Author: Deborah Hardoon, Senior Researcher, Oxfam GB.
(In the run up to the World Economic Forum in Davos , Deborah looks at the trends of billionaire’s wealth and compares it when the rest of world)
Wealth data from Credit Suisse, finds that the 99% have been getting less and less of the economic pie over the past few years as the 1% get more. By next year, if the 2010-2014 trend for the growing concentration of global wealth is to continue, the richest 1% of people in the world will have more wealth than the rest of the world put together.
Measurements of wealth capture financial assets (including money in the bank) as well as non financial assets such as property. It is not just inefficient to concentrate more and more wealth in the hands of a few, but also unjust. Just think of all the empty properties bought by wealthy people as investments rather than providing housing for those in need of a home. Think of the billionaire chugging out carbon emissions flying around in a private jet, whilst the poorest countries suffer most from the impacts of climate change and the poorest individuals living want for a decent bicycle to get to school or work.
Wealth inequality is now so extreme, that in 2014 just 80 people have the same wealth as the bottom half of the planet. The richest 80 people in the world have a collective wealth of $1,898,600,000,000, (that’s 1.9 trillion dollars) or an average of $24,000,000,000 (24 billion dollars) each. These are big numbers, lots of 0’s, so let’s try to break it down.
Let’s get rid of all the zeroes. Wealth of $24 per person would be pretty negligible, not much you can do to invest this or purchase productive assets. Increasing this by $3 in one year wouldn’t make much difference at all, especially as prices in the economy increase.
Wealth of $24,000 could be transformative. It could enable you have own a mode of transport or farming equipment to enable your work and livelihood. It could provide cash in the bank, just in case you need some reserves if the income that you rely on is affected or you face a financial surprise or shock. $3,000 more in a year could make an important difference for you and your family.
Wealth of $24,000,000 would be more than enough for a (financially) worry free life. So long as you do not have a dangerous shopping habit, you potentially be financially secure for your entire life with this kind of wealth, owning property so that you would never need to pay rent and earning enough interest to provide a stable income, a 1% interest on this would give you an annual income of $230,000). Another $3,000,000 every year is, quite frankly, unnecessary.
Wealth of $24,000,000,000 blows my mind. Based on even tiny levels of interest, this wealth would grow faster than you could spend it. And it grows fast, an extra $3,000,000,000 in one year alone. Aside from what this extreme level of wealth might do to shopping habits and holiday destinations, what does it mean for the rest of us that do not have this amount of wealth at our disposal?
“Wealth: Having it all and wanting more” is a short research brief published today that looks at wealth data and finds that it is more unequally distributed than ever before. In 2010 it took 388 billionaires to have the same amount of wealth of the bottom half of the world, it now takes just 80 of them. The extreme wealth at the top of the distribution as desired above is not only mindblowing, but quite obscene when compared with how wealth is distributed to the rest of us in the world. The average wealth of adults in the bottom half of the world is $784, in Malawi the wealth per adult is just $230.
Why do I use the word obscene? Why is this disparity a problem? Many reasons, better articulated in Oxfam’s recent Even It Up report and by others here, here and here. But I’ll just mention one that I feel strongly about, the vicious and pernicious cycle of wealth, power and influence that leaves the rest of us excluded from determining the policies that affect us all, as stated last year in Oxfam’s “Working for the Few”.
In the report, I delve into the Forbes billionaires data to identify the origins of their extreme wealth (the excel file I used is also online, so you can have a look too). Around one third inherited some or all of their wealth. But most interesting were the sectors from which their fortunes were derived. 20% of the billionaires on the 2014 list were listed as having interests or activities in the finance or insurance sector. No doubt these individuals have been hardworking, smart and creative, but we also know that companies from the finance and insurance sector spend a lot of time and money on influencing, in 2013 more than $500mil was spent on lobbying by this sector in Washington and Brussels alone. And this is just scratching the surface of how high net worth individuals and companies can use their position to influence others to support their agenda to the detriment of the rest of society, particularly the poor. There is a real cost involved here, when the policies and people that are influenced no longer work in the interests of the majority, of those most in need of support, those people that can’t afford to take their political representatives out for swanky meals. Companies from the pharmaceutical and healthcare sector are spending similar amounts on lobbying, protecting their corporate interests when the world is badly in need of the provision of affordable drugs and new vaccines – both which challenge the bottom line of pharma companies.
For a fairer and more just policy making and governance, alongside keeping lobbyists and other influencing mechanisms in check, we also need to be pro active in strengthening the voice and participation of the 99%. Transparency and open government initiatives in many countries presents an opportunity for citizens to engage, but we need to find a way to do that effectively. Strengthening unions, actively supporting causes we feel strongly about, standing up against restrictions on freedom of expression. We need more power and we need it now to prevent the runaway wealth of the rich running us into insignificance.