It is undeniable that wealth and income inequality is growing in the U.S. and across the world. But the scale and extent of it is far more than previously imagined. Although about six months by the time of this post, the report by Oxfam International — titled “Working for the Few” — is no less stark and relevant in its identification of a “growing tide of inequality” (to use the report’s own description).
You can read the report yourself, but Laura Shin of Forbes did a good job of breaking down the sobering statistics:
- Almost half of the world’s wealth is now owned by just one percent of the population.
- The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population [3.5 billion people].
- The bottom half of the world’s population owns the same as the richest 85 people in the world.
- Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
- The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
- In the U.S., the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.
The following chart compiled from this data highlights just how much the problem has grown: while every country saw some growth in inequality, the U.S. by far saw the most dramatic increase:
Although the report makes clear that some economic inequality is necessary to foster growth (in line with mainstream economics) it also warns that wealth concentration at this severity “threaten[s] to exclude hundreds of millions of people from realizing the benefits of their talents and hard work” — also in line with what we’ve learned from both history and economic research.
In particular, the Oxfam report emphasizes the corrosive effect that such inequality can have on democratic governance and social mobility, due mostly to the fact that “when wealth captures government policymaking, the rules bend to favor the rich, often to the detriment of everyone else”
According to polls conduct by Oxfam in Spain, Brazil, India, South Africa, the U.K. and the U.S. — a mix of developed and developing economies — the majority of people in these countries believe that “laws are skewed in favor of the rich” in a variety of areas, including financial deregulation, tax laws favoring the wealthy, economic austerity, policies that disproportionately harm women and the poor, and the use of oil and mineral revenues.
Despite all the grim news, the report does point out that such trends aren’t irreversible: there are plenty of historical examples of countries minimizing inequality and creating broader prosperity (notably the U.S. and Europe following the Second World War). In fact, since the turn of the century, Latin America has made significant inroads in reducing its historically high rate of inequality and underdevelopment, although it still has a long way to go.
Is there enough political will in each country, not to mention on a global level, to resolve this problem before it worsens? Or is this issue overblown? What do you think?