Oxfam International released a study report, ‘An economy for the 99%’, on January 16, which found that the world’s wealthiest eight men own the same wealth as the poorest half of people in the world. It blames this situation squarely on economic policies and on the economic system: “The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point.”
The report also showed that “While some billionaires owe their fortunes predominantly to hard work and talent …one-third of the world’s billionaire wealth is derived from inherited wealth, while 43% can be linked to cronyism.”
The report also traced how across the world, the richest individuals and corporations tend to have a great deal of control over political processes and leaders – thereby undermining democracy.
The report noted the growing wage gap and decline of workers’ collective bargaining power all over the world. It noted the role of corporations in driving this global inequality crisis: “Squeezing labour and production costs and minimizing taxes allow corporations to hand an ever-growing proportion of these profits to their owners. In publicly listed companies, this drive for ever-greater profit has delivered rich rewards for shareholders…. In India, as profits have been rising for the 100 largest listed corporations, the share of net profits going to dividends has also increased steadily over the last decade, reaching 34% in 2014/15, with around 12 private corporations paying more than 50% of their profits as dividends.”
The report recommended several measures to decrease global inequality: including increasing taxes on wealth and high incomes to ensure a more level playing field, investment in healthcare, education and job creation; ensuring a decent wage for workers; measures to curb tax dodging and falling corporate taxes.
The Report found:
• Eight men now own the same amount of wealth as the poorest half of the world.
• Over the next 20 years, 500 people will hand over $2.1 trillion to their heirs – a sum larger than the GDP of India, a country of 1.3 billion people.
• The incomes of the poorest 10% of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1% increased 182 times as much.
• A CEO who figures in the Financial Times Stock Exchange 100 Index earns as much in a year as 10,000 people in working in garment factories in Bangladesh.
• In the US, new research by economist Thomas Piketty shows that over the last 30 years the growth in the incomes of the bottom 50% has been zero, whereas incomes of the top 1% have grown 300%.
Inequality is even deeper in India than in the world as a whole, the report showed. 57 billionaires in India now have same wealth as that of the bottom 70% of India’s people. Referring to the ‘Global Wage Report 2016-17’ of the Indian Labour Organisation, the study said India suffers from a huge gender pay gap and has among the worst levels of gender wage disparity – men earning more than women in similar jobs – with the gap exceeding 30%.
The study also showed a steep rise in inequality and concentration of wealth in the past two years that correspond with Modi’s regime. The percentage of the India’s wealth held by the top 1% grew from 40.3% in 2000 to 49% in 2014; but it leaped from 49% in 2014 to 58.4% in 2016.
The Report debunked the myth that “The market is always right, and the role of governments should be minimized”, finding that “In reality, the market has failed to prove itself the best way of organizing and valuing much of our common life or designing our common future. We have seen how corruption and cronyism distort markets at the expense of ordinary people and how the excessive growth of the financial sector exacerbates inequality. Privatization of public services such as health, education or water has been shown to exclude the poor, and especially women.”