20th January 2013
Income of richest 100 people enough to end poverty four times over
An explosion in extreme wealth is exacerbating inequality and hindering the world's ability to tackle poverty, Oxfam has warned, in a briefing published ahead of the World Economic Forum in Davos next week.
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The $240 billion net income in 2012 of the richest 100 billionaires would be enough to make extreme poverty history four times over, according to "The cost of inequality: how wealth and income extremes hurt us all". The agency is calling on world leaders to curb today's income extremes and commit to reducing inequality to at least 1990 levels.
The richest one per cent has increased its income by 60 per cent in the last 20 years, with the financial crisis accelerating rather than slowing this trend.
In its report, Oxfam warns that extreme wealth is economically inefficient, politically corrosive, socially divisive and environmentally destructive. This is corroborated by evidence from past studies by organisations like the Equality Trust, showing a clear correlation between inequality and social problems.
Barbara Stocking, Oxfam Chief Executive: "We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true. Concentration of resources in the hands of the top one per cent depresses economic activity and makes life harder for everyone else – particularly those at the bottom of the economic ladder. In a world where even basic resources such as land and water are increasingly scarce, we cannot afford to concentrate assets in the hands of a few and leave the many to struggle over what's left."
Members of the richest one per cent are estimated to use as much as 10,000 times more carbon than the average US citizen.
Oxfam said world leaders should learn from the current success of countries such as Brazil, which has grown rapidly while reducing inequality – as well as the historical success such as the United States in the 1930s when President Roosevelt's New Deal helped bring down inequality and tackle vested interests. Roosevelt famously warned: "the political equality we once had won is meaningless in the face of economic inequality."
Stocking added: "We need a global new deal to reverse decades of increasing inequality. As a first step, world leaders should formally commit themselves to reducing inequality to the levels seen in 1990. From tax havens to weak employment laws, the richest benefit from a global economic system which is rigged in their favour. It is time our leaders reformed the system so that it works in the interests of the whole of humanity rather than a global elite."
Closing tax havens – which hold as much as $32 trillion (£20tr), or a third of all global wealth – could yield an additional $189bn (£118bn) in additional tax revenues.
In addition to a tax haven crackdown, elements of a global new deal could include:
- a reversal of the trend towards more regressive forms of taxation;
- a global minimum corporation tax rate;
- measures to boost wages compared with returns available to capital;
- increased investment in free public services and safety nets.
You can download a copy of the briefing here.