“We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true.”
~Jeremy Hobbs - Executive Director, Oxfam International
It’s amazing how many people fail to understand the significance of income inequality; some view income inequality as somehow the result of an individual or a group of people simply lacking the work ethic or intelligence to “earn” a better life. That’s the most dangerous lie of course. It’s very unusual for a charity organization such as Oxfam to write a report that decries obscene wealth. They point out rightly the economic impact of income inequality over the entire system. In short – income inequality breaks down the entire system; it puts us all at risk. If we search out solutions to income inequality – we will find solutions to economic growth, education and prosperity.
When someone is sitting on $1 billion – there is simply no way that one person can purchase enough cars, homes, food etc to maintain an efficient marketplace. So – this individual hoards their wealth instead of spending it as any rational person would do. The hundreds of millions of dollars being placed in a bank vault get taken out of the economy and thus the economy is not only less efficient – people start losing jobs. Now tip the scales a bit and add in a large group of billionaires with excessive fortunes just sitting in a bank vault … you have even more people out of work as those now trillions of saved wealth fails to go back into the global economy.
The more unemployed people there are – the less power and options each individual worker has. When it’s all said and done – the wealthy and powerful pay their workers less because they can thus enriching the wealthy plutocrats even more. It’s a horrible downward cycle. Just consider how the top 100 billionaires in the world added $240 billion among them in just one year. That’s not their entire wealth; that’s just what they added to their wealth in 365 days. If you take that wealth – you could feed every starving person in the world and still be left with $180 billion just in additional profits they earned for one year.
You can read the report from Oxfam HERE; the solutions they propose to fix this problem:
“From tax havens to weak employment laws, the richest benefit from a global economic system which is rigged in their favour. It is time our leaders reformed the system so that it works in the interests of the whole of humanity rather than a global elite.”
Closing tax havens – which hold as much as $32 trillion or a third of all global wealth – could yield an additional $189bn in additional tax revenues. In addition to a tax haven crackdown, elements of a global new deal could include:
- a reversal of the trend towards more regressive forms of taxation;
- a global minimum corporation tax rate;
- measures to boost wages compared with returns available to capital;
- increased investment in free public services and safety nets.
The Guardian points this out HERE:
The report said the issue affected all parts of the world. “In the UK inequality is rapidly returning to levels not seen since the time of Charles Dickens. In China the top 10% now take home nearly 60% of the income. Chinese inequality levels are now similar to those in South Africa, which is now the most unequal country on Earth and significantly more unequal than at the end of apartheid.”
In the US, the share of national income going to the top 1% has doubled since 1980 from 10 to 20%, the report says. For the top 0.01% the share of national income is above levels last seen in the 1920s.
The World Bank and International Monetary Fund have argued that extreme income inequality undermines growth and both organisations have attempted to tie their loans to programmes that limit the growth of inequality.
This problem isn’t just a world problem with some poor country in Africa. In America – the top 1% of Americans now have more wealth than the bottom 90% combined (source). Or as Bernie Sanders pointed out – the 6 heirs of Sam Walton – founder of Wal-Mart – are now worth more than the bottom 40% of Americans combined (source). We won’t be able to maintain these levels of inequality and still maintain Social Security and Medicare. In the 50′s – we taxed the highest individuals over 90%; that tax rate is now down to just over 39% thanks to President Obama raising taxes on the rich for the first time since the 80′s. Our country will cease to exist as we know it unless we address the issue of income inequality. That’s no joke.
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