The growing concentration of the world’s wealth has been highlighted by a report showing that the 26 richest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the planet’s population. In an annual wealth check released to mark the start of the World Economic Forum in Davos, the development charity Oxfam said 2018 had been a year in which the rich had grown richer and the poor poorer. It said the widening gap was hindering the fight against poverty, adding that a 1% wealth tax would raise an estimated $418bn (£325bn) a year – enough to educate every child not in school and provide healthcare that would prevent 3 million deaths.
Oxfam said the wealth of more than 2,200 billionaires across the globe had increased by $900bn in 2018 – or $2.5bn a day. The 12% increase in the wealth of the very richest contrasted with a fall of 11% in the wealth of the poorest half of the world’s population. As a result, the report concluded, the number of billionaires owning as much wealth as half the world’s population fell from 43 in 2017 to 26 last year. In 2016 the number was 61. Among the findings of the report were:
- In the 10 years since the financial crisis, the number of billionaires has nearly doubled.
- Between 2017 and 2018 a new billionaire was created every two days.
- The world’s richest man, Jeff Bezos, the owner of Amazon, saw his fortune increase to $112bn. Just 1% of his fortune is equivalent to the whole health budget for Ethiopia, a country of 105 million people.
- The poorest 10% of Britons are paying a higher effective tax rate than the richest 10% (49% compared with 34%) once taxes on consumption such as VAT are taken into account.
Oxfam’s director of campaigns and policy, Matthew Spencer, said, “The massive fall in the number of people living in extreme poverty is one of the greatest achievements of the past quarter of a century but rising inequality is jeopardising further progress. “The way our economies are organised means wealth is increasingly and unfairly concentrated among a privileged few while millions of people are barely subsisting. Women are dying for lack of decent maternity care and children are being denied an education that could be their route out of poverty. No one should be condemned to an earlier grave or a life of illiteracy simply because they were born poor. It doesn’t have to be this way – there is enough wealth in the world to provide everyone with a fair chance in life. Governments should act to ensure that taxes raised from wealth and businesses paying their fair share are used to fund free, good-quality public services that can save and transform people’s lives.”
The report said many governments were making inequality worse by failing to invest enough in public services. It noted that about 10,000 people per day die for lack of healthcare and there were 262 million children not in school, often because their parents were unable to afford the fees, uniforms or textbooks. Oxfam said governments needed to do more to fund high-quality, universal public services through tackling tax dodging and ensuring fairer taxation, including on corporations and the richest individuals’ wealth, which it said were often undertaxed. A global wealth tax has been called for by the French economist Thomas Piketty, who has said action is needed to arrest the trend in inequality.
The World Inequality Report 2018 – co-authored by Piketty – showed that between 1980 and 2016 the poorest 50% of humanity only captured 12 cents in every dollar of global income growth. By contrast, the top 1% captured 27 cents of every dollar.
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk. Oxfam said that in addition to tackling inequality at home, developed nations currently failing to meet their overseas aid commitments could raise the missing billions needed to tackle extreme poverty in the poorest countries by increasing taxes on extreme wealth. China’s rapid growth over the past four decades has been responsible for much of the decline in extreme poverty but Oxfam said World Bank data showed the rate of poverty reduction had halved since 2013. In sub-Saharan Africa, extreme poverty was on the increase. Oxfam said its methodology for assessing the gap between rich and poor was based on global wealth distribution data provided by the Credit Suisse global wealth data book, covering the period from June 2017 to June 2018. The wealth of billionaires was calculated using the annual Forbes billionaires list published in March 2018.
Credit: Larry Elliot for The Guardian, 21 January 2019.