Posts Tagged ‘Oxfam’

Oxfam

According to Oxfam’s analysis of data produced by Credit Suisse (which I analyzed in a different manner late last year), 42 billionaires now own the same wealth as the bottom half—3.7 billion people—of the world’s population.

Together, those 3.7 billion people own only one half of one percent (0.53 percent) of the world’s wealth, a figure that rises to just about one percent (0.96 percent) when net debt is excluded.

In 2017, 42 billionaires on the Forbes billionaires list had a cumulative net worth of $1,498 billion—more than the wealth of the bottom 50 percent. When debt is excluded, that figure rises to 128 billionaires, who had a net worth of $2,694 billion.

Over the last decade, ordinary workers have seen their incomes rise by an average of just 2 percent a year, while billionaire wealth has been rising by 13 percent a year—nearly six times faster.

Without a fundamental change in economic institutions, the arc of capitalist history will continue to bend toward greater inequality.

8-billionaires-in-the-world

Oxfam’s headline-grabbing numbers are bad enough: “Eight men are as rich as half the world.” But the international organization has presented an even more serious and severe indictment of current economic arrangements—which can’t be glossed over by merely encouraging those at the top to pay more taxes.

In the background paper, “An Economy for the 99 Percent” (a follow-up to last year’s “An Economy for the 1%“), Oxfam researchers both document the existence of grotesque levels of economic inequality in the world today and analyze the main causes of that inequality.

Regular readers of this blog will recognize the numbers indicating the obscene levels of contemporary inequality:

  • Since 2015, the richest 1% has owned more wealth than the rest of the planet.
  • The incomes of the poorest 10% of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1% increased 182 times as much.
  • A FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh.
  • In the US, new research by economist Thomas Piketty shows that over the last 30 years the growth in the incomes of the bottom 50% has been zero, whereas incomes of the top 1% have grown 300%.
  • In Vietnam, the country’s richest man earns more in a day than the poorest person earns in 10 years.

But it’s the analysis behind those numbers that, in my view, deserves even more attention.

Oxfam starts where they should, with the key institution within global capitalism: corporations.

Businesses are the lifeblood of a market economy, and when they work to the benefit of everyone they are vital to building fair and prosperous societies. But when corporations increasingly work for the rich, the benefits of economic growth are denied to those who need them most. In pursuit of delivering high returns to those at the top, corporations are driven to squeeze their workers and producers ever harder – and to avoid paying taxes which would benefit everyone, and the poorest people in particular.

Corporations are where much of the world’s surplus (at least the surplus that is created within the bounds of capitalism) is both appropriated and distributed. In recent years, corporate profits have been rising because they’ve been able to squeeze their own workers, by forcing more of them to work not for themselves but for corporate giants and, when they do, paying them a smaller and smaller share of the value that is created. And corporations have managed to get even more of the surplus by squeezing small producers, who are forced to have the freedom to sell their goods and services to those corporations, and by using “their huge power and influence to ensure that regulations and national and international policies are shaped in ways that enable continued profitability.” Then, once they’ve managed to get more surplus, corporations have been able to keep more of it, by “paying as little tax as possible.” Finally, corporations have been “paying out an ever-greater share of these profits to the people who own them,” such that the small group of already-wealthy shareholders have been able to receive a large share of the surplus.

What we have then is a Second Gilded Age, “in which a glittering surface masks social problems and corruption.” And, of course, “once a fortune is accumulated or acquired it develops a momentum of its own.”

The huge fortunes we see at the very top of the wealth and income spectrum are clear evidence of the inequality crisis and are hindering the fight to end extreme poverty. But the super-rich are not just benign recipients of the increasing concentration of wealth. They are actively perpetuating it.

One way this happens is through their investments. As some of the biggest shareholders (particularly in private equity and hedge funds), the wealthiest members of society are huge beneficiaries of the shareholder worship that is warping the behaviour of corporations.

The end result is exactly what one would expect: “Eight men now own the same amount of wealth as the poorest half of the world.”

1% + 99%, 62 = 50%

Posted: 19 January 2016 in Uncategorized
Tags: , ,

billone

The current global distribution of wealth makes as much sense as the math in the title I’ve chosen for this post.

According to a new report from Oxfam (pdf), “An Economy for the 1%,” based on data from Credit Suisse (pdf),

  • the richest 1 percent have now accumulated more wealth than the rest of the world put together;
  • just 62 individuals had the same wealth as 3.6 billion people, the bottom half of humanity. (This figure is down from 388 individuals as recently as 2010.)

growth

And it gets even worse:

  • Since the turn of the century, the poorest half of the world’s population has received just 1 percent of the total increase in global wealth, while half of that increase has gone to the top percent.

Oxfam’s conclusion?

There is no getting away from the fact that the big winners in our global economy are those at the top. Our economic system is heavily skewed in their favour, and arguably increasingly so. Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate. Once there, an ever more elaborate system of tax havens and an industry of wealth managers ensure that it stays there, far from the reach of ordinary citizens and their governments.

As if these numbers were not obscene enough, consider Oxfam’s projection in last year’s report: “If this trend continues of an increasing wealth share to the richest, the top 1 percent will have more wealth than the remaining 99 percent of people in just two years.”

Well, it didn’t take two years. It happened by the end of 2015.

Not only are we headed in the wrong direction. We’re headed there even faster than we thought possible.

inequality-690-532-19203053 oxfam1

sources*

Contemporary capitalism faces a real legitimacy crisis, based on two fundamental problems: instability and inequality.**

As we know, capitalism has shown itself to be inherently unstable, with twelve recessions just since the end of World War II. And, of course, the most recent, the so-called Great Recession, was the worst downturn since the Great Depression of the 1930s. No matter how you measure it—in terms of lost output or lost lives—the cost of these economic crises, especially to the majority of people, has been enormous.

Capitalism has also returned to creating, especially in recent decades, a widening gap between a tiny minority at the top and everyone else. Whether we measure it in terms of the distribution of income or wealth, grotesque levels of inequality—in the United States and across the world—are year by year becoming even more obscene.

Both problems have, in the period since the crash of 2008, called into question the legitimacy of organizing the economy on the basis of capitalist institutions.

But I sense a pivot taking place these days, from instability to inequality. Last night, President Obama declared in his sixth State of the Union address that “the shadow of crisis has passed” and that it’s time to turn our attention to the problem of inequality:

“Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?”

Meanwhile, following on last year’s conference in London, first Larry Summer and Ed Balls and now Thomas Edsall have begun to focus on the prospect of creating an “inclusive capitalism.” (Even some of the Republican not-yet-officially presidential candidates are talking about poverty and inequality.)

So, it seems, worries about capitalist instability are giving way (in my view, too soon) to capitalist inequality (not, of course, soon enough).

risks-2015

It’s all the more surprising then that “economic disparity,” which had been the number one risk three years running at the Davos World Economic Forum, has dropped off the list of the top five risks altogether.

The authors of the report itself [pdf] do, in fact, discuss the problem of inequality.

A major driver of social fragility is rising socio-economic inequality within countries, although it is diminishing between countries. Among the members of the Organisation for Economic Co-operation and Development (OECD), the average income of the richest 10% has now grown to about nine times that of the poorest 10%. In other countries, the ratio is even higher: for example, more than 25 times in Mexico.

Income inequality is widening quickly in large emerging markets. The People’s Republic of China has seen its Gini Index rise from about 30 in the 1980s to over 50 in 2010. While extreme poverty (less than $1.25 per day) was reduced from afflicting over 50% of the world’s population in 1990 to 22% in 2010, the same reduction did not take place in those earning under $3 per day. The story is of people escaping extreme poverty, yet remaining poor. Widening income inequality is associated with lower and more fragile economic growth, which reduces the scope to meet rising social expectations in emerging markets.

Rising structural unemployment drives both inequality and social pressures. Lower economic growth and technological change are likely to keep unemployment high in the future, also in developing countries. The spread of connectivity enables protest movements to mount more quickly, increasing the risk of unrest and violence that could easily spill over from individual countries to affect the global economy. While inequality and unemployment contribute to social instability, social instability in turn impacts negatively on equality, employment and wealth creation. The multidirectional cause-and-effect relationship makes it harder to address the related risks.

But inequality has been displaced from the list of the top five global risks (which is now headed by “interstate conflicts”) as well as from the list of global risks with the largest global impact (led by “water crises”).

I don’t have a good explanation as to why there appears to be such a large gap between the growing concern with inequality here in the United States and the seeming lack of worry about inequality within the rest of the global elite gathered in Davos.

However, it seems clear to me that the patterns of exclusion—together with the ongoing forces of instability—associated with contemporary economic institutions are sure to haunt capitalism now and for years to come.

 

*The source of the chart on the left is Vuahini Vara; for the chart on the right, Ofxam.

**To which, of course, we could add a third: climate change and the natural environment more generally.

Update

As if on cue, a reader sent me the link to an article from the BBC [ht: sm], in which the argument is, the world on average has more stuff (e.g., goods and service, cars, and a longer life expectancy) but inequality has been growing.

OECD-Gini

oxfam2 oxfam3

[click to enlarge]

All kinds of folks have been sending me links to the latest Oxfam study of world wealth inequality. And for good reason: it shows that the current global distribution of wealth, which is grotesquely unequal, is headed in the direction of becoming even more unequal.

And why is it we want to keep in place an economic system that generates such obscene levels of inequality?

Or as Winnie Byanyima, Oxfam’s executive director, put it:

“”Do we really want to live in a world where the one per cent own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.”

Just to get the numbers straight:*

  • In 2014, the richest 1 percent of people in the world owned 48 percent of global wealth, leaving just 52 percent to be divided up among the other 99 percent of adults on the planet.
  • Almost all of that 52 percent is owned by those included in the richest 20 percent, leaving just 5.5 percent for the remaining 80 percent of people in the world.
  • If this trend continues of an increasing wealth share to the richest, the top 1 percent will have more wealth than the remaining 99 percent of people in just two years, with the wealth share of the top 1 percent exceeding 50 percent by 2016.
  • The very richest of the top 1 percent, the billionaires on the Forbes list, have seen their wealth accumulate even faster over this period. In 2010, the richest 80 people in the world had a net wealth of $1.3 trillion. By 2014, the 80 people who top the Forbes rich list had a collective wealth of $1.9 trillion—an increase of $600 billion in just 4 years, or 50 percent in nominal terms. Meanwhile, between 2002 and 2010, the total wealth of the poorest half of the world in current U.S. dollars had been increasing more or less at the same rate as that of billionaires; however, since 2010, it has been decreasing.
  • The wealth of these 80 individuals is now the same as that owned by the bottom 50 percent of the global population, such that 3.5 billion people have between them the same amount of wealth as that of these extremely wealthy 80 people.
  • And, just to top it off, as the wealth of everyone else has not been increasing at the same rate as that for the top 80, the share of total wealth owned by this group has increased and the gap between the very rich and everyone else has also been increasing. As a result, the number of billionaires who have the same amount of wealth as that of the bottom half of the planet has declined rapidly over the past five years. In 2010, it took 388 billionaires to equal the wealth of the bottom half of the world’s population; by 2014, the figure had fallen to just 80 billionaires.

Had enough?

 

*To its credit, Oxfam has made available (as an Excel file) all its sources, data, and calculations.