Inequality gap: World’s richest 26 people now wealthier than poorest 3.8 billion
Between 2017 and 2018, a new billionaire was created every two days.
In the struggle against growing inequality and poverty, one of the world’s most prominent charities Oxfam has published a damning report into the current state of global wealth.
In a report titled “Public Good or Private Wealth?”, Oxfam’s authors have presented a series of startling findings backed up by recently published data from Credit Suisse and Forbes magazine.
One of the key takeaways from the 106-page report is that the world’s 26 richest people own as much as poorest 50% – an all-time record – with the income gap rapidly expanding instead of contracting, contrary to what most of the world’s governments have repeatedly vowed to alleviate.
The only time the growth in global billionaires was halted was during the global financial crisis in 2007-2009, although in the 10 years since the financial crisis, the number of billionaires has nearly doubled.
The issue of growing inequality is a major focal point for the impending World Economic Forum Annual Meeting in Davos, Switzerland, set to commence today.
The invitation-only event is an annual gathering that welcomes leaders of global society, the heads and members of more than 100 governments, top executives of the 1,000 foremost global companies among many other leaders of international organisations.
One of the most scathing findings expressed by Oxfam that is sure to raise eyebrows is that a root cause of the growth in inequality is the prevalence of large corporations to avoid paying tax altogether.
The authors of the report referred to recent data published in Australia by the ATO which showed at around 30% of Australian firms pay zero tax.
In the UK, another country where inequality is also growing in parallel to adverse taxation trends, Oxfam said that the poorest 10% of Britons are paying a higher effective tax rate than the richest 10% (49% compared with 34%) once taxes on consumption such as VAT are considered.
Detailing inequality
Inequality is defined as “the condition of being unequal or disparity”, with Oxfam’s scope being focused on social or economic disparity. In other words, the inequality between the rich and the poor and how this gap is changing over time.
As part of the charity’s continued work to redress the balance, there is a heightened focus on unequal opportunity or treatment resulting from economic and social disparities.
Oxfam says that 2018 was a year in which the rich had grown richer and the poor poorer, to the extent that the wealth of more than 2,200 billionaires across the globe had increased by US$900 billion (A$1.26 trillion) in 2018.
The 12% increase in the wealth of the very richest contrasted with a fall of 11% in the wealth of the poorest half of the world’s population.
The charity reserved some indirect criticism for the world’s richest man – Jeff Bezos, founder and owner of Amazon which is currently valued as the world’s largest company by market capitalisation (now at around US$829 billion).
Mr Bezos saw his fortune increase to US$112 billion which means just 1% of his fortune is equivalent to the whole health budget for Ethiopia, a country of 105 million people.
The multinational company Mr Bezos leads has been embroiled in a series of tax scandals in recent years due to its global operational scope and multi-billion revenue base.
Other large companies such as Uber, Google, Apple and Facebook have also received criticism for paying less tax than they’re liable for although all companies have vehemently denied any wrongdoing.
In the land down under
With respect to Australia, Oxfam’s report said that Australia’s rich keep getting richer, with the top 1% of Australians owning more wealth than the bottom 70% combined.
The number of billionaires in Australia rose from 33 to 43 last year with their combined wealth climbing to almost A$160 billion.
The top 10 wealthiest Australians in 2018.
Helen Szoke, chief executive of Oxfam Australia, said Oxfam’s report showed that the most disadvantaged remained trapped in an “entrenched cycle of poverty”.
Chiming in line with Oxfam’s broader conclusions, Dr Szoke called on the Federal Government to introduce tougher laws aimed at multinationals which continue to implement a variety of strategies involving harnessing internationally-held subsidiaries, tax optimisation schemes and accountancy loopholes that alleviate their tax burdens while doing trillions of dollars in business combined.
To help restrain what Oxfam calls a “boomtime for the world’s billionaires”, the charity wants national tax collection agencies to require companies to give detailed public reports about their tax affairs by country and reinstate a “women’s budget”.
“The way our economies are organised means wealth is increasingly and unfairly concentrated among a privileged few while millions of people are barely subsisting. Women are dying for lack of decent maternity care and children are being denied an education that could be their route out of poverty,” said Oxfam’s director of campaigns and policy, Matthew Spencer.
“No one should be condemned to an earlier grave or a life of illiteracy simply because they were born poor,” said Mr Spencer.
Oxfam said its methodology for assessing the gap between rich and poor was based on global wealth distribution data provided by the Credit Suisse global wealth databook, covering the period from June 2017 to June 2018.
The wealth of billionaires was calculated using the annual Forbes billionaires list published in March 2018.