Rising Global Wealth Inequality

In January 2016, anti-poverty charity Oxfam has come up with a new report on world’s wealth. The report titled ‘An Economy for the 1%’ shows the increasing inequalities in the global wealth.

Observations from the report

3. In 2015, just 62 individuals (53 of them are men) own as much wealth as the 3.5 billion people in the bottom half of the world’s income scale. In 2010, the figure was 388 individuals.
4. The 1% richest people in the world own more than what the other 99% people own together.
5. In last five years, the wealth of richest 62 individuals has increased by 44% whereas the poorest fell by 41%.
6. For around 25 years, the average annual income of the poorest 10% in the world has increased by less than $3 each year and their daily income increased by less than a single cent every year.
7. The poorest are more vulnerable to ill effects from climate change but their contribution to total global emissions is around 10% only.

The Oxfam report suggests that global wealth inequality has continued to widen at an alarming rate. The increasing inequalities have widened the trust gap between governments and people. The rising inequalities are holding back the fight against global poverty in the world.  The study pointed that the global network of tax havens contributed to the divide by allowing the rich to keep their wealth out of reach of ordinary citizens and governments. Now, around $7.6 trillion wealth of individuals is currently held offshore. The banking sector is playing the important role in tax-haven issue. Just 50 big banks manage majority of offshore wealth. The report states that the owners of the capital make sure that their capital to grow faster than the rate at which the economy has been growing. The global gender pay gap is high in more unequal societies. Majority of the world’s low-paid workers are women. The report is more critical of the capitalism that helped the powerful to use their position to further concentrate their wealth.

Oxfam seven point action plan

Oxfam has called the governments to adopt a seven point plan to tackle inequality:

• Taking action on tax evading by corporations and rich individuals
• Investing in universal, free public services such as health and education
• Share the tax burden fairly, shifting taxation from labour and consumption towards capital and wealth.
• Introducing minimum wages and providing a living wage for all workers.
• Introduction of equal pay legislations to give women a fair deal in economy.
• Providing adequate safety-nets to the poorest including a minimum income guarantee.
• Agree to a global goal to deal with inequality.

Analysis

The report is full critical about free-market economics but many of those in the list of 62 like Bill Gates, Mark Zuckerberg, Larry Page and Sergey Brin, Jack Ma, Jeff Bezos, etc. reached their position due to the digital-age businesses created by them. They were no inherited millionaires. They are also responsible for creation of millions of jobs across the globe. They are also voluntarily spending on philanthropy in areas which are once considered as the exclusive domain of governments, such as healthcare and primary education. It is unfair to assume the all the 62 individuals have accumulated the wealth at the cost of the other. However, the real threat to the world’s economy is from growing automation. Automation is introducing disruptive changes in the labour market. The e-commerce, while creating new jobs, has been eliminating the need for a brick-and-mortar store. The sectors like healthcare, financial services, etc, could see the highest shrinkage in employment opportunities. So, the priority before the governments is to provide required skills to those sections that are more vulnerable from shrinking demand for labour.