Annual income of richest 100 people enough to end global poverty four times over
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Leaders must aim to bring down global inequality at least to 1990 levels
An explosion in extreme wealth and income is exacerbating inequality and hindering the world’s ability to tackle poverty, Oxfam warned today in a briefing published ahead of the World Economic Forum in Davos next week.
The $240 billion net income in 2012 of the richest 100 billionaires would be enough to make extreme poverty history four times over, according Oxfam’s report ‘The cost of inequality: how wealth and income extremes hurt us all.’ It 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 the process.
Oxfam warned that extreme wealth and income is not only unethical it is also economically inefficient, politically corrosive, socially divisive and environmentally destructive.
Jeremy Hobbs, Executive Director, Oxfam International, said: “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 present-day 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 that the “political equality we once had won was meaningless in the face of economic inequality.”
New global deal needed
Hobbs said: “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 or a third of all global wealth – could yield an additional $189bn 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.
The cost of inequality: how wealth and income
extremes hurt us all
The world must urgently set goals to tackle extreme inequality and extreme wealth
It is now widely accepted that rapidly growing extreme wealth and inequality are harmful to
human progress, and that something needs to be done. Already this year, the World Economic
Forum’s Global Risk Report rated inequality as one of the top global risks of 20131. The IMF and
the Economist2 agree. Around the world, the Occupy protests demonstrated the increasing public
anger and feeling that inequality has gone too far3.
In the last decade, the focus has been exclusively on one half of the inequality equation – ending
extreme poverty. Inequality and the extreme wealth that contributes to it were seen as either not
relevant, or a prerequisite for the growth that would also help the poorest, as the wealth created
trickled down to the benefit of everyone.
There has been great progress in the fight against extreme poverty. Hundreds of millions of
people have seen their lives improve dramatically – an historically unprecedented achievement
of which the world should be proud4. But as we look to the next decade, and new development
goals we need to define progress, we must demonstrate that we are also tackling inequality- and
that means looking at not just the poorest but the richest5. Oxfam believes that reducing
inequality is a key part of fighting poverty and securing a sustainable future for all. In a world of
finite resources, we cannot end poverty unless we reduce inequality rapidly.
That is why we are calling for a new global goal to end extreme wealth by 2025, and reverse the
rapid increase in inequality seen in the majority of countries in the last twenty years, taking
inequality back to 1990 levels67.
Extreme wealth and inequality are reaching levels never before seen and are getting
worse
Over the last thirty years inequality has grown dramatically in many countries. In the US the
share of national income going to the top 1% has doubled since 1980 from 10 to 20%. For the
top 0.01% it has quadrupled8 to levels never seen before. At a global level, the top 1% (60 million
people)9, and particularly the even more select few in the top 0.01% (600,000 individuals – there
are around 1200 billionaires in the world), the last thirty years has been an incredible feeding
frenzy10. This is not confined to the US, or indeed to rich countries. In the UK inequality is rapidly
returning to levels not seen since the time of Charles Dickens11. In China the top 10% now take
home nearly 60% of the income. Chinese inequality levels are now similar to those in South
Africa,12 which are now the most unequal country on earth and significantly more unequal than at
the end of apartheid13. Even in many of the poorest countries, inequality has rapidly grown14.
Globally the incomes of the top 1% have increased 60% in twenty years.15 The growth in income
for the 0.01% has been even greater16.
Following the financial crisis, the process has accelerated, with the top 1% further 17 increasing
their share of income18. The luxury goods market has registered double digit growth every year
since the crisis hit19. Whether it is a sports car or a super-yacht, caviar or champagne, there has
never been a bigger demand for the most expensive luxuries.
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