Welcome to the billionaire economy
It's a boom time for billionaires. As for everyone else, not so much.
More billionaires were minted in 2017 than in any other year in history, according to a new report from the charity Oxfam International, which will present its findings at the annual meeting of the World Economic Forum in Davos, Switzerland. While the world's economies are growing, four-fifths of the wealth created in 2017 was claimed by the top 1 percent of income earners, the report found.
Income inequality is worsening across the globe, which has a corrosive impact on social institutions, the standard of living for the poor and near-poor, and is linked to political unrest, Oxfam said. The dangers of inequality aren't a new rallying point, yet despite a lip service lawmakers and the rich pay to it, the wealthy continue to pull away from the poor and middle class.
"In the last year, there has been a new billionaire created every two days, and of the wealth that got created, the top 1 percent got 82 percent of it, and the poorest half got nothing," said Paul O'Brien, vice president for policy and advocacy at Oxfam America, a nonprofit focused on alleviating poverty. "That means 3.7 billion people got nothing of that new wealth."
The wealth boom tends to reward men, while women are predominately drawing the short straw. Structural issues such as the gender pay gap, a devaluation of women and their contributions, and discrimination are contributing factors to women's weaker economic positions, Oxfam said.
It noted that women have fewer economic rights than men in 155 countries, including 18 where husbands can legally prevent their wives from working.
President Donald Trump, who is heading to Davos to attend the meeting, recently signed a new law that provides tax cuts for corporations and the rich, while middle- and low-income workers are receiving smaller reductions that will expire in a decade.
"The real issue is Donald Trump campaigned that he would unrig the rules in favor of giving hardworking Americans a better chance to lift them out of poverty, and as he heads to Davos, there are very few people who think he represents those issues," O'Brien said. "Donald Trump will be a bit surprised by the robustness of the discussion" at Davos.
A few companies, including Walmart (WMT), have recently cited the tax bill in boosting wages, yet critics say the prime beneficiaries will be the richest Americans, not the rank and file.
Republicans argue that a growing economy will lift all boats, but Oxfam's view is that better policy would be to fund social services like education and health care. Under the Trump administration, however, the U.S. is shifting resources away from such programs, such as its recent decision to allow states to impose work requirements for Medicaid recipients.
The facts don't bear out the belief, held by some, that billionaires will create new jobs, O'Brien said.
"We're seeing lots of new billionaires, but we aren't seeing new wealth," he added. "I'm profoundly grateful that people like Jeff Bezos chooses to spend some of his 10 thousand million dollars so I can read my local paper in Washington, and I'm profoundly grateful that Bill Gates chooses to spend some of his wealth to address the health systems of countries in Africa."
But, he added, "We shouldn't rely on a economy where we have to pray that they do so."
Here are more findings from Oxfam's report:
- There are now 2,043 billionaires across the globe. Nine out of 10 are men.
- In the last year, the wealth of the billionaires rose by $762 billion.
- Ordinary workers saw their income rise by an average of 2 percent a year from 2006 to 2015, while billionaire wealth rose 13 percent a year during the same period
- The richest 1 percent own more wealth the the whole of the rest of the world's population