For more than a decade now, I have been harping on the theme that the biggest economic and social problem of the world is income inequality. However, governments and Big Business along with traditional economists insist that increasing Gross Domestic Product is the main economic problem.
This week, the World Economic Forum (WEF) is ongoing in Davos, Switzerland. It will bring together heads of state, economic and finance leaders, big business and other representatives of the global elite to address what they perceive as the main problem the world must tackle in the year 2023.
The principal concern in this year’s WEF is the looming global recession on top of continuing worldwide inflation. The other challenges that are expected to be discussed are the challenges of climate change, the war in Ukraine and the increasing trend towards protectionism by several governments, including the United States.
In the latest issue of The Economist, there was criticism of the American government’s “abandonment of free market rules for an aggressive industrial policy.” The issue specifically pointed to the efforts of the United States to introduce subsidy-laden programs to power the American effort to transition renewable energy and to make this country a center of semi-conductor manufacturing. This manufacturing crucial to the making of chips is presently centered in Taiwan. The Economist further said that “a dangerous spiral into protectionism worldwide” has become a distinct possibility.
The said publication also warned that these protectionist moves may imperil “the causes of liberal democracy and market capitalism.” There have also been several talks that warn that these increasing moves toward protectionism are leading towards a global trend of de-globalization.
It is clear that the threat to globalization is apparently the biggest worry of the corporate elites. The one thing that is unfortunately clear is that there is very little attention on what I believe is the most serious social and economic problem in the world today. This is the issue of income inequality, which is getting worse.
At the start of this year’s WEF, Oxfam released a report titled “Survival of the Richest.” Oxfam is “a global movement of people working together to end the injustice of poverty.” According to the report, the richest one percent of people on earth made almost two-thirds of the new wealth created since the pandemic began. In other words, the world’s richest have absorbed a greater proportion of global wealth during the pandemic and over the past decade while global poverty has increased for the first time in 25 years.
While the elite are concerned with globalization, declining profit margins and protectionism, Oxfam sees that the world is facing a crisis brought about by increasing cost of living for the overwhelming majority of people, widespread hunger and unprecedented decline in human development.
This is clearly two very different views of the world today. Even the proposals on how to remedy the world’s biggest problem today have two different viewpoints.
In the Oxfam report, it stated: “As a starting point, the world should aim to halve the wealth and number of billionaires between now and 2030, both by increasing taxes on the top 1 percent and adopting billion busting policies. This would bring billionaire wealth and numbers back to where they were just a decade ago in 2012.”
The Oxfam report called for countries to impose a tax rate of at least 60 percent on income of the world’s richest 1 percent as well as overall higher rates for multimillionaires and billionaires. The report further said that even a tax of up to 5 percent on the world’s billionaires could raise about $ 1.7 trillion annually.
Oxfam claims that this would be enough money to lift two billion people out of poverty as well as fund a global plan to end hunger.
Gabriela Bucher, executive director of Oxfam International, said in a press release: “While ordinary people are making daily sacrifices on essentials like food, the super rich have outdone even their wildest dreams. Just two years in, this decade is shaping up to be the best yet for billionaires. A roaring ’20s boom for the world’s richest.”
These proposals may seem idealistic to many of the rich and the elites. However, to those who believe that this Oxfam proposal may not be advisable, it would be advisable for them to remember that this worsening income equality has been responsible for the rise in populism. I have often heard the elite complain about the quality of politicians that the masses vote into office.
The question should be asked, why would the masses continue to vote for the candidates of the elite whom the masses know will only perpetuate the increasing trend towards worsening income inequality?
If the present ruling elites do not address this problem of income inequality, we will see a world with increasing political power for populists whose main campaign slogan would be to bring down the elites.
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Email: elfrencruz@gmail.com