Maverick Citizen

Tuesday editorial

World Inequality Report shows global wealth disparity has reached record levels

Findings in the World Inequality report reveal that the share of the bottom 50% of the world in total global wealth is 2% while the share of the top 10% is 76%. (Photo: worldbank.org / Wikipedia)

As we face converging storms of environmental destruction, pandemic disease, inequality and the climate crisis it’s time for democratically elected governments to reclaim power and resources from elites and to put human rights and the public and planetary interest at the heart of governance.

Last week Maverick Citizen’s editorial warned about the danger of ignoring scientific evidence in relation to SARS-CoV-2 and HIV. But given that Covid is as much a social disease as a viral pathogen, it’s important to be aware that whilst we try to overcome the Covid-19 pandemic there are other predictable crises hurtling down the line. 

Later this week the US administration is hosting a Summit on Democracy. The summit of world leaders, including some of those with the worst track records on human rights, is meant to reinforce the world’s jaded democracies. By pure coincidence, it’s also the week in which the findings and data from the 2022 World Inequality Report are being launched. And on Friday International Human Rights day coincides with the 25th anniversary of the signing of our Constitution.

These issues and events are not unconnected. 

The World Inequality Report 2022, available here, presents the most up-to-date and complete data on the various facets of inequality worldwide: global wealth, income, gender and ecological inequality. The data and analysis are based on several years’ work by more than 100 researchers from around the world. It is published by the World Inequality Lab, a group of analysts that includes Thomas Piketty. The data on which it is based is all available for scrutiny.

The report shows how in 2021, “after three decades of trade and financial globalisation, global inequalities remain extremely pronounced … about as great today as they were at the peak of Western imperialism in the early 20th century.”

It notes how across the world “Nations have got richer — but governments have got poorer” documenting how:

“Over the past 40 years, countries have become significantly richer, but their governments have become significantly poorer. The share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in private hands.”

At a media briefing its lead author, Lucas Chancel from the Paris School of Economics described how in 2020, during the first waves of the Covid-19 pandemic, global billionaires’ wealth grew by $3.7 trillion. According to Chancel, this amount is “almost equivalent to the total annual spending on public health by all governments in the world before the pandemic — approximately $4-trillion.” (Total spending on health from all sources was $7.8-trillion in 2017 according to the WHO)

But in the same period, 100 million more people around the world have been thrown into extreme poverty as a result of Covid.

And here’s the rub that makes a calamity of so many people’s lives. 

This increase in the wealth of the 0.1% of the world’s population has taken place at the very same moment as governments have struggled to fund interventions to protect poor people from Covid. Because of ‘funding constraints’ they have failed to fulfil legal duties under international law and national Constitutions that — like ours — require them to “respect, protect, promote and fulfil human rights”.

There is a clear reason for this.

One of the greatest problems society has suffered in the 21st century is the way democratically elected governments have progressively ceded the power the law entrusts to them. They have surrendered or sold it to elites who threaten governments with fears of disinvestment and the terror of downgrading by the unaccountable ratings agencies. 

As a result, most governments find themselves financially incapable of carrying out their social obligations. The inability to carry out the popular will has gutted democracy. Consider this:

Isn’t it ridiculous that COP26, a meeting of governments that was meant to steer humanity away from climate catastrophe, failed for want of a commitment from developed countries to raise enough money to fund a $100-billion climate finance facility to assist developed countries make a just and equitable energy transition? 

“We can’t afford it,” they plead, yet Elon Musk’s personal net worth is reported by Forbes to be nearly $300-billion. One man literally has enough money to rescue the planet.

Bill Gates, who would have us believe that he is the saviour of global health, has a net worth of $136.5-billion in 2021.

Restore democratic governance, end the power of elites, 

Covid-19 laid these inequalities bare. Then it made them worse. Before March 2020, the world economy was already in a crisis, but since then pandemic economics, just like war economics in previous moments of crisis, have been used to boost elite wealth and power

Big pharma, for example, has never been less accountable. It holds the world to ransom.

It is not just social justice activists who argue this. Last week Dr Tedros Adhanom Ghebreyesus, WHO Director-General, told a Special Session of the World Health Assembly, that:

“Global health security is too important to be left to chance, or goodwill, or shifting geopolitical currents, or the vested interests of companies and shareholders.”

In his address to the nation on November 28th, President Ramaphosa said South Africa was joining the struggle “for equal access to vaccines for everyone.” 

On 29 November a group of nearly 40 UN Special Rapporteurs issued a statement saying that “addressing the health crisis equitably must take priority over profit maximisation by corporations and vaccine hoarding by high-income countries.” 

But the question is; will any of these pious words be turned into actions. It seems unlikely because our leaders are snared in the status quo and beneficiaries of it. Decisive action is needed to rescue democracy and society. But we doubt the Summit on Democracy will resolve that private power, including that of big pharma, needs to be drastically curtailed. 

Which brings us home ….

On December 10th SA will celebrate the 25th anniversary of its Constitution. Thanks mainly to civil society activists it’s still alive. But it is chronically ill. The failure to realise the rights promised to the poor, on the grounds that we don’t have enough money, is rapidly undermining confidence in constitutionalism and the rule of law. 

South Africa is an example of one of those countries that is rich, but whose government is poor. According to the World Inequality Report:

  • The top 10% in South Africa earn more than 65% of total national income and the bottom 50% just 5.3%.
  • The top 10% own close to 86% of total wealth and the share of the bottom 50% is negative, meaning that the group has more debts than assets. Since 1990, the average household wealth for the bottom 50% has remained under zero.

Failure to narrow inequality by introducing measures such as a wealth tax and a Basic Income Grant (BIG) is ushering in a future of instability in South Africa, including the possibility that in a year from now the corrupt Zuma faction of the ANC can try and mobilise popular discontent to regain control. 

These are reasons why the Government should act decisively on its constitutional mandate to build a society founded on equality and social justice. After 25 years of promises, time is running out. DM/MC

Sidebar

The crime of inequality:

Some facts from the World Inequality Report:

  • The share of the bottom 50% of the world in total global wealth is 2% while the share of the top 10% is 76%.
  • Between 1995 and 2021, the top 1% captured 38% of the global increment in wealth, while the bottom 50% captured a frightening 2%.
  • The share of wealth owned by the global top 0.1% rose from 7% to 11% over that period and global billionaire wealth soared.
  • Overall, women’s share of total incomes from work (labour income) neared 30% in 1990 and stands at less than 35% today.
  • More than 80% of the world’s vaccines have gone to G20 countries; low-income countries, most of them in Africa, have received just 0.6% of all vaccines.

DM/MC

 

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All Comments 7

  • One difficulty with wealth inequality is big numbers quickly make what appears to be a lot, irrelevant.

    Musk is presently the wealthiest person. If one took his (unrealized) wealth at $280b and confiscated all of it : $40 per person globally.

    One can go down the list and confiscate the total wealth of the wealthiest 100 and still generate (one-off) maybe $1500 per person.

    Next year, confiscate the wealth of the next 900 on the list for another $1500.

    The year after? There is no wealth as there will be no business or capital left to employ anybody. Go back to stone ages.

    Wealth of individuals is entirely irrelevant, even if the wealthy would not like to be told this.

    • Dear Johan, I think your missing the point, which is the trends in the concentration of wealth and increasing disparity of incomes as an outcome of our current economic system and orthodoxy. The relevance is not removed by postulating confiscation and (utterly unrealisable) global distribution of the nominal wealth of the upper echelon (which is in no way suggested or implied in Heywoood’s article). We have to address the practices and power relations that drive the increasing inequality, of which the hyper-rich are a symptom and indicator. Dividing their wealth by global population is meaningless. The financial system needs a radical – from the roots – overhaul, inter alia to reduce the power of the financial sector and deference to so-called ‘market forces’, to which governments are abrogating their responsibilities.

      • That “financial system needs a radical – from the roots – overhaul” is limiting the overpopulation of the world. Only have as many children as you can afford. Then poverty will drop like a rock!

      • Richard:

        The title of the report is Inequality, which derives from a comparison. The report does not say many people don’t earn enough.

        It calls inequality a “crime”, as if the luckier / successful are the cause of poverty. It is intellectually corrupt and offensive. Apple (the most valuable company in the world) generates 100% of its income from the top 20% of the world. That reality will apply for most of the top companies and by extension their shareholders.

        Governments should reform their tax systems, capture fair taxes AND then spend those taxes wisely. Should the wealthy do this for them too?

        Researchers need to become honest (I assume they cannot be the idiots). This week there was a research paper out claiming that the top 10% in SA earn R780k per year and the bottom 50% earn R12k. The researchers focus only on wages and totally ignore the R1.1 trillion (yes a t not a b) that this country spends on social support (free housing education healthcare water electricity university, subsidised everything, plus grants). Not my number, the finance minister’s number. The free services are a proxy for income unless the researchers really are idiots. The 1.1 trillion translates to another R36k per year.

        But as I pointed out, it is futile fixating on the wealth of the top few. It makes for sensational headlines but the wealth of individuals is inconsequential even if researchers appear fixated on it.

  • We should all agree that this is a crisis waiting to happen but this isn’t something average Joe can solve. What we have is a chronic dearth of leadership where our current crop of leaders would be hard pressed to lead a chain gang. For the 1 percenters there’s no such thing as national loyalty, their only loyalty is to boost their wealth even more. And please don’t give me the argument that we need these champions of industry because they do precious little for the global economy as most of their wealth is tied up in convoluted trust accounts in the many tax havens.
    We will however reach a tipping point where the poorest of the poor, meaning around 90% of the population (and lets forget about the middle class because there is none) reach a point of no return where death would be preferable to living.

  • While I agree with the need to address poverty and wealth inequality, pushing through measures like BIG that are unaffordable in an environment of extreme corruption and near zero accountability, without considering the impact on our economy in general, is also not going to work.

    All suggestion and studies that I have seen on this topic, even the ueber biased ones from the IEJ and black sash all require the end of corruption and increases in taxes across the board, including a small middle class, that has been severely under strain. This by the way includes the ever growing black middle that is just finding its footing.

    All other social systems and experiments into income grants in other countries have a larger tax base, more stable economies and functioning criminal justice system to implement accountability. This needs to be acknowledged!

    Why are we not solving corruption with the same urgency as BIG is being pushed as a solution?

  • Let’s consider the cause/drivers of wealth generation. Primarily an open free market and incentive to be inventive, courageous – risk taking and the like. Governments by their very nature do this poorly. Reviewing world data whilst this huge wealth creation has occurred, absolute poverty has decreased, education and availability of health facilities has improved. So something in the current way of things works. That said when I entered the work place some 50 years ago the income of the boss, the CEO, was about 30 times those on the shop floor. It’s now around 300. There has to be something screw ball about that outcome. Fixing it is not bringing down the free market based system but working out how to tweak the western developed world free market, to level the playing field whilst keeping Governments noses out of it. A self regulating system. A Nobel Peace Prize awaits. I hope I’m alive to see it become a reality.