Richest 62 ‘as wealthy as half the world’
Oxfam has caused a stir with its claim that the world’s 62 richest people own as much wealth as its poorest 3.6 billion. But is that number accurate? And does it matter if it is?
It is becoming an annual tradition. As the global elite gather at the World Economic Forum (WEF) conference, Oxfam releases a report which shows how unequal the world has become.
This year is no different – except that the stats are more extreme than ever. In its 2016 report, released yesterday, the charity claims that the world’s 62 richest people now own as much wealth as the poorest half of the human population (3.6bn people in total). And they are only getting wealthier: in 2010, the number was 388.
The revelations do not end there. The report shows that instead of contributing to society, the super-rich are now placing their wealth in offshore accounts, out of the taxman’s reach. If this money were taxed, governments would have around $190bn more to spend each year on, say, healthcare for the poorest.
This widening inequality must end, says Oxfam. To reverse the trend, we need the cooperation of politicians, business leaders, celebrities – exactly the sorts of people who attend the WEF. The charity proposes three steps: crack down on tax-dodging, boost public spending, and increase minimum wages.
Inequality is one of the big issues of our time; everyone from Pope Francis to Leonardo DiCaprio has denounced it. So it is no surprise that Oxfam’s report has caused a stir. Media outlets around the world have quoted its findings, and Twitter is abuzz with debate.
Yet not everyone comes down on Oxfam’s side. As in previous years, flaws in the charity’s analysis have been pointed out. The biggest problem is measuring wealth: rather than income, Oxfam looks at ‘net household wealth’. Critics argue that this approach distorts the scale of inequality. Some also claim that inequality can have positive effects on the economy.
If Oxfam’s report is becoming an annual tradition, so is the mixed reaction. Who is right? Just how bad is inequality anyway?
First among equals
Even if we leave aside the methodological problems, the report is wrong, say some. Inequality is not a bad thing. It encourages productivity: the promise of vast wealth is a good incentive to work hard. What’s more, the super-rich are important to the economy, as they create jobs and invest in projects. Taking their wealth (in the form of taxes) and giving it to the poor is counter-productive and unfair.
This is true up to a point, reply others. But in our world, inequality has stopped being useful: instead of using their money to fuel the economy, the super-rich are hiding it in tax havens. Their wealth gives them a dangerous amount of influence over politicians. Meanwhile, the poor still face famine, rising crime levels and poor education standards. This is a fact – and an injustice.
- If you had £1,000 to donate to charity, who would you give it to? Why?
- How heavily should the super-rich be taxed?
- Pick a rich person who you think has used some of their money in a good way. (They don’t have to be famous.) Give a one-minute presentation, explaining your choice.
- Imagine you are interviewing the world’s richest person at the WEF. Write down five questions that you would ask.
Some People Say...
“Poverty is the parent of revolution and crime.”Aristotle
What do you think?
Q & A
- As long as I have enough to get by, who cares how wealthy the elite are?
- In a way, you’re right. Many would agree that we should let the rich be rich – anything else is just envy. Then again, others would argue that inequality can’t exist without poverty: if some people are amassing huge fortunes and not giving much back to society, others will lose out. In other words, not everyone will have enough to get by.
- Will this report make a difference?
- It’s easy to be pessimistic – after all, Oxfam releases a similar report every year, yet inequality is rising. But then so is public support for action against inequality; Oxfam will press this fact on world leaders at the WEF. For things to change, though, politicians will somehow have to break free from the influence of their super-rich backers.
- World Economic Forum
- An annual conference held at Davos in the Swiss mountains. Businessmen, diplomats, celebrities and other influential people come here to network, make deals and discuss global issues.
- A world-famous charity, founded in the UK in 1942. Initially dedicated to helping victims of famine, it now works to tackle poverty in general and raise living standards in developing countries.
- Offshore accounts
- Bank accounts located in territories with low (or no) taxes, known as ‘tax havens’. In general, the account holders do not actually live in the relevant territory – they are simply taking advantage of its tax regime.
- Net household wealth
- Defined as assets (everything you own) minus debt (everything you owe). This can lead to strange results: for example, a debt-ridden university graduate in the USA is ‘poorer’ than a Chinese farmer with no debts, but almost no income either.
- A methodology is the system of methods used in a particular study. Oxfam’s use of ‘net household wealth’ as a way of measuring wealth is part of its methodology.