The world’s richest 85 people have wealth equal to that of half the world’s population.
According to Oxfam, which relies on World Economic Forum statistics released in November, this global elite is worth $US110 trillion, which is equal to the wealth of the poorer half of the world’s population. And the wealth of the richest 1% of the world’s population is 65 times the wealth of the bottom half of the world’s population.
Oxfam’s study is addressed to the delegates at the World Economic Forum, taking place at Davos in Switzerland this week.
“Oxfam is concerned that, left unchecked, the effects are potentially immutable, and will lead to ‘opportunity capture’ – in which the lowest tax rates, the best education, and the best healthcare are claimed by the children of the rich. This creates dynamic and mutually reinforcing cycles of advantage that are transmitted across generations,” the charity writes.
“This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems. Instead of moving forward together, people are increasingly separated by economic and political power, inevitably heightening social tensions and increasing the risk of societal breakdown.”
Oxfam calls on the delegates to Davos to pledge not to dodge taxes in their own country or the countries they invest in, to not use their economic wealth to seek political favours that undermine the democratic will of their fellow citizens, to be transparent about their investments and to support social protection and a progressive taxation system.
According to the study, Australia saw the second-largest largest percentage increase in the income share of the richest 1% of the population between 1980 and 2012, behind only the United States over that period. In 2012, 10% of Australia’s wealth went to the richest 1%, which is double what it was in 1980. In the United States, the most unequal society studied, nearly 20% of the country’s wealth went to the richest 1% – in 1980 it was just 10%.
Economist Richard Denniss, executive director of left-wing think tank The Australia Institute, says the numbers are “as alarming as can be”.
“As is the fact that no one expects anything to change. It shows how effective the rich are at changing the rules to benefit themselves.”
Sadly, Denniss says, wealth inequality in Australia mirrors the global trends, with the gap between the rich and the very poor significantly widening over recent decades.
“The easiest evidence is to look at Australia’s richest person, Gina Rinehart. She’s far richer today relative to the average than the richest person in 1980. And she’s far, far richer than the second-richest person in the country.”
Oxfam’s study also surveyed residents in six countries about whether they perceived laws and regulations to be regularly designed to benefit the rich. A majority of respondents agreed with the statement.
The study did not survey Australians, but Denniss says he believes the trends would be replicated here.
“For example, we’ve just removed the mining tax which would have been paid by foreign countries and Australia’s richest people, and aimed to spread the benefits of the mining boom more fairly.”
“It’s a bad thing, for democracy, for any group to have far more influence than their numbers entitle them to.”
Denniss says that if Australia’s richest people are committed to equality and opportunity for all, they shouldn’t focus on philanthropy, but should instead support a fairer taxation system, and be supportive of increases to the minimum wage and other aspects of the social safety net.
Oxfam is more optimistic than Denniss. In its closing summary, the charity says the trend can be reversed, as it has been in the past.
“The US and Europe in the three decades after World War II reduced inequality while growing prosperous. Latin America has significantly reduced inequality in the last decade – through more progressive taxation, public services, social protection and decent work. Central to this progress has been popular politics that represent the majority, instead of being captured by a tiny minority. This has benefited all, both rich and poor.”