Oxfam warns that extreme wealth is economically inefficient, politically corrosive, socially divisive and environmental destructive

January 20th, 2013 by Oxfam

Dame Barbara Stocking, Chief Executive, Oxfam UK speaks at the World Economic Forum in Davos on 29 January 2011 (click image to expand - image ©World Economic Forum, swiss-image.ch/ photo by Michael Wuertenberg)

An explosion in extreme wealth is exacerbating inequality and hindering the world’s ability to tackle poverty, Oxfam warned in a briefing published ahead of the World Economic Forum in Davos this week.

The $240 billion (£150 billion) net income in 2012 of the richest 100 billionaires would be enough to make extreme poverty history four times over, according to ‘The cost of inequality: how wealth and income extremes hurt us all‘.

The agency is calling on world leaders to curb today’s income extremes and commit to reducing inequality to at least 1990 levels.

The richest 1% has increased its income by 60% in the last 20 years with the financial crisis accelerating rather than slowing the process.

Oxfam warned that extreme wealth is economically inefficient, politically corrosive, socially divisive and environmentally destructive.

Barbara Stocking, Oxfam Chief Executive, said “we can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true.”

“Concentration of resources in the hands of the top 1% depresses economic activity and makes life harder for everyone else – particularly those at the bottom of the economic ladder.”

“In a world where even basic resources such as land and water are increasingly scarce, we cannot afford to concentrate assets in the hands of a few and leave the many to struggle over what’s left.”

Kolkata (Calcutta) waste dump on 25 February 2011 (click image to expand - image ©Wolfgang Sterneck)

Members of the richest 1% are estimated to use as much as 10,000 times more carbon than the average US citizen.

Oxfam said world leaders should learn from the current success of countries such as Brazil which has grown rapidly while reducing inequality – as well as the historical success such as the United States in the 1930s when President Roosevelt‘s New Deal helped bring down inequality and tackle vested interests.

Roosevelt famously warned that the “political equality we once had won was meaningless in the face of economic inequality.”

Mary Stocking said “we need a global new deal to reverse decades of increasing inequality. As a first step world leaders should formally commit themselves to reducing inequality to the levels seen in 1990.

“From tax havens to weak employment laws, the richest benefit from a global economic system which is rigged in their favour.”

“It is time our leaders reformed the system so that it works in the interests of the whole of humanity rather than a global elite,” she said.

Closing tax havens – which hold as much as $32 trillion (£20 trillion) or a third of all global wealth – could yield an additional $189 billion (£118 billion) in additional tax revenues.

In addition to a tax haven crackdown, elements of a global new deal could include:

  • a reversal of the trend towards more regressive forms of taxation;
  • a global minimum corporation tax rate;
  • measures to boost wages compared with returns available to capital;
  • increased investment in free public services and safety nets.

(click on Oxfam logo to download Oxfam briefing paper on wealth inequality)

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