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inequality

What’s wrong with wealth?

Lan, 32, works in a factory in Dong Nai province, southern Vietnam, which produces shoes for global fashion brands. She works on 1200 pairs of shoes a day, yet she can’t afford to buy even one pair for her son on the amount she earns each month. Photo: Sam Tarling/Oxfam

Blog post by Nick Bryer
Oxfam Global Inequality Lead (Davos)

Oxfam’s new inequality report is bound to ruffle feathers at the World Economic Forum – the annual get together of the rich and powerful in Davos, Switzerland.

Some will accuse us of being ‘anti-rich’, and of focusing on billionaires because we’re jealous of their success. They will say we should be focusing on the hundreds of millions of people who are still trapped in poverty, rather than on those at the top who are doing so very well for themselves.

Two sides of the same coin

Don’t be fooled. We are absolutely focused on people living in poverty. What has become increasingly clear over the years, however, is that there’s no way we’re going to end poverty unless we tackle extreme wealth too. They are two sides of the same coin.

The reality is that all too often the fortunes of the super-rich have been amassed at the expense of the rest of us – and especially the workers and producers who are at the bottom of every global supply chain.

An economy for the rich

The insatiable pursuit of profit by giant corporations and their rich shareholders is fuelling an epidemic of tax dodging that is depriving developing countries of at least $170 billion every year – money that should be going to schools and hospitals. It is driving down wages and working conditions across the globe, leaving hundreds of millions of people in dangerous and difficult jobs, struggling to earn enough to get by.

It is no coincidence that most of these people are women.

The effects of inequality

Women like Lan, who is a garment worker in Vietnam, working in a factory far from her home. Lan’s pay is so low, and she has to work so much overtime, that she goes months at a time without seeing her young children. She will earn in her lifetime what a CEO of a top garment company earns in just ten days. Or Dolores, who works in a US poultry factory, and has to wear diapers to work because she isn’t allowed to take toilet breaks. And that’s in the richest country on earth!

A broken system

So yes, if people are getting rich at the expense of others, we have a problem with that.

If companies are paying out huge dividends to their rich shareholders and bumper pay packets to their top executives, while workers in their supply chains aren’t earning enough to feed their families, then yes, we have a problem with that.

If billionaire fortunes are the result of monopolies, of crony capitalism, of vast inherited wealth – the gilded results of a broken economic system that rewards wealth rather than work – yes, we have a problem with that.

Of course, it is true that some billionaires contribute a lot to our societies.  Many are pioneers in their fields, innovators and risk-takers who have created things we can all enjoy and benefit from. Many of them are very generous philanthropists, giving away vast sums of money to help those less fortunate than them.

But this doesn’t change the fact that they are the beneficiaries of a broken economic system that is enriching them first and foremost at the huge expense of millions of others who remain trapped in poverty.

Toward a fairer, more human economy

We need a different kind of economy now. One that shares value more fairly. One that treats women as well as it treats men. One that increases prosperity and well-being for all, without trashing the planet in the process. An economy that rewards work, not wealth.

We need to see governments acting in the interest of ordinary workers – implementing and enforcing living wages, limiting excessive rewards for investors and top executives, regulating new technologies to ensure they benefit the majority, cracking down on tax dodging, investing in healthcare and education for all.

And we need businesses that are ready to act in the interests of their workers and wider society, and not just rich shareholders. That means more responsible tax behaviour, it means ensuring better working conditions, it means no longer paying out big dividends until they can be sure that everyone in their supply chain is being paid enough to live a decent life.

Say goodbye to poverty

These are necessary, practical steps that can help us consign both extreme wealth and extreme poverty to the history books.

You can help spread the word and join the growing global demand for governments and big businesses to do things differently.

Richest 1% of Kiwis bagged 28% of all wealth created last year

A staggering 28 per cent of all wealth created in New Zealand in 2017 went to the richest 1 per cent of Kiwis.

While the 1.4 million people who make up the poorest 30 per cent of the population got barely 1 per cent, according to new research released by Oxfam today.

The research also reveals that 90 per cent of New Zealand owns less than half the nations wealth.

The research forms part of a global report released to coincide with this week’s annual meeting of political and business leaders at the World Economic Forum in Davos, Switzerland. New Zealand Trade Minister David Parker is scheduled to attend the gathering, which focuses on global politics, economics and social issues.

The full report, called Reward Work, Not Wealth and released at 1pm this afternoon [Monday], will reveal how the global economy enables a wealthy elite to continue to accumulate vast wealth while hundreds of millions of people struggle to survive on poverty pay. It will reveal how globally big business and the extremely wealthy are fuelling the inequality crisis by avoiding taxes, driving down wages for their workers and the prices paid to producers, and investing less in their business, say Oxfam.

Last year, Oxfam’s research revealed two New Zealand men owned more wealth than the poorest 30 per cent of the adult population; this startling statistic remains the same. Graeme Hart, New Zealand’s richest man, has increased his fortune by US$3.1 billion in 2017 to US$9.5 billion (up from $US6.4 in 2016).

Rachael Le Mesurier, Executive Director at Oxfam New Zealand says: “Trickle-down economics isn’t working. The extreme gap between the very rich and the very poor in our country is shocking. As new wealth is created it continues to be concentrated in the hands of the already extremely wealthy.

“2017 was a global billionaire bonanza. This is not a sign of success but of economic failure. Experts are clear, high levels of inequality are bad for economic growth – for everyone except the small number of super-rich, who on a global scale are often able to translate their disproportionate control of resources into disproportionate influence over political and economic decision making. This can lead to policies that are geared towards their interests, often at the expense of the majority.

“To end the global inequality crisis, we must build an economy for ordinary working people, not the very few rich and powerful.
“Kiwis love fairness, not inequality. Governments can tackle extreme inequality here and globally by ensuring the wealthy and multi-nationals pay their fair share of tax by cracking down on tax avoidance – then using that money to make our country and the global economy a fairer place.”

“Let’s have a national conversation about tax. Labour’s Tax Working Group and the opportunity it provides New Zealand to examine the structure, fairness and balance of the New Zealand tax system, is a huge opportunity to ensure our economy reflects the fairness that is innately Kiwi. It also offers an opportunity for New Zealand to provide an example to many developing countries in using a fairer tax system to reduce the extreme gap between the very rich and the very poor. Oxfam’s report includes a strong list of recommendations, backed up by experts, for both governments and multi-nationals that can help us achieve this.”

The two richest New Zealanders are Graeme Hart and Richard Chandler. They own wealth of US$9.5billion and US$1.9billion respectively.

Oxfam’s 2018 report is the most recent in a series of reports that has analysed economic inequality and its drivers. Each of these reports was published to coincide with the annual meeting of the World Economic Forum in Davos. Each year the report has included an analysis of wealth inequality which draws on data from the Credit Suisse Global Wealth Databook and the Forbes list of billionaires. This Credit Suisse Databook is produced annually and is widely recognised as providing the best available data on global wealth.

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Oxfam’s reaction to the new US tax plan

In response to the tax plan outline proposed jointly by President Trump and Congressional leaders, Paul O’Brien, Oxfam America’s Vice-President for Policy and Advocacy, made the following statement:

“The tax plan introduced today is a blueprint for increased inequality. There is no doubt that the biggest winners in our global economy are those at the top, and this proposal will skew that even further.

“Instead of the real reform the President promised on the campaign trail, this plan offers more tax cuts for the rich and budget cuts for the poor. While President Trump was elected on his promise to fix the rigged political and economic system, these proposals will only further rig the rules in favor of the rich and powerful while harming poor families in the US and in developing countries worldwide.

“Every year corporate tax dodging costs Americans approximately $135 billion. The same tricks, schemes, and offshore tax havens sap an estimated $100 billion from poor countries – revenue that should go towards building schools, bridges and hospitals. The plans released today do nothing to solve these problems.

“Worse yet, the ideas offered today perversely reward the very companies that dodge the most taxes. This plan will incentivize further use of offshore tax havens that harm America and poor countries alike. Huge tax cuts for the wealthy and big corporations will have to be paid for by cuts in anti-poverty programs at a time when need for global engagement and solutions to inequality is only growing. If anything the plans will incentivize companies to offshore more jobs and profits.

“The President and Congress should go back to the drawing board and start over with a plan that works with our allies around the world to stem tax haven abuse. Only through cooperation can we avoid a global race to the bottom where everyone but the richest will suffer.”

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World faces unprecedented famine threat, G7 must take action

Group of Seven leaders meeting in Taormina, Sicily, this week should take the lead in fighting famine and immediately fund nearly half ($2.9 billion) of the UN’s urgent appeal to avoid catastrophic hunger and more deaths, urged Oxfam today. Without an immediate and sweeping response, this crisis will spiral out of control.

Further delay will cost more lives.

Deadly famine is already affecting 100,000 people in parts of South Sudan and threatens to extend to Yemen, Somalia and northeast Nigeria. Widespread famine across all four countries is not yet inevitable, but G7 leaders need to act now with a massive injection of aid, backed with a forceful diplomatic push to bring an end to the long-standing conflicts that are driving this hunger crisis.

Winnie Byanyima, Executive Director of Oxfam International, said: “Political failure has led to these crises – political leadership is needed to resolve them. G7 leaders cannot walk away from Taormina without providing emergency funding and clear solutions to tackle the root causes: the world’s most powerful leaders must now act to prevent a catastrophe happening on their watch.

“Our world of plenty today faces an unprecedented four famines. If G7 leaders were to travel to any of these four countries, they would see for themselves how life is becoming impossible for so many people: many are already dying in pain, from disease and extreme hunger.”

If each G7 government contributed its fair share to the UN’s appeal for $6.3 billion for all four countries, Oxfam estimates that this would raise almost half of the total required. These UN appeals are still only 30 percent funded across the four countries.

No G7 country has provided its fair share of funding for all four countries.

G7 commitments to food security and nutrition
In 2015, the G7 committed to lift 500 million people out of hunger and malnutrition, yet 30 million people across the four countries are now experiencing severe hunger – 10 million of whom are facing emergency and famine conditions. The number of people experiencing acute food insecurity is estimated to have risen by about 40 percent over the last two years. G7 leaders should uphold the commitments they have made on hunger and malnutrition and give more importance to crisis prevention and supporting smallholder farmers’ resilience in order to reduce needs over time.

Conflict and famine
In addition to funding the UN appeal, G7 leaders should press for immediate ceasefires and inclusive peace processes, as well as for safe access to places where aid agencies are having trouble reaching people in need. Conflict has driven millions of people from their homes and communities, cutting them off from their fields, jobs, food, and markets.

In Yemen, countries including G7 members continue to supply weapons, munitions, military equipment, technology, or logistical and financial support for military action that is in contravention of the rules of war. In South Sudan, three years of conflict have displaced more than 3.5 million people – including 2 million children. Somalia also remains an active conflict where access is limited by Al Shabaab, as well as other parties involved in the conflict. Nigeria’s conflict has spread into neighboring Niger, Chad and Cameroon forcing 2.6 million people to flee and leaving nearly 11 million people in need of emergency aid.

Famine and hunger are the glaring symptoms of larger challenges that include climate, migration and inequality which must all be tackled together if progress is to be made.

Climate
Climate change is not a distant future threat: it is helping fuel a humanitarian disaster in Somalia and other countries in the Horn of Africa.  There could be no stronger call to G7 leaders to take action on climate change than suffering on this scale. The G7 members must make it clear that they are committed to implementing the Paris Agreement. It is vital that the summit produces a clear and strong outcome on climate change action – no excuses.

Migration
When G7 leaders have chosen a symbolic place to meet in Sicily – Europe’s coast, where thousands of people have died trying to reach safety and security – it is reprehensible that they are set to overlook the suffering of refugees and migrants on their doorstep, and ignore the challenge of migration and forced displacement. Rich countries should lean into this challenge, exercise positive global leadership and compassion, and agree to concrete steps that protect the dignity and rights of people on the move.

Inequality
When one in 10 people go to bed hungry every night, famine represents one extreme end of the inequality spectrum and is in itself the result of the instability which inequality helps to drive. Oxfam is calling on G7 leaders to commit to the developing a fully fledged action plan to tackle growing inequality, in line with their commitment to the 2030 Agenda and Sustainable Development Goals.

Notes to editors

1. Download Oxfam’s latest policy report on what governments need to do to avert the threat of global famine: https://www.oxfam.org/sites/www.oxfam.org/files/bn-four-famines-190517-en.pdf

2. Oxfam will be attending at the G7 summit with spokespeople for interview on the ‘four famines’, inequality, climate and migration in English, Italian, French, Spanish, German, Chichewa/Nyanja and Tumbuka.

3. Oxfam will be presenting a number of stunts over the period of the summit on the themes of the 4 famines, climate and migration. The first will take place on the morning of Thursday 25 May and will be on the subject of the four famines, taking place near the International Media Centre in Giardini Naxos. Contact us for further details.

4. Oxfam can offer journalists the opportunity to visit some of our programs supporting migrants in Sicily. Contact us for further details.

5. The UN ‘four famines’ appeal was originally launched for a total of $5.6 billion  http://interactive.unocha.org/emergency/2017_famine/index.php  and was later revised up to $6.3 billion after the Somalia response plan was updated in earlier this month http://reliefweb.int/report/somalia/somalia-humanitarian-response-plan-may-2017-revision

6. There has been a rise of 40 percent in the number of people experiencing acute food insecurity over the last two years according to FEWSNET: http://www.fews.net/global/alert/january-25-2017

7. Oxfam’s fair share analysis: Oxfam calculates its fair share analysis by comparing data from the UN’s Financial Tracking System (FTS) and information received from G7 members with their national income. No G7 country has provided its fair share of funding for all four nations facing famine. (The FTS website may not have been updated with recent pledges.)

According to UN figures, as of May 18, only 30 percent of the $6.3 billion needed has been received. Country by country, this means that Nigeria is only 21 percent funded; Somalia, 33 percent; South Sudan, 42 percent; and Yemen, 21 percent.

G7 leaders must commit to fund their fair share for each country, while pressing other donors to do their part, in order to prevent more people from dying of hunger. These contributions alone would mean $492 million for Nigeria, $703 million for Somalia, $764 million for South Sudan, and $964 million for Yemen.

G7 must also commit to increase aid for longer term solutions that build resilience and improve food security and nutrition, in order to prevent further crises from escalating into disasters.

Only one G7 leader (UK) has provided its fair share for Yemen, two (UK and Canada) for South Sudan, two (UK and Germany) for Somalia and two (Canada and Germany) for Nigeria.

The United States Congress commitment of $990m to address famine in the four countries is welcomed, but this must be urgently translated into aid on the ground if the impact of famines is to be reduced.

View or download Oxfam’s fair share analysis here: http://oxf.am/ZERG.

8. About 30 million people are are experiencing alarming levels of hunger in Nigeria, South Sudan, Somalia and Yemen – 10 million of them are facing emergency and famine conditions. (10 million people are at IPC4 and 5, and a further 20 million people are at IPC3.)

• South Sudan: 4.9 million people dangerously hungry (IPC Phases 3-5, including 100,000 already in famine)
• Yemen: 17 million people dangerously hungry (IPC Phases 3-4)
• Somalia: 3.2 million people dangerously hungry in Somalia (IPC Phases 3-4)
• Nigeria: 4.7 million people dangerously hungry in northeast Nigeria (IPC Phases 3-5)

9. Climate change is helping to fuel a humanitarian disaster in East Africa where 13 million people are dangerously hungry and Somalia is on the brink of famine: https://www.oxfam.org/sites/www.oxfam.org/files/mb-climate-crisis-east-africa-drought-270417-en.pdf

10. Oxfam is responding directly and with local organizations across the affected countries delivering food and other essential aid including cash so that people can buy from local markets. It is striving to ensure people have clean water to be used for drinking, cooking, washing and sanitation and to fight waterborne diseases such as diarrhea and cholera. We are also helping vulnerable communities, focusing especially on women, to stay safe and access aid in these unstable circumstances.