A new Oxfam briefing paper, “An Economy for the 99%”, says that it’s time to build a human economy that benefits everyone, not just the privileged few. It estimates that just eight men own the same wealth as the poorest half of the world. The paper believes, “As growth benefits the richest, the rest of society – especially the poorest – suffers. The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point.” Excerpts:
It is four years since the World Economic Forum 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. 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. As President Obama told the UN General Assembly in his departing speech in September 2016: “A world where 1% of humanity controls as much wealth as the bottom 99% will never be stable.” Yet the global inequality crisis continues unabated:
- Since 2015, the richest 1% 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% 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.
- 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% has been zero, whereas incomes of the top 1% have grown 300%.
- 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. 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 propoor between 1990 and 2010, 700 million more people, most of them women, would not be living in poverty today.
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% looks at how large corporations and the super-rich are driving the inequality crisis and what can be done to change this.
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 many parts of the world, corporations are increasingly driven by a single goal: to maximize returns to their shareholders. This means not only maximizing short-term profits, but paying out an ever-greater share of these profits to the people who own them. In the UK, 10% of profits were returned to shareholders in 1970; this figure is now 70%. In India, the figure is lower but is growing rapidly, and for many corporations it is now higher than 50%. The increased return to shareholders works for the rich, because the majority of shareholders are among the richest in society, increasing inequality.
In India, as profits have been rising for the 100 largest listed corporations, the share of net profits going to dividends has also increased steadily over the last decade, reaching 34% in 2014/15, with around 12 private corporations paying more than 50% of their profits as dividends. Over the last two decades the richest 10% of the population in China, Indonesia, Laos, India, Bangladesh and Sri Lanka have seen their share of income increase by more than 15%, while the poorest 10% have seen their share of income fall by more than 15%.
More than 40% of the 400 million women who live in rural India are involved in agriculture and related activities. However, as women are not recognized as farmers and do not own land, they have limited access to government schemes and credit, restricting their agricultural productivity. An Oxfam study conducted in 2006 with Gorakhpur Environmental Action Group (GEAG) found that only 6% of women owned land, 2% had access to credit and only 1% had access to agricultural training.
Fossil fuels have driven economic growth since the industrial revolution, but are incompatible with a human economy that benefits the majority. The local air pollution caused by burning coal causes around 670,000 premature deaths per year in China and 100,000 in India alone, with the poorest or most marginalized communities often most exposed. But the destruction caused by runaway climate change is even more devastating to the many outside the global 1% that cannot insulate themselves from more extreme weather and rising seas.
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