy elite. Data from Credit Suisse shows that since 2010, the richest 1% of adults in the world have been increasing their share of total global wealth. In 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of adults on the planet. Almost all of that 52% is owned by those included in the richest 20%, leaving just 5.5% for the remaining 80% of people in the world. If this trend continues of an increasing wealth share to the richest, the top 1% will have more wealth than the remaining 99% of people in just two years, with the wealth share of the top 1% exceeding 50% by 2016.
Global health being concentrated in the hands of small wealthy elite
The very richest of the top 1%, the billionaires on the Forbes list, have seen their wealth accumulate even faster over this period. In 2010, the richest 80 people in the world had a net wealth of $1.3tn. By 2014, the 80 people who top the Forbes rich list had a collective wealth of $1.9tn; an increase of $600bn in just 4 years, or 50% in nominal terms. Meanwhile, between 2002 and 2010 the total wealth of the poorest half of the world in current US$ had been increasing more or less at the same rate as that of billionaires; however since 2010, it has been decreasing over this time.
The wealth of these 80 individuals is now the same as that owned by the bottom 50% of the global population, such that 3.5 billion people share between them the same amount of wealth as that of these extremely wealthy 80 people. As the wealth of everyone else has not been increasing at the same rate as that for the top 80, the share of total wealth owned by this group has increased and the gap between the very rich and everyone else has also been increasing. As a result, the number of billionaires who have the same amount of wealth as that of the bottom half of the planet has declined rapidly over the past five years. In 2010, it took 388 billionaires to equal the wealth of the bottom half of the world’s population; by 2014, the figure had fallen to just 80 billionaires.
Wealthy individuals have sustained their riches through interests in a few economic sectors
In 2014 there were 1,645 people listed by Forbes as being billionaires. This group of people is far from being globally representative. Almost 30% of them (492 people) are citizens of the USA. Over one-third of billionaires started from a position of wealth, with 34% of them having inherited some or all of their riches. This group is predominately male and greying; with 85%7 of these people aged over 50 years and 90% of them male.
There are a few important economic sectors that have contributed to the accumulation of wealth of these billionaires. In March 2014, 20% of them (321) were listed as having interests or activities in, or relating to, the financial and insurance sectors, the most commonly cited source of wealth for billionaires on this list. Since March 2013, there have been 37 new billionaires from these sectors, and six have dropped off the list. The accumulated wealth of billionaires from these sectors has increased from $1.01tn to $1.16tn in a single year; a nominal increase of $150bn, or 15%.
Finance and pharmaceutical companies spent millions in 2013 on lobbying
The biggest and most successful companies from both the finance and insurance sectors and the pharmaceutical and healthcare sectors achieve extremely high profits and therefore command substantial resources which they use to compensate their owners and investors, helping to accumulate their personal wealth. But these resources could also potentially be used for economic and political influence. One way that companies explicitly use their resources for influence is through the direct lobbying of governments, particularly on issues and policies which affect their business interests.
During 2013, the finance sector spent more than $400m on lobbying in the USA alone, 12% of the total amount spent by all sectors on lobbying in the US in 2013. In addition, during the election cycle of 2012, $571m was spent by companies from this sector on campaign contributions. The financial sector is found by the Centre for Responsive Politics to be the largest source of campaign contributions to federal candidates and parties. Billionaires from the US make up approximately half of the total billionaires on the Forbes list with interests in the financial sector. The number of US finance billionaires increased from 141 to 150, and their collective wealth from $535bn to $629bn; an increase of $94bn, or 17% in a single year.
In the EU, an estimated $150m is spent by financial sector lobbyists towards EU institutions every year. Between March 2013 and March 2014, the number of billionaires in the EU with activities and interests in the financial sector increased from 31 to 39, an increase in collective wealth of $34bn, to $128bn.
While corporations from the finance and insurance sectors spend their resources on lobbying to pursue their own interests, and as a result go on to increase their profits and the associated wealth of those individuals involved in the sector, ordinary people continue to pay the price of the global financial crisis. The cost to the US taxpayer of the bailout of the financial sector was calculated to be $21bn. While the financial sector has recovered well as a result of this bailout, median income levels in the USA are yet to return to their pre-crisis levels. The ongoing cost to the tax payer for “systematically important financial institutions‟ – in other words those that are too big to fail – has been estimated by the IMF to be $83bn every year.
During 2013, the pharmaceutical and healthcare sectors spent more than $487m on lobbying in the USA alone. This was more than was spent by any other sector in the US, representing 15% of $3.2bn total lobbying expenditures in 2013. In addition, during the election cycle of 2012, $260m was spent by this sector on campaign contributions.17 Twenty-two of the 90 pharmaceutical and healthcare billionaires are US citizens.
At least $50m is spent by the pharmaceutical and healthcare industry on lobbying each year in the EU, where 20 of the 90 billionaires who made their money from pharmaceuticals and healthcare reside, and who together increased their wealth in the last year by $28bn.
While millions are being spent on lobbying by pharmaceutical and healthcare companies and billions being made by individuals associated with these companies, a health crisis has erupted in West Africa. The Ebola virus has been threatening the lives and livelihoods of millions of people in Guinea, Sierra Leone and Liberia in 2014.
Companies have responded positively to the Ebola crisis: some pharmaceutical companies are investing in research to find a vaccine, the full costs of which are not yet known. The three pharmaceutical companies that are members of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) and that have made the largest contribution to the Ebola relief effort, have collectively donated more than $3m in cash and medical products. But the amount of money that has been spent on Ebola and other activities that have a broader benefit to society needs to be looked at in the context of their expenditure on corporate lobbying to influence for their own interests. These three companies together spent more than $18m on lobbying activities in the US during 2013.
To put the funding for the Ebola crisis in perspective, the World Bank estimates that the economic costs to Guinea, Liberia and Sierra Leone was $356m in output forgone in 2014, and a further $815m in 2015 if the epidemic is slow to be contained. The largest increase in wealth between 2013 and 2014 by a single pharma-related billionaire could pay the entire $1.17bn cost for 2014–15 three times over. Stefano Pessina increased his net worth by $4bn, from $6.4bn to $10.4bn in a single year; the largest single increase in wealth of all the billionaires listed with pharmaceutical and healthcare interests.
Most prolific lobbying in US is on budget and tax issues
The billions that are spent by companies on lobbying, giving them direct access to policy and law makers in Washington and Brussels, is a calculated investment. The expectation is that these billions will deliver policies that create a more favourable and profitable business environment, which will more than compensate for the lobbying costs.
In the US, the two issues which most lobbying is reported against are the federal budget and appropriations and taxes. These are the public’s resources, which companies are aiming to directly influence for their own benefit, using their substantial cash resources. Lobbying on tax issues in particular can directly undermine public interests, where a reduction in the tax burden to companies results in less money for delivering essential public services.