Economic Growth

The shocking truth about inequality today

A farmer harvests rice on a field in Lalitpur, Nepal October 26, 2016. REUTERS/Navesh Chitrakar     TPX IMAGES OF THE DAY      - D1BEUJDWLRAA

Bitter harvest: The poorest half of humanity got poorer last year Image: REUTERS/Navesh Chitrakar

Winnie Byanyima
Undersecretary-General of the United Nations; Executive Director, Joint United Nations Programme on HIV/AIDS (UNAIDS)
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Economic Progress

Every January I get a glimpse into a different world. A world of billionaires, of business and political elites, coming together in the Swiss mountain resort of Davos for the Annual Meeting of the World Economic Forum.

Curious friends often ask if I have ever met a billionaire and what they are like. I tell them they were born lucky. Lucky to be born a man – 9 out of 10 billionaires are men; lucky to be born into a wealthy family – a third of billionaire fortune is the result of inheritance, lucky to get a decent education in a world where 262 million children don’t go to school.

For Oxfam, Davos is an opportunity to take stock of the crisis of extreme inequality.

Our inequality reports have charted the rise and rise of the lucky few over recent years. Our latest report, “Private Wealth or Public Goods,” shows that the wealth of the world’s billionaires increased by twelve percent or $2.5 billion a day last year. A new billionaire was created every two days between 2017 and 2018.

Meanwhile, the poorest half of humanity, 3.8 billion people, saw their wealth shrink by eleven percent. Just under half the world’s population subsists on less than $5.50 a day – one school fee or medical bill away from falling into extreme poverty.

While women’s work is the bedrock of our economies, they do not see the benefits. Globally men earn 23 percent more than women and own 50 percent more wealth.

This extreme and growing gap between rich and poor is no accident. It is the result of policy decisions made by governments. Chief among them are decisions about how governments raise and spend our taxes.

Consider how wealth taxes have been reduced or eliminated in many rich countries and are barely implemented in the poor countries. Just four cents in every dollar of tax revenue collected globally came from taxes on wealth such as inheritance or property in 2015.

Consider how tax rates for wealthy individuals and corporations have been cut dramatically. Billionaires are paying lower rates of tax than their secretaries. In some countries, such as Brazil, the poorest 10 percent of society are paying a higher proportion of their income in tax than the richest 10 percent.

Governments add insult to injury when they fail to clamp down on tax dodging, leaving wealthy corporations and individuals to pocket billions in unpaid taxes. Poor countries lose around $170 billion a year as a result of tax dodging by wealthy individuals and corporations.

At the same time, governments are allowing vital poverty-busting public services such as healthcare and education to crumble for want of funds, or outsourcing these services to private companies that exclude the poorest. These services serve as the foundations on which people can work their way out of poverty and they’re being ripped away from ordinary people.

The consequences of these policy decisions are etched on the lives of millions of people around the globe, including the 10,000 people who die every day for want of healthcare.

Always, it is women and girls who are hardest hit. I think of the girls I know in my village in Uganda who are pulled out of school when money isn’t available to pay fees or the women who spend countless hours filling in the gaps, caring for children, the sick and elderly when public services fail.

Humanity can’t live with this. And we don’t have to. Government policies created this crisis - they can solve it by ensuring corporations and wealthy individuals pay their fair share of tax and investing this money in free quality healthcare and education for all.

We know this is possible. When the government of Ghana dropped fees for senior high school in September 2017, 90,000 more students walked through the school doors.

And we know a little change can go a long way. Oxfam estimates that a tiny 0.5 percent increase in tax on the wealth of the richest one percent could raise more than it would cost to educate all the children who are currently out of school and provide healthcare that would save the lives of 3.3 million people.

These ideas are not extreme – they are common sense. Even the International Monetary Fund is talking up wealth taxes, and says that higher income tax rates would help bring down inequality without being bad for growth. They are catching up with people around the world who know that going to school or seeing a doctor when you are sick should not be the preserve of a lucky minority.

They are the basic rights of all people, and the foundation for stable societies and strong economies. That’s the message I will convey in Davos this week.

Winnie Byanyima, Executive Director for Oxfam International, will be attending the World Economic Forum in Davos, Switzerland in January 2019.

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