A recent study conducted by Oxfam International indicates that just 62 people, 53 of them men, now control over half the world’s wealth. The study, 'An Economy for the 1 Percent,' was released ahead of the World Economic Forum (WEF) in Davos, Switzerland.
The study from the anti-poverty NGO calculated that 62 people held the same amount of wealth as the world’s 3.6 billion poorest citizens in 2015. That's a huge drop from the estimated 388 people who controlled that amount of wealth in 2010, and the concentrated amount of wealth that those 62 people possess has increased by 44 percent over that same five-year period, to $1.76 trillion dollars.
It is true that global poverty has declined substantially since 1990, according to Oxfam. However, the study found that at the same time that global wealth rose dramatically among the world’s richest 1 percent, the relative wealth of those living in extreme poverty has declined dramatically since 2010, by approximately $1 trillion.
“Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” the report reads.
Oxfam argues that there are several reasons for why the disparity between rich and poor has become so vast, including what the report terms “the global spider’s web of tax havens and the industry of tax avoidance, which has blossomed over recent decades.”
Oxfam estimates that nearly $7.6 trillion, or more than twice the combined GDP of the United Kingdom and Germany, is currently being held offshore.
When these taxes go unpaid, that can further exacerbate the economic inequality between rich and poor because that money is not going towards social programs that could help alleviate poverty and reduce diagnosed health problems, the report argues.
In Africa, for example, approximately $500 billion of rich Africans’ wealth is held offshore in tax havens. Oxfam estimates that this costs African countries some $14 billion a year in tax revenues, money that could otherwise go to school programs and health initiatives that could save lives.
The Oxfam study also suggests that the global economy’s push on the importance of capital over labor is another reason for widening inequality. This not only concentrates national incomes in the hands of those few that control it, Oxfam says, but has implications for private companies as well. It increases pay for executives while preventing many workers in the very lowest-paying jobs at the bottom from earning higher wages.
In his final State of the Union address last week, President Barack Obama touched on how the global economy can negatively impact workers. “Companies in a global economy can locate anywhere… [as] a result, workers have less leverage for a raise," he said. "Companies have less loyalty to their communities. And more and more wealth and income is concentrated at the very top.”
"It's a major wake-up call," Jyrki Raina, general secretary of IndustriALL Global Union, told CNBC. "Inequality is one of the biggest threats to economic well-being and it needs to be addressed."