World leaders and corporate bosses who have gathered in the Swiss mountain resort of Davos since Wednesday for the annual World Economic Forum will close their meeting today (Sunday). A key issue at the summit is global economic recovery, amid uncertainty over global growth as troubles deepen in the eurozone and emerging markets, despite a strengthening US economy.
But an underlying issue which seems to have occupied the minds of many – at least it is hoped so – is the issue of widening gap between the rich and the poor in the world.
Ahead of this year’s annual meeting, the anti-poverty charity Oxfam released a study that showed the share of the world’s wealth owned by the best-off 1% has increased from 44% in 2009 to 48% in 2014, while the least well-off 80% currently own just 5.5%.
Oxfam added that on current trends, the richest 1% would own more than 50% of the world’s wealth by 2016. Oxfam made headlines at Davos last year with a study showing that the 85 richest people on the planet have the same wealth as the poorest 50% (3.5 billion people).
The charity said this year that the comparison was now even more stark, with just 80 people owning the same amount of wealth as more than 3.5 billion people, down from 388 in 2010. This is while according to IMF, there are still 1.3 billion people living under $1.25 a day; and over 2 billion people are living under $2 per day.
In its latest report on global wealth, Credit Suisse states that the UK is the only G7 country to record rising wealth inequality during the period of 2000-14. Wealth inequality has risen four times faster in the seven years after the crash compared with the seven years before. The rich in the UK are becoming richer, faster than ever. Wealth inequality rose under Labor led governments; it rose faster under the coalition cabinet of Prime Minister David Cameron.
These facts do not bode well for the growth and the security of the world. The grave consequences of such inequality have already alarmed some world leaders to act. In his State of the Union address, US President Barack Obama promoted his policy of ‘’middle-class economics’’ which hinges on raising taxes on high-income Americans to fund initiatives to benefit those at lower income levels as a means to narrow huge income gap that exists in America today. Pope Francis criticized global wealth inequality and the growing level of poverty and hunger in a statement directed at United Nations leaders last year. The pope called for “the legitimate redistribution of economic benefits by the State, as well as indispensable cooperation between the private sector and civil society.”
Dangers of inequality have even prompted Davos oligarchs to comment as well. IMF director Christine Lagarde also in a separate statement warned about the rising global inequality fearing that Capitalism could be planting ‘’ seeds of its own destruction’’ – in the words of Karl Marx – and called for immediate remedial steps to be taken.
Other countries can look to Latin America and China, the two regions that have largely curbed the tide of inequality. In Latin America, the numbers living on less than $2 a day have fallen from 108 million to 53 million in little over a decade. China, despite having seen sharp rise in inequality at home has also lifted more people out of poverty than the rest of the world combined, offsetting the growing global income gap.
While the wealthy may be willing to pay a bit more taxes, it does not seem that they are willing to let the pendulum of social order swing in any other direction. But the realization by world leaders and billionaires themselves that to carry on business as it is now, can have dire consequences is a good start to fight inequality before it engulfs humanity in a dystopian nightmare.
Sharing the tax burden fairly, introducing minimum wages and seriously clamping down on tax dodging as well as investment in universal, free public services, are only some of the initiatives governments can take to create a more inclusive share of resources that can benefit the global community far better than the current trends.
