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01 Feb 2017

Wealth Inequality Across the Globe

A new report by Oxfam highlights inequality across the globe, with dramatic figures showing a huge disparity between the haves and have-nots. Released just before the World Economic Forum, 'An Economy For The 99%' claims that eight men control the same wealth as the poorest half of the world. While the methodology used in this report has been criticised in the past by free market think tanks, it shines a light onto a very real problem - not a lack of resources but economic bottlenecks in the mechanisms of distribution.

The World Economic Forum recognised global inequality as a major threat to social stability in 2013, with the World Bank stating a desire to end poverty and share economic prosperity in 2014. Despite these lofty goals, however, the gap between rich and poor continues to widen as 1 percent of the population control more wealth than the other 99 percent. The Oxfam report is based on figures from the Forbes Billionaires list and the Credit Suisse Global Wealth Report, with Credit Suisse having high quality survey data for about 55 percent of the world's population, accounting for 88 percent of the world's wealth.

Here are some mind-boggling facts to put the state of global inequality into perspective. Eight men control the same wealth as the poorest half of the world. 500 people will inherit more than the GDP of India over the next 20 years. Australia's two richest people are wealthier than the bottom 20 percent of the country. The incomes of the top 1 percent increased 182 times more than the incomes of the poorest 10 percent between 1988 and 2011. The incomes of the bottom 50 percent haven't grown at all over the past 30 years, with incomes in the top 1 percent having grown by 300 percent.

Once the domain of leftist protest marches and socialist blogs, the growing state of economic imbalance is increasingly being recognised by both sides of politics. In fact, a growing sense of disillusionment with the current economic system was a deciding factor in the political turmoil that defined much of 2016, including the Trump presidency and the Brexit vote. While lots of people will say there is no inherent problem with the current state of affairs, indeed that inequality itself is a driver of economic growth, the trickle-down plumbing of modern capitalism does seem to be blocked.

Even if we assume that the market is perfect in theory, a false assumption according to Oxfam, it is obviously in need of repair. Globalisation, tax dodging, and political donations have all been in the news lately, with each of these things highlighting imperfections in the free market system. According to Oxfam, a human economy needs to be created so that economic growth can be transferred to the people who need it the most: "Humanity has incredible talent, huge wealth and infinite imagination. We need to put this to work to create a more human economy that benefits everyone, not just the privileged few."

Image Source: ismagination /