Inequality is growing – but it’s not inevitable

On the eve of the annual meeting of the World Economic Forum in Davos, Oxfam is again highlighting extreme economic inequality across the world. Our research shows that the 3.8 billion people who make up the poorest half of the world saw their wealth decline by 11 per cent last year, while billionaires’ fortunes rose 12 per cent – or $2.5 billion a day. And that 26 people now own the same wealth as the poorest half of the world – down from 43 in 2017.  

This staggering level of inequality is not inevitable but a result of political choices. This is positive – policymakers can do something to reverse this damaging and divisive trend – there is enough wealth in the world to provide everyone with a fair chance in life. Central to doing so is investment in public services as our new report, Public Good or Private Wealth?, outlines.  

It is not a revelation that free quality healthcare and education are big levellers when it comes to addressing economic inequality and helping ensure all people are able to enjoy their rights and a life of dignity, free from poverty.  

And yet throughout the world, many governments are exacerbating inequality by failing to invest enough in public services that are key to reducing it. It is estimated that around 10,000 people die, every day, for lack of healthcare. There are 262 million children who are not in school, often because their parents cannot afford the fees, uniforms or textbooks. 

Critical to ensuring proper investment in public services is effective and progressive taxation. And again, many governments are failing to adequately tax both corporations and wealth. In fact in many countries corporate tax rates have been falling, while in some countries tax rates for the richest are at near-record lows. In 2015, just four cents in every dollar of tax revenue collected globally came from taxes on wealth, while the UN estimates corporations deprive developing countries of $100 billion each year through tax avoidance.  

By way of illustration, if the world’s richest one per cent paid an additional 0.5 per cent tax on their wealth it would raise an estimated $418 billion a year. This would be enough to educate every child currently not in school and provide healthcare that could prevent three million deaths.  

A fairer, more sustainable tax system would be designed to ensure that the richest taxpayers who can most afford it – both individuals and companies – pay more and that loopholes are closed so tax bills cannot be dodged. Unfortunately, many countries are increasingly reliant on payroll taxes and VAT, which disproportionately affects the poorest.  

It is worth remembering that its often women who are the hardest hit by extreme inequality. Women are more likely to be poor, particularly during their reproductive years, because of the level of unpaid care work they are expected to do. To quantify this, if all the unpaid care work done by women across the globe was carried out by a single company, it would have an annual turnover of $10 trillion – 43 times that of Apple. 

Pratima (pictured), who lives in a slum in eastern India, lost both her twins after experiencing poor quality public healthcare. There was no ambulance available to get her to hospital, no incubator for her premature child, and no expert advice when she needed it. These services, too often only available for those who can afford private care, could have saved their lives.

One of the great achievements in recent decades has been the huge reduction in the numbers of people living in extreme poverty, defined by the World Bank as $1.90 per person per day. Yet new evidence from the World Bank shows that the rate of poverty reduction has halved since 2013. The number of people in extreme poverty is actually increasing in sub-Saharan Africa and nearly half the global population – 3.4 billion people – are barely scraping a living on less than $5.50 a day. 

Unless governments act to reduce inequality, Sustainable Development Goal (SDG) 1 to end extreme poverty by 2030 will remain out of reach. Public Good or Private Wealth? calls on governments to set concrete, timebound targets and action plans to reduce inequality as part of their commitments under SDG 10 on inequality – including the UK which in 2019 will be completing a review of its progress towards meeting the goals both at home and internationally. These plans should include action in the following three areas:

1. Delivering universal free health care, education and other public services that also work for women and girls. 
2. Ending the under-taxation of rich individuals and corporations.
3. Freeing up women’s time by easing the millions of unpaid hours they spend every day caring for their families and homes. 

To end poverty, we must stem the tide of extreme economic inequality and give everyone the chance, not only to live, but to succeed. Inequality is not inevitable – it is a political choice. Concrete policy action can be taken to reduce it. When we live in a world of such abundance, no one should be condemned to an earlier grave or a life of illiteracy simply because they were born poor.

Image credit: Atul Loke, Panos / Oxfam
Claire Jordanoski Spoors is Advocacy Adviser at Oxfam GB