After living through the financial crisis and the Great Recession, almost everyone is aware that economic inequality is a big problem. But despite the attention called to the issue by protesters, sometimes-reluctant politicians, and the media, the problem doesn’t seem to be going away.
In fact, according to a study by Oxfam International, economic inequality is still getting worse.
The report warns that the wealth of the world’s richest 1% will overtake the combined wealth of the remaining 99% in 2016. This would mark a milestone for the wealth gap, which has widened since the financial crisis in 2008. According to Oxfam, the richest 1% has increased their share of global wealth from 44% in 2009 to 48% in 2014.
Oxfam Executive Director Winnie Byanyima said that “[t]he scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.”
Urging the business and political leaders gathered at the World Economic Forum in Davos to take action, Byanyima argued that “[b]usiness as usual for the elite isn’t a cost free option – failure to tackle inequality will set the fight against poverty back decades. 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.”
What does anyone actually plan to do about it?
Although the high cost of gross economic inequality are obvious, Congress and other legislative houses around the world have raged on for decades without ever actually doing anything to address the problem. Wealth tends to beget wealth, and some of the economies producing the most are also home to the most severe inequality.
But an enterprising Oxfam is actually proposing a solution — or, at least, a process for narrowing the wealth gap — with a seven-point plan:
- Clamp down on tax dodging by corporations and rich individuals.
- Invest in universal, free public services such as health and education.
- Share the tax burden fairly, shifting taxation from labor and consumption toward capital and wealth.
- Introduce minimum wages and move toward a living wage for all workers.
- Introduce equal pay legislation and promote economic policies to give women a fair deal.
- Ensure adequate safety-nets for the poorest, including a minimum income guarantee.
- Agree on a global goal to tackle inequality.
Some of the ideas proposed by Oxfam may look far fetched, but some of our very own politicians in the U.S. have proposed similar things. President Barack Obama, for example, wants to offer two free years of community college to responsible students. But despite support for some of these ideas, particularly among the political left, there is virtually zero chance that America at large would support the entire platform. We have seen huge legislative showdowns over health care, education, tax reform, minimum wage, and equal pay legislation all just over the past couple of years, and have made minimal progress.
What Oxfam would like to see would require considerably more investment in public services than American citizens can expect to see, but that doesn’t mean that other countries can’t make it happen. Universal health care and education are standard in many other countries, as are higher minimum wages, equal pay initiatives, and social safety-nets.
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