Wednesday, January 29 2014

Emerging
from the financial crisis, the global economy is strengthening. Yet around the
world most people are still being excluded from opportunities
to better themselves and achieve prosperity. Increasingly the biggest benefits
of growth are being captured instead by a tiny elite. We live in a world where the 85
richest people own the wealth of half of the world’s population.

 

In the United
States, the increase in the income share of the top one per cent is at its
highest level since the eve of the Great Depression. In India, the number of
billionaires has increased tenfold in the past decade. In Europe, poor people
struggle with post-recovery
austerity policies while moneyed investors benefit from bank bailouts. Africa has
had a resource boom in the last decade but most
people there still struggle daily for food, clean water and health care. 

 

The
problem of inequality has shot up the global agenda. President Obama has made
it a key priority for the US administration in 2014. The IMF says that in too
many countries the benefits of growth are being enjoyed by far too few people.
The World Economic Forum, meeting this week in Davos, has identified economic
inequality as a major risk to human progress, that it undermines social
stability and threatens security on a global scale.

 

It’s
widely acknowledged that extreme concentrations of wealth are not just morally
questionable but they stunt long-term economic growth too, making it more
difficult to reduce poverty. What must now be admitted is that extreme income
inequality is dangerous because it also threatens to undermine democratic
governance.

 

Oxfam
has spent 70 years working to fight poverty and injustice in more than 90
countries. We’ve witnessed first-hand how the wealthiest individuals and groups
can capture political power at the expense of the rest of society. A massive
concentration of resources is a significant threat to inclusive political and
economic systems.

 

Increasingly,
in rich and poor countries alike, the lowest tax rates, the best health and
education and the opportunity to influence are being given not just to the rich
but also to their children. Without a concerted effort to tackle inequality,
the cascade of privilege and of disadvantage will continue down the
generations, and equality of opportunity will be just a dream.

 

Extreme
inequality is not inevitable. It can be reversed quickly. There are clear
examples of success. The US and Europe in the three decades after World War II
reduced inequality while growing prosperous. Ghana’s recent Petroleum Revenue
Management Bill is a good example of how targeted regulation can promote shared
prosperity. Latin America has significantly reduced inequality in the last
decade through progressive taxation, public services, social protection and
decent work. Central to this progress has been popular politics that represent
the majority, instead of being captured by a small minority.

 

Governments
must crack down
on financial secrecy keeping trillions hidden in tax havens.
They must invest more
in universal education and healthcare. Together, they must work to an agreed
global goal to end extreme inequality in every country. For their part, the economic
elite must refrain from using their wealth to seek political favors that
undermine the democratic will of their fellow citizens. They should be made to
publish their investments and to ensure that decent jobs and living wages are
paid throughout all the companies they own or control.

 

Together, for
the benefit of all, we need to reverse this dangerous trend, which threatens to
unravel long and hard-fought battles against poverty and injustice.

 

*Winnie Byanyima is
the executive Director of Oxfam International. She is attending the Davos World
Economic Forum.