Nearly half the world’s wealth is owned by 1 percent of the global population, and such extreme economic inequality poses a threat to democratic processes and could lead to social instability, a report from Oxfam International finds.
Issued in conjunction with the World Economic Forum‘s annual meeting in Davos this week, the report, Working for the Few (32 pages, PDF), highlights the impact of inequality in both developed and developing countries, including the effect of wealth concentrations on political representation. When wealth actively seeks to influence policy making, the report argues, the rules almost always are crafted to favor the wealthy, which in turn leads to the erosion of democratic governance, social cohesion, and equal opportunity.
According to the report, the eighty-five richest people in the world control as much wealth as the bottom half of the global population of seven billion. The report also found that the wealthiest individuals and companies worldwide have parked an estimated $21 trillion in tax havens; that there is a correlation between financial deregulation in the United States and the dramatic increase in the income share of the top 1 percent; that the rise in the number of billionaires in India has been aided by a highly regressive tax structure; and that global corporations operating in Africa — especially those in extractive industries — use their influence to avoid taxes and royalties, reducing the resources available to governments to fight poverty.
Released in November, WEF’s Outlook on the Global Agenda 2014 (49 pages, PDF) cited widening income inequality as the second greatest risk for the global community over the next twelve to eighteen months. The Oxfam report calls on elites meeting in Davos to pledge to implement its recommendations, including supporting progressive taxation, making public all their investments in companies and trusts, and challenging governments to use tax revenue to provide universal health care, education, and social security for citizens.
“We cannot hope to win the fight against poverty without tackling inequality,” said Oxfam executive director Winnie Byanyima. “Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table….In developed and developing countries alike, we are increasingly living in a world where the lowest tax rates, the best health and education, and the opportunity to influence are being given not just to the rich but also to their children.”