Katy Wright is the Head of UK Government Relations at Oxfam GB.
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As the world's elite mingle in Davos this week Oxfam hit the headlines with a new report on growing extreme inequality. Or specifically what hit the headlines was the staggering statistic that the total wealth of the 85 richest individuals in the world is the same as that of the poorest half of the world’s population. So that’s 85 people owning the same wealth that is shared out between 3.5 billion others (we like to picture those 85 people inside a double-decker bus).
It feels wrong. But is it in itself a problem? And is it – quite frankly – a bit too lefty for Oxfam to be going on about extreme wealth rather than concentrating on getting charity to the world’s poorest? I don’t think so, and I think the signs are increasingly there that extreme inequality is something we all – left and right, rich and poor (or struggling middle classes) need to take seriously.
Firstly let’s concentrate for a moment on the feeling that this sort of extreme inequality is just morally wrong. This is not to say all inequality is a moral problem. As the Oxfam report says, some economic inequality is essential to reward risk and hard work. But one only has to watch this clip of Kevin O’Leary - an investor and businessman from across the pond - making the bombastic argument that the poverty of 3.5 billion people is “fantastic” to feel that any moral celebration of such extreme inequality is hard to stomach. Even for the most ardent believer in free markets.
Oxfam is far from alone in our concern. In fact we’re in rather august company as the World Economic Forum themselves rank widening income disparities as the second greatest worldwide risk in the coming 12 to 18 months. It is also worth reading President Obama’s remarks on inequality in December last year. The Spectator recently carried a really interesting piece from Toby Young who (whilst apologising for sounding like Owen Jones) argued that the super rich’s reluctance to call themselves upper class is really all about hiding their concentration of wealth.
Inequality works to deny social mobility. What is striking about Obama’s speech is his assertion that inequality is now at odds with the great American dream. Whilst the existence of some economic inequality incentivises progress and social mobility, extreme inequality pulls the rungs of that ladder just too far apart. Oxfam’s report highlights the vicious cycle of ‘opportunity capture’ – in which the lowest tax rates, the best education, and the best healthcare are claimed by the children of the rich. This creates dynamic and mutually reinforcing cycles of advantage that are transmitted across generations.
Inequality undermines democracy. This cartoon perfectly captures the politics of extreme wealth – whereby money buys a voice, buys influence, buys favourable policies and so reinforces itself. The mechanics of this may not be transparent to all – but we all feel it. An Oxfam survey found that in the UK today two-thirds of people agreed with the statement ‘The rich have too much influence over where this country is headed’ (See Figure 3 of our report).
It undermines security and growth. A society which contains such different and intractable life chances starts to lose its coherence. The World Economic Forum report directly links income disparities to the wave of uprisings across the world – pointing out that the young are most willing to take to the streets because they feel like they have nothing to lose. Recent IMF findings have suggested that chronic inequality also harms long-term economic growth.
Ultimately, inequality makes poverty harder to overcome. That’s why we care about it. All those who care about growth, security, reward for hard work, democracy and moral order should care too.
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