Poverty inequality is exploding around the world, with the rich amassing a disproportionate amount of the world's wealth while already vulnerable people have fewer resources available.
A new report released this week by the non-governmental organization Oxfam makes this clear. The charity publishes its annual report on global poverty to coincide with the annual World Economic Forum (WEF) in Davos, Switzerland. The forum brings together the world's business elite, from CEOs of large corporations to self-made billionaires, to discuss global trade issues.
According to an Oxfam report, in a world where LVMH chairman Bernard Arnault, Amazon's Jeff Bezos, investor Warren Buffett, Oracle co-founder Larry Ellison, and Tesla CEO Elon Musk The five richest people have doubled their wealth since 2020, earning $14 million an hour.
But while the world's wealthy elite is amassing wealth, global poverty is rising for the first time in nearly 30 years, Oxfam said.
Here's why charities say inequality is rising and how they propose redistributing wealth.
Multiple crises will make the rich richer and the poor poorer
Inflation, which hit many parts of the world in 2022 due to disruptions caused by shutdowns due to the COVID-19 pandemic and supply chains also disrupted as a result of the Russia-Ukraine war, will employ more people around the world. contributed to that. poorer.
At least 1.7 billion workers around the world will see inflation rise faster than wages in 2022, limiting their ability to buy food and pay utility bills, according to Oxfam analysis.
At the same time, a small elite group of the world's wealthiest people are only getting richer, Oxfam's findings show.
Over the past decade, more than half of the world's new wealth has been funneled into the pockets of humanity's richest 1 percent. But between 2020 and 2021 alone, the rate accelerated even further, with the richest 1 percent gaining 63 percent of all new wealth and 99 percent of the world's population earning just 37 percent of new global earnings. I decided to get it.
Oxfam found that these inequalities also have gender and racial overtones. Men owned $105 trillion more wealth than women, but black families in the United States had only 15.8 percent of the wealth of typical white families.
“While ordinary people make daily sacrifices for necessities like food, the super-rich are making sacrifices beyond even their wildest dreams,” Oxfam director Gabriela Butcher said in a press release. “Just two years later, this decade is shaping up to be the best decade ever for billionaires. It's the roaring '20s boom for the world's richest people.”
Oxfam's annual report on inequality has been criticized in the past for including indebted individuals in its calculations of the world's poorest people. The organization used data from Credit Suisse, the Institute for Policy Studies and Forbes, among others, to make its calculations.
However, according to an October 2023 report by the International Rescue Committee (IRC), while the number of poor people is decreasing globally, 13 of the least developed countries are living in extreme poverty. The number of people living in the country has soared by 80%, which confirms some of the situation. Oxfam findings.
What causes inequality?
Billionaires have made huge profits from the pandemic, according to an Oxfam report. Rich countries have pumped money into their economies to support families and people who are unemployed or on low wages, while also boosting the value of assets and wealth already held by the ultra-rich.
Oxfam also found that wealthy individuals who own shares in the world's largest food and energy companies made dramatic gains in 2022. Since these companies recorded huge profits that doubled their profits for the year, they also paid out large dividends.
Oxfam also found that one of the most important factors contributing to further widening of the inequality gap is the absence of progressive taxes on newly created wealth. The report found that wealthy people in several countries pay significantly less tax than they did a decade ago. Half of the world's billionaires live in countries where they don't have to pay taxes on their inherited wealth, meaning $5 trillion in wealth will be inherited tax-free, according to the report.
All of these factors have helped the world's billionaires grow from a total of $6 trillion in wealth in 2012 to around $14 trillion in 2022, the report said.
Oxfam warned that continued accumulation of wealth in the hands of a few could slow countries' economic growth, exacerbate political divisions and lead to corruption across sectors.
Billionaires are also more likely to invest in fossil fuels, which could lead to more climate pollution, the report said.
Is there a solution?
According to the Oxfam report, tax increases are one way to redistribute concentrated wealth and close inequality gaps.
In many countries, taxes on the wealth of the wealthy have continued to fall in recent decades. Politicians believe that lower taxes will allow businesses to hire more workers, increase labor competition, raise average wages, and ultimately distribute more wealth to ordinary people. , it claims. Man.
Oxfam data for Organization for Economic Co-operation and Development (OECD) countries shows that the average tax rate for the richest has fallen from 58% in 1980 to 42% today.
According to an Oxfam study, Tesla founder and X (formerly Twitter) owner Elon Musk paid an “effective tax rate” of about 3% from 2014 to 2018.
But several reports have documented, for example, that tax cuts for wealthy corporations in the United States only further entrench inequality levels.
In 2017, former US President Donald Trump promised Americans that the Tax Cuts and Jobs Act would benefit the working class. This law aimed to reduce corporate taxes on large companies from 35 percent to about 20 percent. President Trump achieved a $1.5 million tax cut, the largest corporate tax cut in U.S. history.
However, economists Emmanuel Saez and Gabriel Zucman, in their book Triumph of Injustice: How the Rich Avoid Taxes and Make They Pay, report that in 2018, the richest Americans It was revealed that 400 households were paying an average tax rate of 23%. In 2018, the poorest households paid a tax rate of 24.2 percent, higher than the wealthiest.
Oxfam says a 5% annual wealth tax could mobilize up to $1.7 trillion to address humanitarian crises around the world and support countries bearing the brunt of climate change. Stated.
