Back in January, Oxfam pointed out that the 85 richest people in the world have more money than the the poorest 3.5 billion people all put together. In a new report published in October, Oxfam delves further in to the issues of wealth inequality and income inequality, and focuses on the negative economic and social consequences of this extreme inequality for society as a whole.
Consequences of government policies supporting TBTF institutions and billionaires
The new report also highlights some sobering statistics regarding the consequences of government policies supporting “too big to fail” institutions and their billionaire owners since the financial crisis. For example, a reasonable person would expect that the super rich would have suffered the most during the financial crisis as they have a much larger amount of their assets invested. It turns out, however, that the number of billionaires has doubled since the 2008 financial crisis.
How can that be, you ask? It boils down to the fact the rich have rigged the political system. Today, the super rich influence the political system so much with their money that they can’t lose. They water down laws and the regulatory process so that they can continue to exploit a broken system. Even worse, they control the media so they can bamboozle enough of the public to keep electing professional politicians who clearly do not represent their interests.
As Warren Buffett put it, “There’s been class warfare going in for the last 20 years and my class has won.”
Consequences of extreme inequality
The Oxfam report highlights that the consequences of pervasive inequality are negative for everyone. “Extreme inequality corrupts politics, hinders economic growth and stifles social mobility. It fuels crime and even violent conflict. It squanders talent, thwarts potential and undermines the foundations of society.”
Market fundamentalism and the capture of politics by elites is creating extreme inequality
Inequality doesn’t happen by accident. It happens because greedy people make selfish choices. The report notes: “Oxfam’s decades of experience in the world’s poorest communities have taught us that poverty and inequality are not inevitable or accidental, but the result of deliberate policy choices.”
Although these greedy people may not be consciously aware of their greed or of the negative effect of their selfish choices on others, that does not change the harm caused by their actions.
Oxfam: Huge benefits from curbing inequality
The potential benefits of slowing down wealth inequality by even a little bit are huge. Oxfam notes that a tax of just 1.5% on the wealth of global billionaires, if undertaken immediately after the financial crisis, could have saved 23 million lives in the world’s poorest 49 countries by investing in healthcare.
As of 2014, a tax of 1.5% on the 1650 billionaires worldwide could fill all annual gaps in funding needed to get every child into school and deliver health services to every citizen in those 49 countries.
As Oxfam points out, certainly some inequality is needed “to reward talent, skills and a willingness to innovate and take entrepreneurial risk.” But by the same token, extremes of economic inequality undermine growth and progress and neglect the potential of hundreds of millions of people.
The full report can be found here cr-even-it-up-extreme-inequality-301014-en.reviewed