Working for the few: political capture and economic inequality

Added 29 Jan 2014

Eurodad partner Oxfam has launched its latest briefing paper, entitled “Working for the few: political capture and economic inequality”. According to the paper, almost half of the world’s wealth is now owned by just one percent of the population, and seven out of ten people live in countries where economic inequality has increased in the last 30 years. The World Economic Forum has identified economic inequality as a major risk to human progress, impacting social stability within countries and threatening security on a global scale.

This massive concentration of economic resources in the hands of fewer people presents a real threat to inclusive political and economic systems, and compounds other inequalities – such as those between women and men. Left unchecked, political institutions are undermined and governments overwhelmingly serve the interests of economic elites – to the detriment of ordinary people.

Some of Oxfam’s key findings include:

  • Almost half of the world’s wealth is now owned by just one percent of the population.
  • The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
  • The bottom half of the world’s population owns the same as the richest 85 people in the world.
  • Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
  • The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
  • In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

The report provides a number of recommendations to those that gathered at Davos for the World Economic Forum:

  • Not dodge taxes in their own countries or in countries where they invest and operate, by using tax havens;
  • Not use their economic wealth to seek political favors that undermine the democratic will of their fellow citizens;
  • Make public all the investments in companies and trusts for which they are the ultimate beneficial owners;
  • Support progressive taxation on wealth and income;
  • Challenge governments to use their tax revenue to provide universal healthcare, education and social protection for citizens;
  • Demand a living wage in all the companies they own or control;
  • Challenge other economic elites to join them in these pledges.

Furthermore, Oxfam has recommended policies in multiple contexts to strengthen the political representation of the poor and middle classes to achieve greater equity. These policies include:

  • A global goal to end extreme economic inequality in every country. This should be a major element of the post-2015 framework, including consistent monitoring in every country of the share of wealth going to the richest one percent.
  • Stronger regulation of markets to promote sustainable and equitable growth; and
  • Curbing the power of the rich to influence political processes and policies that best suit their interests.
  • The particular combination of policies required to reverse rising economic inequalities should be tailored to each national context. But developing and developed countries that have successfully reduced economic inequality provide some suggested starting points, notably:
  • Cracking down on financial secrecy and tax dodging;
  • Redistributive transfers; and strengthening of social protection schemes;
  • Investment in universal access to healthcare and education;
  • Progressive taxation;
  • Strengthening wage floors and worker rights;
  • Removing the barriers to equal rights and opportunities for women.
Read the full paper here.