The explosion in extreme wealth hurts us all

An explosion in extreme wealth and income is exacerbating inequality and hindering the world’s ability to tackle poverty, Oxfam — a British humanitarian organization — has warned in a briefing published ahead of the World Economic Forum in Davos next week.

News of the report has been posted on the Internet at Oxfam.org, and may be found here.

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, titled: ‘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,” the posting on the Oxfam website said.

Oxfam warned that extreme wealth and income is not only unethical, it is also economically inefficient, politically corrosive, socially divisive and environmentally destructive.

In the Oxfam website article 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 International is a confederation of 17 organizations working together to find lasting solutions to poverty and injustice. Its Internet posting said that 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’,” the Oxfam website report said.

New global deal needed

Mr. Hobbs added: “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.”

What can be done? The Oxfam website article said that “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, the article said, 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.