Dar es Salaam, Tanzania - An explosion in extreme wealth and income is exacerbating inequality and hindering the world’s ability to tackle poverty, international development agency, Oxfam, warned on Saturday in a briefing published ahead of the World Economic Forum in Davos next week.
The US$240 billion net income in 2012 of the richest 100 billionaires would be enough to make extreme poverty history four times over, according Oxfam’s report 'The cost of inequality: How wealth and income extremes hurt us all.’
Calling on world leaders to curb today’s income extremes, the report also urges them to bring down global inequality to at least 1990 levels.
“The richest one per cent has increased its income by 60 per cent in the last 20 years with the financial crisis accelerating rather than slowing the process,” the agency observed.
Oxfam warned that extreme wealth and income was not only unethical but “it is also economically inefficient, politically corrosive, socially divisive and environmentally destructive”.
Oxfam International Executive Director Jeremy Hobbs 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 one per cent 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.”
Members of the richest one per cent 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 present-day 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.
According to Hobbs, a global new deal is needed to reverse decades of increasing inequality.
“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,” he said.
Closing tax havens – which hold as much as US$32 trillion or a third of all global wealth – could yield an additional US$189 billion in additional tax revenues.
In addition to a tax haven crackdown, Oxfam said 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 and increased investment in free public services and safety nets.