Economic Progress

8 men own the same wealth as the poorest half of the world

Silhouetted workers walk in front of office towers in the Canary Wharf financial district in London February 16, 2011. New Bank of England forecasts opened the door on Wednesday for interest rates to rise slowly in Britain but Governor Mervyn King warned against jumping to conclusions about when the central bank would pull the trigger.   REUTERS/Luke MacGregor  (BRITAIN - Tags: BUSINESS EMPLOYMENT) - RTR2IOGT

The gulf between rich and poor is vast Image: REUTERS/Luke MacGregor

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Economic Progress

New research by Oxfam says just eight men own the same wealth as the poorest half of the world’s population.

Total global wealth has reached $255 trillion, says the report. Since 2015, more than half of this wealth has been in the hands of the richest 1% of people.

As Oxfam points out, inequality damages nations and the global economy. At its worst, it threatens social and political stability.

Share of global wealth, 2010-2015
Image: Oxfam

That just eight men possess the same wealth as half the world’s people will reignite the debate over the growing global wealth divide.

At the very top, the richest eight individuals have net wealth totaling $426 billion. Oxfam’s calculations are based on the Forbes Billionaires list and the Credit Suisse Global Wealth Databook (2016).

False economic assumptions

Part of the problem, says Oxfam, is that our economic models are based on what it sees as false assumptions. For example, Oxfam questions the principle that corporations must maximize profits and returns to shareholders at all costs. Oxfam says there are plenty of examples of organizations using commercial practices to deliver social and environmental benefits.

The charity cites the example of Novo Nordisk, a global healthcare company based in Scandinavia: “It is driven by its mission to rid the world of diabetes. It is a publicly traded operating company controlled by a foundation. It has a dual class share structure in which the foundation’s voting rights are 10 times stronger than those of ordinary shareholders. The foundation’s control also prevents hostile takeovers and so allows executives to focus on the long term,” explains the report.

What’s the solution?

While inequality within countries is rising, global inequality is actually falling.

The chart below demonstrates that while the rich may be richer, the average level of income increased significantly between 1820 and 2000, and again between 1970 and 2000.

In the last 15 years, extreme poverty has been halved.

 Figure 2
Image: Our World In Data
Universal income

Some governments have mooted the idea of a universal basic income. Opponents argue that it is money for nothing, supporters say it could play a valuable role in alleviating poverty and supporting those that contribute to the economy but don’t get paid for it (i.e. women in caring and domestic roles). With the growth of the gig economy, it could give people stability during lean periods between jobs and in the near future provide a safety net as artificial intelligence replaces human workers.

We may soon get to see if it works. Finland has begun an experiment in which a number citizens on forms of income support receive a basic monthly income. The trial will last two years. People receiving this income will not lose the benefit if they find work.

A more human economy

The vast wealth of just a few individuals matters, says Oxfam, because it “is economically inefficient, politically corrosive, and undermines our collective progress.”

Another false assumption, in Oxfam’s view, is that our economic model is gender-neutral. “In fact, cuts in public services, job security and labour rights hurt women most. Women are disproportionately employed in the least secure and lowest-paid jobs. They also do most of the unpaid care work – which is not counted in GDP, but without which our economies would not function,” says the charity.

Oxfam calls for what it calls a more “human economy”, one where governments are accountable and visionary, businesses work in the interests of workers and producers, an economy where the environment is valued, women’s rights are upheld and there is a strong system of fair taxation.

Want to know more about universal income? Watch the live Davos session.

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