Yves here. Another sobering update from Oxfam about the widening chasm between the squillionaire overclass and the poor. As the famous salesman David Einhorn used to say, “No matter how bad you think it is, it’s really bad.”
By Jomo Kwame Sundaram and Siti Maisarah Zainurin. Originally published on Jomo’s website
Oxfam expects the world’s first trillionaire within a decade and poverty to end in 229 years! The wealth of the world’s five richest people has doubled since 2020, as 4.8 billion people fell into poverty.
Oxfam’s 2024 report on the topic Company Inequality Inc. he warned, “We are witnessing the beginning of a decade of separation” as billionaires face “epidemics, inflation and war, while the wealth of billionaires grows”.
“This inequality does not happen by accident; the billionaire class ensures that companies bring more wealth to themselves at the expense of everyone else,” notes Amitabh Behar of Oxfam International.
Driving Inequality
Summarizing the report, Tanupriya Singh noted that the gaps between the rich and the poor, and between the rich and developing countries have widened for the first time in the 21st century as the richest have become richer.
The Global North has 69% of all global wealth and 74% of the wealth of billionaires. Oxfam notes that modern wealth accumulation began with colonialism and empire.
Since then, “neo-colonial relations with the Global South continue, perpetuating economic inequality and hacking economic rules in favor of rich countries”.
The report notes, “economies across the Global South are locked into exporting primary commodities, from copper to coffee, for private industry in the Global North, perpetuating a colonial-style ‘extractivist’ model”.
Inequality between wealthy nations has increased, and marginalized communities have worsened, fueling international conflict and violent politics.
70 percent of the world’s largest companies have a billionaire as the main shareholder or CEO. These companies are worth more than 10 billion rands, which is more than the total value of Latin America and Africa.
The income of the rich has grown much faster than that of many others. Therefore, the top 1% of shareholders own 43% of the world’s financial assets – half in Asia, 48% in the Middle East, and 47% in Europe.
Between 2022 and mid-2023, the world’s 148 largest companies generated $1.8 trillion in revenue. Meanwhile, 82% of the profits of the 96 largest companies went to shareholders through stock buybacks and dividends.
Only 0.4% of the world’s largest companies have agreed to pay minimum wages to those who contribute to their profits. Surprisingly, the poor part of the world received only 8.5% of the world’s income in 2022.
The wages of nearly 800 million workers did not keep pace with inflation. In 2022 and 2023, they lost $1.5 trillion, equivalent to an average of 25 days of lost wages per worker.
In addition to income inequality, Oxfam’s 2024 Report noted that workers face increasing challenges due to stressful working conditions.
The gap between the income of the super rich and workers is so great that a health woman or social worker would need 1,200 years to earn what the CEO of a Fortune 100 company makes every year!
Despite women’s lower wages, unpaid care work supports the global economy by at least $10.8 trillion a year, three times what Oxfam calls the ‘tech industry’.
Monopoly Power
Oxfam notes that monopoly power has worsened global inequality. Thus, several corporations influence and even control the country’s economy, governments, laws, and policies for their own benefit.
An International Monetary Fund (IMF) study found one force responsible for the 76% decline in labor’s share of US manufacturing income.
Behar noted, “Monopolies hurt innovation and oppress workers and small businesses. The world has not forgotten how pharma monopolies deprived millions of people of vaccines for COVID-19, created a vaccine for racism while creating a new club of billionaires”.
Between 1995 and 2015, 60 pharmaceutical companies were merged into ten Big Pharma giants. While innovation is often funded by public funds, drug companies are rampant and spend with impunity.
Oxfam notes that Ambani’s wealth in India comes from monopolies in many sectors empowered by the Modi regime. Ambani’s son’s lavish wedding celebrations recently showcased the world’s extreme wealth.
A 2021 Oxfam report estimated that “an unskilled worker would need 10,000 years to achieve what Ambani did in an hour during the pandemic and three years to achieve what he did in a second”.
Unsurprisingly, Oxfam’s 2023 Report noted, “India’s richest 1% own about 40 percent of the country’s wealth, while over 200 million people continue to live in poverty”.
Fiscal Subordination
Corporations have increased their value through “a sustained and highly effective tax war … by depriving the public of essential services”.
As more companies increased their profits, the corporate tax rate fell from 23% to 17% between 1975 and 2019. Meanwhile, nearly billions of dollars entered the tax havens in 2022 alone.
Of course, the drop in the corporate tax rate is due to the “neoliberal agenda advanced by corporations and their wealthy owners, often alongside the countries of the Global North and international institutions such as the World Bank”.
Meanwhile, pressure to cut spending has grown as federal tax revenue has declined for nearly decades. High government debts through corporate tax evasion and avoidance have fueled the policies of holding money.
Unfunded public services negatively affect consumers and workers, especially health and social protection. High interest rates have exacerbated debt problems in developing countries.
As governments are financially constrained from sustaining public services, private sector lobbyists have become increasingly influential, gaining greater control over public services in a variety of ways.
Private companies profit from the sale of discounted public goods, public-private partnerships and government contracts to deliver public policies and programs.
“Major development agencies and institutions… have found common ground with investors by adopting approaches that ‘de-risk’ such programs by shifting financial risk from the private sector to the public sector”, the report said.
Access to essential public services should be accessible to everyone. Emphasis on private profit considerations reduces access for marginalized communities, exacerbating inequality.
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