Obscene wealth: World’s 85 richest people have same wealth as 3.5 billion poorest

Obscene wealth:

World’s 85 richest people have same wealth as 3.5 billion poorest

 

AFP Photo / Spencer Platt

The world’s 85 wealthiest people have as much money as the 3.5 billion poorest people on the planet – half the Earth’s population. That’s according to Oxfam’s latest report on the risks of the widening gap between the super-rich and the poor.

The report, titled “Working for the Few,” was released Monday, and was compiled by Oxfam – an international organization looking for solutions against poverty and injustice.

The document focuses on the extent of global economic inequality caused by rapidly increasing wealth of the richest people that poses the threat to the “human progress.”

A total of 210 people became billionaires last year, joining the existing 1,426 billionaires with a combined net worth of $5.4 trillion.

"Instead of moving forward together, people are increasingly separated by economic and political power, inevitably heightening social tensions and increasing the risk of societal breakdown," the report stated.

Also, according to the Oxfam data, the richest 1 percent of people across the globe have $110 trillion, or 65 times the total wealth of the bottom half of the planet’s population – which effectively “presents significant threat to inclusive political and economic systems.”

“It is staggering that, in the 21st century, half of the world’s population — that’s three and a half billion people — own no more than a tiny elite whose numbers could all fit comfortably on a double-decker bus,” Oxfam chief executive Winnie Byanyima told a news conference.

And the number of the rich is steadily growing: for example, in India the number of billionaires skyrocketed from six to 61 in the past 10 years, and their combined net worth is currently $250 billion.

The report comes ahead of the World Economic Forum in Davos which begins later this week, and urges the world leaders to discuss how to tackle this pressing issue.

Among the solutions presented by Oxfam are measures to avoid tax dodging and using economic wealth to pressure governments, looking for political benefits. Also, the organization calls for “making public all the investments in companies and trusts for which they are the ultimate beneficial owners,” as well as “challenging governments to use tax revenue to provide universal healthcare, education and social protection for citizens.”

Oxfam also said that there are many laws that favor the rich, which were lobbied for in a “power grab” by the world’s wealthiest people.

Since the late 1970s, tax rates for the richest have fallen in 29 out of 30 countries for which data are available, according to Oxfam.

"A survey in six countries (the US, UK, Spain, Brazil, India and South Africa) showed that a majority of people believe that laws are skewed in favor of the rich," the report said.

For instance, almost 80 percent of the Spanish and the Indians, as well as over 60 per cent of the US and the UK residents, either agree or strongly agree that “the rich have too much influence over where this country is headed.”

Public Beats Private: Six Reasons Why

by Paul Buchheit

Private systems are focused on making profits for a few well-positioned people. Public systems, when sufficiently supported by taxes, work for everyone in a generally equitable manner. The following are six specific reasons why privatization simply doesn't work.

1.   The Profit Motive Moves Most of the Money to the Top

2.    

The US federal Medicare Administrator made $170,000 in 2010. The president of MD Anderson Cancer Center in Texas made over ten times as much in 2012. Stephen J. Hemsley, the CEO of United Health Group, made almost 300 times as much in one year, $48 million, most of it from company stock.

In part because of such inequities in compensation, our private health care system is the most expensive system in the developed world. The price of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany. Two of the documented examples: an $8,000 special stress test for which Medicare would have paid $554; and a $60,000 gall bladder operation, for which a private insurance company was willing to pay $2,000.

Medicare, on the other hand, which is largely without the profit motive and the competing sources of billing, is efficiently run, for all eligible Americans. According to the Council for Affordable Health Insurance and other sources, medical administrative costs are much higher for private insurance than for Medicare.

But the privatizers keep encroaching on the public sector. Our government reimburses the CEOs of private contractors at a rate approximately double what we pay the President. Overall, we pay the corporate bosses over $7 billion a year.

Many Americans don't realize that the privatization of Social Security and Medicare would transfer much of our money to yet another group of CEOs.

2. Privatization Serves People with Money, the Public Sector Serves Everyone

A good example is the U.S. Postal Service (USPS), which is legally required to serve every home in the country. Fedex and United Parcel Service (UPS) can't serve unprofitable locations. Yet the USPS is much cheaper for small packages. An online comparison revealed the following for the two-day shipment of a similarly-sized envelope to another state:

-- USPS 2-Day $5.68 (46 cents without the 2-day restriction)

-- FedEx 2-Day $19.28

-- UPS, 2 Day $24.09

USPS is so inexpensive, in fact, that Fedex actually uses the U.S. Post Office for about 30 percent of its ground shipments.

Another example is education. A recent ProPublica report found that in the past twenty years four-year state colleges have been serving a diminishing portion of the country's lowest-income students. At the K-12 level, cost-saving business strategies apply to the privatization of our children's education. Charter schools are less likely to accept students with disabilities. Charter teachers have fewer years of experience and a higher turnover rate. Non-teacher positions have insufficient retirement plans and health insurance, and much lower pay.

Finally, with regard to health care, 43 percent of sick Americans skipped doctor's visits and/or medication purchases in 2011 because of excessive costs. It's estimated that over 40,000 Americans die every year because they can't afford health insurance.

3. Privatization Turns Essential Human Needs into Products

Big business would like to privatize our water. A Citigroup economist exulted, "Water as an asset class will, in my view, become eventually the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals."

They want our federal land. Attempts at privatization were made by the Reagan administration in the 1980s and the Republican-controlled Congress in the 1990s. In 2006, President Bush proposed auctioning off 300,000 acres of national forest in 41 states. Paul Ryan's Path to Prosperity was based in part on Republican Jason Chaffetz' "Disposal of Excess Federal Lands Act of 2011," which would unload millions of acres of land in America's west.

They want our cities. A privatization expert told the Detroit Free Press that the real money is in urban assets with a "revenue stream." So Detroit's most valuable resource, its Water & Sewerage Department (DWSD), is the collateral for a loan of $350 million to pay off the banks handling the litigation. Bloomberg estimates a cost of almost half a billion dollars, in a city where homeowners can barely afford the water services.

And they want our bodies. One-fifth of the human genome is privately owned through patents. Strains of influenza and hepatitis have been claimed by corporate and university labs, and because of this researchers can't use the patented life forms to perform cancer research.

4. Public Systems Promote a Strong Middle Class

Part of free-market mythology is that public employees and union workers are greedy takers, enjoying benefits that average private sector workers are denied. But the facts show that government and union workers are not overpaid. According to the Census Bureau, state and local government employees make up 14.5% of the U.S. workforce and receive 14.3% of the total compensation. Union members make up about 12% of the workforce, but their total pay amounts to just 10% of adjusted gross income as reported to the IRS.

The average private sector worker makes about the same salary as a state or local government worker. But the median salary for U.S. workers, 83% of whom are in the private sector, was $18,000 less in 2009, at $26,261. Inequality is much more pervasive in the private sector.

5. The Private Sector Has Incentive To Fail, or No Incentive At All

The most obvious incentive to fail is in the private prison industry. One would think it a worthy goal to rehabilitate prisoners and gradually empty the jails. But business is too good. With each prisoner generating up to $40,000 a year in revenue, the number of prisoners in private facilities has increased from 1990 to 2009 by more than 1600%, from about 7,000 to over 125,000 inmates. Corrections Corporation of America recently offered to run the prison system in any state willing to guarantee that jails stay 90% full.

Nor do privatizers have incentive to maintain infrastructure David Cay Johnston describes the deteriorating state of America's structural foundation, with grids and pipelines neglected by monopolistic industries that cut costs rather than provide maintenance. Meanwhile, they achieve profit margins of over 50%, eight times the corporate average.

As for public safety, warning signs about unregulated privatization are becoming clearer and more deadly. The Texas fertilizer plant, where 14 people were killed in an explosion and fire, was last inspected by the Occupational Safety and Health Administration (OSHA) over 25 years ago. The U.S. Forest Service, stunned by the Prescott, Arizona fire that killed 19, was forced by the sequester to cut 500 firefighters. The rail disaster in Lac-Megantic, Quebec followed deregulation of Canadian railways. At the other extreme is the public sector, and the Federal Emergency Management Agency (FEMA), which rescued hundreds of people after Hurricane Sandy while serving millions more with meals and water.

The lack of private incentive for human betterment is evident throughout the world. The World Hunger Education Service states that "Harmful economic systems are the principal cause of poverty and hunger." And according to Nicholas Stern, the chief economist for the World Bank, climate change is "the greatest market failure the world has seen."

6. With Public Systems, We Don't Have to Listen To "Individual Initiative" Rantings

Back in the Reagan years, a stunning claim was made by Margaret Thatcher: "There is no such thing as society. There are individual men and women, and there are families." More recently, Paul Ryan complained that government support "drains individual initiative and personal responsibility."

That's easy to say for people with good jobs.

Individual initiative? Our publicly supported communications infrastructure allows the richest 10% of Americans to manipulate their 80% share of the stock market. CEOs rely on roads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Perhaps most important to business, even as it focuses on short-term profits, is the long-term basic research that is largely conducted with government money. As of 2009 universities were still receiving ten times more science & engineering funding from government than from industry.

Public beats private in almost every way. Only the hype of the free-market media keeps much of America believing that "winner-take-all" is preferable to working together as a community.

ABOUT Paul Buchheit

Paul Buchheit is a college teacher with formal training in language development and cognitive science. He is the founder and developer of social justice and educational websites (UsAgainstGreed.org, RappingHistory.org, PayUpNow.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org .

“Jobs or Inequality”? That’s No Choice at All

 

Richard Eskow

by Richard Eskow

What's the economic issue we should focus on - jobs, or inequality? An increasing number of people, including the President and New York's new mayor, have suggested that inequality of wealth and opportunity is the defining issue of our time. But some of the folks at the Washington Post's "WonkBlog" are having none of it. First editor Ezra Klein declared that unemployment, not inequality, should be the left's defining issue. That drew responses from the likes of Paul Krugman and Jared Bernstein (and yours truly, here).

Bright Future

Then Dylan Matthews, a staff reporter on the team (and creator of the highly addictive "Knowmore" site) used a hypothetical scenario to challenge the importance of inequality. Matthews took to a platform called "TwitLonger" (which, parenthetically, looks a lot like something we used to call a "blog") to argue that people who consider inequality our society's defining issue "really think the gap between the rich and poor, separate from the actual positions of the rich and poor on their own, is the problem."

Matthews imagines a future America where poverty, hunger, and homelessness are eliminated; unemployment's below 4 percent; and GDP and median wages keep growing. If you think inequality's the problem, says Matthews, you won't be satisfied.

"If that sounds preposterous," writes Matthews, "then maybe it's because you don't actually think inequality is our biggest problem. You think something like poverty or joblessness or median wage stagnation is. And you're right."

False Choice

But that's a false choice. It won't be possible to achieve anything close to that scenario without addressing today's sky-high inequality. And while it's theoretically possible to imagine an economy which experiences both extreme inequality and healthy GDP growth, it's not possible to imagine this economy growing that way.

Here's why: Unemployment, under-employment, and long-term wage stagnation are suppressing consumer demand. That demand is the engine of a growing and healthy economy - one which is not overly dependent on "rentier" income (see Bob Kuttner here for more on rentiers), bubbles, or cost-inflated financial transactions for its growth, as ours currently is.

Higher tax rates for the wealthy and corporations - that is, returning them to something approaching historical levels - provides much of the revenue for programs which fight poverty and enhance social mobility, as well as for those which lead to job creation and wage growth. It's not an "either/or" between reducing inequality and increasing employment or reducing poverty; it's "and/and."

Seeds of Chaos

Klein argues otherwise on job creation, writing that "We've had nearly full employment during periods of high inequality (say, 2005) and we've had high unemployment during periods of relative equality (say, 1982)."

But other recessionary forces were at work in 1982. Employment levels were good in 2005, thanks to a series of bubbles (the housing bubble was inflating rapidly that year). But job creation was relatively weak during that decade, even before the crisis of 2008.

What's more, that decade, like the one which preceded it, was laying the groundwork for today's ongoing crisis with massive financialization of the economy, which included mass speculation and fraud; growing wage stagnation for the middle class; and increasing loss of social mobility. Celebrating 2005 employment statistics is like celebrating the pre-iceberg Titanic for its nautical safety.

Not Inequality Only

That's not to say that the Klein/Matthews argument is entirely without merit. We shouldn't focus exclusively on inequality, especially if we haven't reached consensus on its origins or its relationship to today's other economic problems. But there appears to be plenty of consensus about these things in the Bernstein/Krugman crowd, to which I subscribe, and I'd paraphrase that consensus view as follows:

Inequality is the result of economic forces such as increased financial speculation, financialization of economic profits, deregulation, trade policy, tax breaks, and other government policies which favor the wealthy and corporate interests. These forces have also led to today's high levels of unemployment and poverty.

What's more, these are not forces of nature. They're the products of government policy. Matthews makes an important point about that in a post entitled "The government is the only reason US inequality is so high." He points out that our "tax and transfer" policies are the main reason we score significantly lower than some European democracies, including Sweden, on the equality scale.

And, lest we forget: those government policies are the product of a money-driven electoral system.

False Future

The scenario of a prosperous but highly unequal future which Matthews later paints is, I would argue, a fundamentally improbable one. We've critiqued the right/libertarian dystopias of Tyler Cowen and Tom Friedman in the past, but those scenarios (created by Cowen and adopted by Friedman) are much more plausible than Matthews'. Cowen's clear on this point: there will be a small minority of very successful and prosperous individuals, surrounded by an impoverished "shanty town" majority.

While that future is anything but inevitable (although Cowen argues that it's exactly that), at least it has internal coherence. Matthews' does not. A consumer-driven economy - one in which people buy things -leads to high employment and robust wages. But the high-earning individuals in our society aren't making their profits from consumer goods. That's one of the main reasons they're doing so well: No employees and low overhead, at least in the US, means higher profits ...

Present Tense

... in the short term. But that kind of growth can't go on forever. And as the "rentiers" come up against the limits of growth, the temptation to cheat becomes irresistible. In other words, inequality is an unstable system subject to perpetual job-losing shocks and "corrections," along with wage-suppressing employment uncertainty.

Which, in turn, produces more inequality ...

But why are we arguing about hypothetical futures and ignoring the very real present? We're still in a situation where the "multiplier effect" - the amount of growth which can be achieved through government spending - is very high. The situation cries out for higher taxation on the wealthy and corporations, coupled with investment in jobs and growth. In other words, it calls out for the very same policies which would reduce inequality.

In the end it's one challenge, not two or three.

To Hate Inequality is Human

It may be true that people sometimes argue against inequality without considering the larger economic implications. That's only human - literally, as it turns out. Studies have shown that human beings are intrinsically "hard-wired" to dislike inequality. So, yes - people would still be dissatisfied in Matthews' hypothetical, unequal Utopia.

For that matter, I would be dissatisfied with a society in which middle-class and lower-middle-class earners have no chance to better themselves. In my opinion, the opportunity for self-improvement is a fundamental human right.

What's more, it's not just those individuals who lose out. When social mobility is denied to any group, society loses a vast talent pool filled with people who could make things better for everyone.

One Challenge

And an unequal nation's politics - even a hypothetical, prosperously unequal one - will inevitably be dominated by the wealthy few and their preferred policies of deregulation, under-spending, and lack of government investment. That would inevitably lead to future crises like those we face today.

So let's stop arguing about which issue to focus upon. It's the same fundamental challenge, no matter how you look at it, so why not work on fixing it instead?

​

---

Richard Eskow, an Affiliate Scholar of the IEET and Senior Fellow with the Campaign for America's Future, is CEO of Health Knowledge Systems (HKS) in Los Angeles.


From RT @ http://rt.com/news/wealthy-rich-85-billion-879/ and
Nation of Change @ http://www.nationofchange.org/public-beats-private-six-reasons-why-1382448019 and
Huffington Post via http://ieet.org/index.php/IEET/more/eskow20140104

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