Welcome to the world’s inequality countdown. In 2010, some 388 people owned as much wealth as the poorest half of the world’s population. Jump to 2014 and that 388 is down to 85 people. In 2015 the figure was 80, and today Oxfam has revealed that 62 rich individuals own as much wealth as the poorest 3.6 billion people.
If this deeply alarming inequality clock continues to tick as fast, by 2020 a mere 11 people could have the same wealth as half the world. That is not even a dozen.
This extreme inequality is not a sign of a healthy global economy as all the wealth is being sucked up by those at the dizzying top. Trickle-down economics is a fallacy – this is not just Oxfam’s view, but that of the World Bank also. The rich can no longer pretend their wealth benefits the rest of us. It does not: it harms us. The only thing that is “trickling down” is inequality, and powerlessness.
The consequences of this extreme economic inequality are far-reaching. If inequality is not dealt with, we could see more social unrest across the world, a brake on growth and all the work that has been done in the last quarter-century on poverty halted – potentially reversed. What this means is a more unstable, unequal world with fewer people able to escape poverty.
The world’s most unequal region is still Latin America, despite income inequality there having fallen in recent years. In 2014, the richest 10pc of people in Latin America had amassed 71pc of the region’s wealth. If this trend continues, according to Oxfam’s calculations, in only six years the region’s richest one per cent will have more wealth than the other 99pc.
Meanwhile, inequality in Asia has risen by as much as 18pc since the mid-1990s. Had this rise not happened, 240 million people across Asia could have escaped poverty. What we need – what the world needs – is more action on dealing with extreme inequality and there has been some, but not enough.
In Africa, four million children’s lives could be saved each year if 30pc of Africa’s wealth was not held in tax havens. This means an estimated 14 billion dollars is lost in tax revenues each year, a sum that could pay for life-saving healthcare for African mothers and children, and employ enough teachers to get every African child into school.
Across the world, we are seeing devastating effects on people. But it does not have to be this way. Inequality is not inevitable.
What the world needs is more action on dealing with extreme inequality and there has been some progress, but not enough.
In 2015, we saw the Sustainable Development Goals (SDGs) on extreme poverty and inequality enshrined. We also saw G20 governments agreeing on measures to curb tax dodging by multinational companies, but these reforms do not go far enough in ensuring that governments receive the taxes they are due. So more needs to happen, especially as tax havens are becoming an ever more common way of doing business.
The leaders of some of these multinational companies attended last week’s World Economic Forum (WEF) in Davos. Oxfam has found that nine out of 10 WEF corporate partners have a presence in at least one tax haven and it is estimated that tax dodging by multinational corporations across the world costs developing countries at least 100 billion dollars every year. Corporate investment in tax havens almost quadrupled between 2000 and 2014.
That is why I went to Davos to challenge governments, companies and elites to play their part in ending the era of tax havens, which is heightening economic inequality and preventing hundreds of millions of people from lifting themselves out of poverty. And it is also why Oxfam has released “An Economy for the 1%” just before this year’s Davos. This research has led to tax havens being at the top of our inequality to-do list.
Tax may be boring to some, but the figures are eye-watering. Roughly 7.6 trillion dollars of individuals’ wealth sits offshore. If tax were paid on the incomes this wealth generates, we are looking at an extra 190 billion dollars for governments to spend on services that are essential for a functioning society, such as schools and hospitals.
We need to end the era of tax havens if we are to stop the inequality countdown. For the benefit of all of us, our governments – which are meant to represent our interests – need to shun the vested interests of the richest by stopping the race to the bottom on tax and pulling back the curtains on shady financial dealings.
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