Extreme Global Inequality Is Out of Control – Something Must Be Done

Coinciding with the World Economic Forum in Davos this week Oxfam has issued a report – entitled An Economy for the 1% – outlining how wealth inequality has grown to the stage where 62 of the world’s richest people own as much as the poorest half of the world’s people combined. To put it in numbers, the richest 62 people on Earth own as much as the poorest 3,600,000,000 people.

The wealth of the poorest half- 3.6billion people – has fallen by 41%, or a trillion US dollars, since 2010. At the same time, the wealth of the richest 62 people has increased by more than half a trillion US dollars to $1.76trillion.

This inequality is deepening, even over the last 12 months.

In 2010, 388 people had the same wealth as the poorest half of humanity. The number has continued to fall each year, and is now 62 in 2015.

Furthermore, it is not the case that whilst the rich are getting richer, everyone else is also benefitting as supporters of ‘trickle down’ economics argue.

The stark truth is that the total wealth of the poorest half of humanity has fallen by nearly £700billion since 2010, even though the number of people in this group has risen by 400million. And whilst it is often pointed out that global poverty is falling, in many parts of the world poverty is actually on the rise, with the World Bank noting that “China alone [has] accounted for most of the decline in extreme poverty over the past three decades.”

This is also a problem in terms of economic development internationally. As Oxfam International Executive Director Winnie Byanyima said this week “the poor are hurt twice by rising inequality — they get a smaller share of the economic pie and because extreme inequality hurts growth, there is less pie to be shared around.”

Extreme inequality is out of control and something needs to be done. Tackling inequality should be central to our vision for international development.

In November, the Government published a strategy document setting out a new framework for the aid budget. The document mentions security thirty two times but fails to mention inequality.

As Shadow Secretary of State for International Development, I agree with Mark Goldring of Oxfam GB that a crackdown on global tax havens is a necessary step towards ending this rampant global inequality. Indeed, it is also a necessary step towards international development more broadly.

Tax havens are enabling both multinational companies and extremely wealthy individuals to hide more and more money offshore.

This of course includes British individuals and profits made by companies due to British operations.

Three years ago, David Cameron said he would make tax dodgers “wake up and smell the coffee.”

Yet, in November the Public Accounts Committee of MPs analysed that HMRC had made “little or no progress” on measures to reveal the extent of tax avoidance here in Britain and George Osborne’s tax avoidance crackdown missed its target by hundreds of millions according to the Office for Budget Responsibility.

The Oxfam report says that the situation may be even worse than this in terms of the world’s poorest countries, estimating that as much as 30% of African financial wealth is held offshore.

How much extra money could end up helping the world’s poorest if there was a real crack down on tax avoidance here and internationally?

A Labour Government will genuinely tackle tax avoidance and work for ambitious global agreements on international development that seek to tackle inequality and its drivers.