Fortunes for the fortunate: all 62 of them

Deborah Hardoon Economics, Inequality

The gap between the richest and the poorest in the world is growing at an alarming rate. In the run up to the World Economic Forum Deborah Hardoon, Deputy Head of Research, introduces Oxfam’s latest inequality data and shares her personal reflections from two years of work on these shocking statistics.

Two years ago, Oxfam made headlines when we crunched some numbers on global wealth. Our research found that the richest 85 people in the world had the same amount of wealth as the poorest half of the world’s population. This year it is even more shocking, the wealth of the richest has boomed whilst the wealth of the bottom half has fallen. In our report An Economy for the 1% we reveal that now the wealth of just 62 billionaires equals that of the poorer half of the population, all 3.6 billion people.

the wealth of just 62 billionaires equals that of the poorer half of the population, all 3.6 billion people.

These stats are shocking, but I can’t really pretend to be surprised. Some people have been doing extremely well in recent years. At the beginning of 2015 Apple had achieved the biggest quarterly profit that any company has ever achieved. Forbes now update their list of billionaires daily, as the fortunes of these individuals can change so quickly. Writing this blog on 13 January I can see that Carlos Slim made $1.1 billion in the last 24 hours alone.

Recent years have also been really tough for many people. The hangover from the global financial crisis persists, particularly in countries like Greece where almost half of young people are unemployed.  Devastating natural disasters, like the earthquake in Nepal last year, wiped out people’s fragile homes and livelihoods. And 2015 made the record books, with more
people forced to leave their homes because of war and persecution than ever before.

What is surprising to me is how easy it is for people with privilege and power to boost their position at the top of the distribution compared with how hard it is for people to work themselves out of poverty. And what’s even more shocking, is how our economic systems and policies exacerbate this difference.

In our report we look at the example of Martin Shkreli. This former hedge fund manager became (in)famous this year when he increased the price of an old drug used to fight parasitic infections from $13.50 to $750. He was widely vilified for this move and in fact later in the year his bad boy persona was reinforced when he was arrested for securities fraud. But more
striking, is that what happened was completely legal. A company that has a patent (i.e. a monopoly) over a drug can increase the price to capture windfall profits, with no need to add any value and with no risk of competition. Consumers (i.e. the sick) have to pick up the tab.

At the same time, people working on poverty wages, particularly in labour intense sectors, such as the garment industry, are held to strict productivity and quality targets, whilst their wages just don’t keep up. All this is made harder when terms of employment provide no income security and poor health and safety standards lead to dangerous working conditionsA company that has a patent (i.e. a monopoly) over a drug can increase the price to capture windfall profits

It feels very unfair when the people whose incomes need a boost most in fact see the smallest slice of the economic pie. Our research found that the poorest fifth of humanity, those people living below the extreme poverty line, saw just 2% of global income growth in the past quarter of a century. It’s particularly unjust that this is a result of power structures, politics and systems that create the conditions that make it easy for those at the top to do better than everyone else.

Tax havens are a clear example of a system which enables multinational companies and wealthy individuals to play by their own set of rules. They use these jurisdictions to avoid paying the taxes that they owe and that the rest of us pay. In the process, our public services, which would otherwise benefit the poorest most, lose out.

I hope I won’t to have to keep updating these shocking stats in perpetuity. Let’s make the rules of the game fairer, boosting wages for people at the bottom and keeping the power and influence of elites in check. Let’s build economies that are inclusive. Shutting down tax havens would be an excellent start.

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Author: Deborah Hardoon
Archive blog. Originally posted on Oxfam Policy & Practice.