Bousquet writes: "Once upon a time it was impossible to even think of what inequality looked like around the world. Today, it's being assessed globally - and the pictures emerging are all too ugly."
Man sleeps on a bench. (photo: Getty)
29 December 17
With 2018 on our doorstep, developing countries can still adopt new approaches to sustainable and sustained future development.
nce upon a time it was impossible to even think of what inequality looked like around the world. Today, it's being assessed globally – and the pictures emerging are all too ugly.
The latest World Inequality Report, published on December 14, indicates that since 1980 the world's richest 0.1 percent (7,000,000 people) have boosted their wealth by as much as the poorest half of mankind: 3.8 billion people. Since then, the richest 1 percent have 'captured' 27 percent of the world's wealth growth; the 0.1 percent have gained 13 percent and the very top 000.1 percent (76,000 people) have 'collected' 4 percent.
Turbo-charged Inequality
The 100 researchers worldwide who contributed to the report found that inequality has worsened in both the European Union and the United States in the 40 years under review, but the situation is much worse in the United States.
The current annual income of the super-rich 1 percent in the United States has risen since 1980 by 205 percent, while for the top 000.1 percent it has ballooned by 636 percent. At the same time, the average annual wage of the bottom 50 percent (117 million adults) has stagnated at about US$16,000.
The report says the stark difference in wealth distribution in the United States is because "the tax system has become less progressive; the federal minimum wage has collapsed; unions have been weakened, and access to higher education has become increasingly unequal." In addition, "deregulation in the finance industry and overly-protective patent laws have contributed to booms on Wall Street and in the healthcare sector, which now make up 20 percent of national income."
U.S. President Donald Trump's highly vaunted 'Christmas gift' tax bill, the report says, will not only reinforce this trend, but "will turbocharge inequality in America" because what's presented as "a tax cut for workers and job-creating entrepreneurs" is instead "a giant cut for those with capital and inherited wealth." It will therefore "overwhelmingly benefit shareholders who can reap their additional profits without any extra work."
While inequality has also increased in Western Europe, the researchers found, it's been at a lower rate "as wage inequality has been moderated by educational and wage-setting policies relatively more favorable to low- and middle-income groups."
Hidden Hooks
Former U.S. presidential candidate Senator Bernie Sanders has exposed the hidden hooks in Trump's fishy tax plan. He says that in order to curb a US$1.4trillion deficit accumulated over 10 years, the Trump plan to railroad US$1.5 trillion in tax cuts through Congress will eventually amount to early and permanent payback rewards for the super-rich who backed his 2016 election campaign, eventually condemning the middle-class and poor to eternal economic damnation.
Sanders posits that while the tax cuts for the corporations and the super-rich are permanent, benefits to working families will eventually expire after a few years, leaving as many as 83 million middle-class families paying more taxes, but Sanders is not the only critic of the loaded Trump tax bill.
Philip Alston, the United Nations special rapporteur on extreme poverty and human rights, was equally scathing in his condemnation of the Trump administration's policies and their effect on America's poor.
After touring six American states during a two-week period, he not only denounced growing inequality in the world's richest country, but also accused President Trump of racing to turn the United States into "the world champion of extreme inequality."
But exactly who are the world's richest and poorest: the 1 percent and the 99 percent?
Richest of the Rich
According to the Bloomberg Billionaires Index, the world's richest person is Jeff Bezos, the founder and chief executive of Amazon, with his US$98.8billion fortune. In the space of the past year, his wealth has increased by a whopping US$33billion.
The world's five richest people are Bezos, Microsoft founder Bill Gates, Berkshire Hathaway boss Warren Buffet, Zara owner Amancio Ortega and Facebook founder Mark Zuckerberg, in that order. Between them, they own US$425billion in assets, equivalent to one-sixth of the entire GDP of the UK. And Bezos, Buffet and Gates – the top three – own as much as half the entire U.S. population.
Across the Atlantic in the UK, the richest on record is the Hinduja family, which controls a conglomerate of businesses including car manufacturers and banks and is worth US$15.4 billion: just half of Bezos' earnings in a year.
Poorest of the Poor
In the United States, the world's richest country, there are officially 41 million people. Almost 13 percent of the population is living in poverty, including 13 million children, with 19 million adults (almost half the total) living in deep poverty and 9 million with no cash income at all.
Blacks comprise 13 percent of the U.S. population, of which 23 percent are officially documented as living in poverty, comprising 39 percent of the nation's homeless. A lesser-known statistic is that the majority living in poverty across the United States – some 27 million – are white.
The UK poverty picture is hardly different. Poverty rates increased to 16 percent for pensioners and 30 percent for children last year, while one in five people (20 percent) are living in poverty.
One in eight UK workers, amounting to 3.7 million people, are not earning enough for their needs, while 40 percent of working-age adults living in poverty have no qualifications, making it even harder to earn better pay.
No Hope
The UK government is being urged by charities and trade unions to unfreeze benefits; increase training for adult workers, and embark on a more ambitious house-building program to provide affordable homes for struggling families, but none of this seems to be even close to happening anytime soon.
Take the state of the British government's response to the plight of the victims of the west-London Grenfell Tower fire, which killed 70 people – including 18 children – and displaced 210 families in June.
A memorial mass was held at St Paul's Cathedral on December 14 to mark the six-month anniversary of the tragic inferno, attended by representatives of the British Royal Family, as well as Prime Minister Theresa May and Opposition Leader Jeremy Corbin.
The very same day, London health authorities indicated that while thousands of affected extended families and relatives are still mourning, survivors of the disaster face a new wave of post-traumatic stress, with chances of treatment hampered because so many remain homeless.
Only 45 of the more-than 200 affected families have been permanently resettled. Victims still cannot begin proper psychological treatment to address symptoms that include horrific flashbacks. In addition, 426 adults and 110 children are still in treatment for post-traumatic stress disorder (PTSD) and other trauma-related issues.
Unhealthy Choices
It's not just in the United States and the UK that poverty is causing people to make stark choices. Almost 100 million people worldwide are pushed into extreme poverty each year because of debts accrued through healthcare expenses.
A report published by the World Health Organization (WHO) and the World Bank on December 13 found that the poorest and most vulnerable people are routinely forced to choose between healthcare and other household necessities, including food and education, subsisting on US$1.90 a day.
The report says that more than 122 million people are forced to live on US$3.10 a day – the benchmark for "moderate poverty" – due to healthcare expenditure. Since 2000, this number has increased by 1.5 percent every year.
The report says that 800 million people spend more than 10 percent of their household budgets on "out-of-pocket" health expenses. Almost 180 million spend 25 percent or more: a number increasing at a rate of almost 5 percent per year, with women among those worst affected.
In addition, only 17 percent of women in the poorest 20 percent of households around the world have adequate access to maternal and child health services, compared to 74 percent of women in the richest 20 percent of households.
Taxation Not Enough
"Progressive income-tax regimes not only reduce post-tax inequality, they shrink pre-tax inequality by discouraging top earners from capturing higher shares of growth via aggressive bargaining for higher pay," the report's authors conclude.
They also note, however, that taxation alone is not enough to tackle the problem "as the wealthy are best placed to avoid and evade tax, as shown by the recent Panama Papers revelation that 10 percent of the world's wealth is profitably parked in tax havens."
Taxation of the richest – commensurate with their fortunes – can always go a long way, but this is hardly ever treated with the seriousness necessary, especially when politicians depend on the super-rich for contributions in pursuit of power, as with the Trump tax bill.
Instead of trapping tax-evaders in their countries of origin, the overwhelming gubernatorial tendency in rich countries is to pursue and punish those poor countries that seek to overcome their inherited economic difficulties by offering healthy incentives for investment.
For example, the EU recently published a list of countries it's threatening to punish for not doing enough to dissuade rich tax evaders. All of them are small nations, mainly present and past European and American colonies left to fend for themselves after centuries of exploitation.
The rich, punishing nations harbor ambiguous laws assuring the super-rich that "tax avoidance is legal, but tax evasion isn't." They also compete to attract the most profitable multinational corporations to their shores by offering over-generous tax-free incentives, allowing them to pay the lowest wages to the greatest numbers of poor workers.
Such ingrained guarantees will continue to widen existing inequality gaps everywhere, until the impoverished majority creates the mechanisms for taking full and real control of their destinies instead of investing their blood, sweat and tears in re-electing parties that promise the best and always deliver the worst.
What Can Be Done?
Across the world, the same questions arise: What's to be done? Who's to do it? And where to begin?
There is a definite need everywhere to protect poor family households by ensuring the breadwinners not only have jobs, but that salaries ensure they can adequately take care of their families.
The authors of the World Inequality Report argue that never mind all these deadly facts, inequality is not inevitable. They argue that given the divergent paths documented, "it is possible for institutions and policymakers to tame the un-equalizing forces of globalization and technological change.
"Just as the policymakers in the United States have made the distribution of income there less equal, they also have the power to make economic growth more equal again." They also advise that "given the stagnant wages among the bottom 50 percent since the 1980s, governments should focus on how to create a fairer distribution of human capital, financial capital and bargaining power rather than limiting themselves to the redistribution of national income after taxes."
This, the Inequality Report says, "will involve improving access to education; reforming labor market institutions to boost workers' bargaining power; raising the minimum wage; changing corporate governance to give workers a greater say in how profits are distributed, and making tax systems more progressive."
The researchers conclude that "the United States has run a unique experiment since the 1980s – and the results have been uniquely disastrous. Bad policy can have a real impact on millions of lives for decades, but what government have done, they can still undo."
With 2018 on our doorstep, developing countries can still adopt new approaches to sustainable and sustained future development. Rather than perpetuating dependence on handouts from the super-rich to the extremely poor through the failed "trickle-down" economic formula, poor nations should devise new means of using their inherent natural and human resources to their maximum potential.
