Oxfam: Richest 1% Will Control More than Half of Global Wealth as Early as 2016

It often seems as though economic turmoil has plagued every country, company and individual until we have all inoculated ourselves from bad economic news. But a recent report by the charity Oxfam (aptly named Wealth: Having it all and wanting more) suggests that economic turmoil has not effected us evenly; not even close to evenly. According to the study released Monday, by next year, the richest 1 percent are likely to control more than half of the world’s total wealth. As the world’s business elite prepares to meet at the annual World Economic Forum in Davos, Switzerland, the increasing global inequality raises serious concerns about the fairness of our economic institutions and how global wealth could have come to be concentrated in so few hands.

As the New York Times reported today, “The type of inequality that currently characterizes the world’s economies is unlike anything seen in recent years.” While the poorest half of the world has seen a decrease in their total wealth since 2010, billionaires have been increasing their wealth during that same time period.

Winnie Byanyima, Oxfam’s executive director, told the Times that a billion people lives on less than $1.25 a day. In contrast, many Chinese entrepreneurs (who have often made their money through some combination of bribes and other illicit activities) are learning the deep pain of having too much money and are taking courses on “class rules” in order to best understand how they should spend and hide their wealth.

This is not to say that China is the problem; indeed, one does not need to travel far to see the excesses of America’s super-rich who in New York can eat a $95,000 truffle, fly to Las Vegas for a $5,000 hamburger and end their day in Los Angeles with a $500 milkshake.

But how have the super-rich come to have so much? According to the International Business Times, most of their wealth comes from stocks and properties in which the wealthy look for “profitable safe havens in which to shelter their cash” and sometimes avoid taxes.

Interestingly, some individuals argue that wealth inequality “incentivizes innovation, aspiration and competition within economies.” Ryan Bourne, head of public policy at the Institute of Economic Affairs told IBT that Oxfam’s research is misleading, “Rather than focusing on the top 1 percent we should be promoting policies such as free trade, open markets, stable property rights, and the elimination of corruption…”

Many economists, however, still believe that the current global economic system must be more inclusive and equitable by, for example, guaranteeing equal pay laws for women, living wages for workers and a decent safety-net to enable the poor to one day dream about innovations and competition. Of course, there are those among the world’s billionaires who have made their money in a honest manner; however, extreme inequality “undermines economic growth and…threatens the private sector’s bottom line.” As such, it can’t be good for anyone.

(Photo courtesy of Nick)