The top one percent in the world today will soon own more than half of all the globe’s wealth by 2016, according to a new Oxfam International reported released Monday in Davos, Switzerland at the World Economic Forum. The report is already generating immense headlines and media buzz.
Oxfam outlined that the world’s most affluent experienced a growth in their share of the wealth, from 44 percent in 2009 to 48 percent last year. Winnie Byanyima, Oxfam’s executive director, said in a statement that rising income inequality still remains a prevalent issue and noted that she is still waiting for public officials, including United States President Barack Obama, to “walk the walk.”
Here were three important points highlighted by Oxfam:
- $1.9 trillion is the wealth of 80 top billionaires, which is equal to the bottom 50 percent of the planet’s population.
- $600 billion, or 50 percent, jump in wealth for 80 top billionaires in four years.
- $750 billion decline in wealth for the bottom 50 percent of the world in four years.
It was alluded that the world’s largest companies have been lobbying the U.S. and European governments for favorable legislation that would diminish their tax percentages, while the average taxpayer is on the hook for the financial crisis and the stimulus programs put forward by governments.
According to the report, financial and healthcare services spent just under $1 billion in 2013 to gain favorable legislation from the U.S. government – the same sector spent $200 million in the European Union. Meanwhile, one in nine people don’t have enough to eat and an estimated billion people live on less than $1.25 a day.
The solution being put forward by the international organization is to encourage governments to clampdown on corporate tax avoidance and boost investment in education, health and equal pay legislation.
“It is time our leaders took on the powerful vested interests that stand in the way of a fairer and more prosperous world,” said Byanyima. “Business as usual for the elite isn’t a cost-free option – failure to tackle inequality will set the fight against poverty back decades. The poor are hurt twice by rising inequality – they get a smaller share of the economic pie and because extreme inequality hurts growth, there is less pie to be shared around.”
Critics
Although the report is garnering international acclaim, the study does have its detractors.
For instance, Felix Salmon, a former columnist for Reuters, wrote that the methodology in which the organization aggregated its statistics is quite troubling because there are an array of factors in relation to the affluent and the impecunious.
“Some poor people have modest savings; some poor people are deeply in debt; some poor people have nothing at all. (Also, some rich people are deeply in debt, which helps to throw off the statistics.)” averred Felix. “By lumping them all together and aggregating all those positive and negative ledger balances, you arrive at a number which is inevitably going to be low, but which is also largely meaningless.”
In addition, one economics blogger cited the Federal Reserve’s quantitative easing program and the latest money-printing schemes perpetrated by central banks everywhere. Blogger Notayesmanseconomics posited that QE initiatives have raised inequality because the richest individuals and corporations own the most equities.
Here is what Kel Kelley of the Mises Institue writes about freshly created money:
“If it is, then, primarily newly printed money flowing into and pushing up the prices of stocks and other assets, what real importance do the so-called fundamentals — revenues, earnings, cash flow, etc. — have? In the case of the fundamentals, too, it is newly printed money from the central bank, for the most part, that impacts these variables in the aggregate: the financial fundamentals are determined to a large degree by economic changes.”
