The whole world seems to have gone “berserk” with talks about inequality and how the gap between the rich and poor continues to widen greater today than ever before. There must be some striking implications if the current scenario continues as thought leaders have increasingly discussed this troubling trend in multiple settings including the just concluded World Economic Forum (WEF).
Oxfam, a confederation seeking to find solutions to poverty and other injustices around the world, has been a long-time sponsor of the fight against inequality. In its latest, and indeed startling, report, it reveals that the 85 richest people in the world have as much wealth as the 3.5 billion poorest. Put another way, almost half of the world’s wealth is now owned by just 1 percent of the total global population.
According to the report titled “Working for the Few,” the wealth of the 1 percent richest people in the world amounts to $110 trillion which is 65 times the total wealth of the bottom half of the world’s population. To say that this is unprecedented is understating the obvious as 7 out of every ten people live in countries where income inequality has increased in the past 3 decades.
Although some level of inequality is necessary for growth, too much of it, as is the case with pretty much everything else, is bad. The report warns that extreme levels of wealth concentration threaten to exclude hundreds of millions of people from realizing the benefits of their talents and hard work. Beyond this, however, when tremendous wealth comes under the exclusive control of a minute few, these people may begin to wield an undue and unfair influence on government policy making. The wealthy will eventually use the political system to turn their wealth into more wealth.
“When wealth captures government policymaking, the rules bend to favour the rich, often to the detriment of everyone else,” the report asserts.
If the cycle continues, the resulting scenario may be one where the rich make more than enough money to save, while middle-class and low income workers are devoid of money to live with and become burdened by debt. Given that the lower income workers constitute the bulk of every society, the world may become an aggregate of similar societies characterized by wealth at the top and debt at the bottom. Only structural problems can result from these.
One sure way to kickback this trend is to raise taxes on the rich, and governments around the world must begin to take this seriously. Additionally, increasing the minimum wage in many countries will help raise the income profile of the poorest in society. Policies that help reduce the cost of building assets for the middle and lower income earners can also help correct this structural problem as will access to fair, low-cost financial services and home ownership opportunities.
The words of a past Associate Justice of the Supreme Court in the United States, Louis Brandeis, are a timely conclusion. He said, “We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.”
By Emmanuel Iruobe
