The rich are getting richer, and the poor are getting even poorer. This is what a recent study, presented by Oxfam with the title Wealth: Having it All and Wanting More, bluntly states. According to the international organization against poverty and injustice, in 2016 the richest 1% will own more than the other 99% combined.
As can be seen in the chart, the situation started to get tough for “us common mortals” after the crisis started in 2008. From then on, and particularly from 2010, while we lost wealth, the top 1% of the world population gained money, preparing to reach the astonishing threshold of “fifty/fifty”, in 2016.
But things are worse than that, if we take an in-depth look.
Indeed, obviously in our 99% not everyone owns the same. Quite the opposite, because the 20% of us own almost everything, leaving the crumbs to other 80%. Bluntly put, inequality is winning.
While the situation gets worse for billions of people, the rich’s capital keeps increasing. The top 80 in Forbes’ rankings passed from 1,3 trillion dollars in 2010 to 1,9 trillion in 2014. Year after year, less and less billionaires are needed to equate the wealth of the rest of the world.
The perfect tycoon
Taking a look at the Oxfam’s charts, it is possible to outline an identikit of the perfect rich.
First of all, he will be a middle-aged man. Indeed, nine out of ten billionaires are males, and over 50.
Then there is a good chance he will be American — 1 out of 3 — and with a wealthy background. Yet, it’s not that other countries don’t have their big capitals. We can find them in South America, Russia, the Middle-East and more. Italy has its Scrooge McDuck too, a drugstore tycoon that owns more or less ten billion dollars.
Obviously there are a few economic sectors in which a billionaire to-be would be glad to invest, because they have proved to be highly profitable. The financial and insurance sectors for sure — they dominate the Forbes’ ranking — together with healthcare and the pharmaceutical market.
And of course, lobbying is a daily job for these “fat cats”, according to the Oxfam’s report. Above all in the pharmaceutical sector, millions are spent to influence governments and other companies, trying to achieve particular goals. According to the report, in 2013, “companies from the financial and insurance sectors spent $550m on lobbying policy makers in Washington and Brussels alone.”
While the big industries play Risk, normal people strive to come back to normality. In the US, median income levels are yet to return to their pre-crisis level.
A difficult situation
In his recent book, Capital in the 21st Century, Thomas Piketty, French professor and economist, presents numbers and graphics to explain the situation of capital in our new millennium and gives us an outlook on global inequality. The Oxfam report basically confirms what he wrote.
One of the most useful pieces of information to take into consideration might be the size of the difference between private and public wealth, because it allows us to understand what is happening.
In Italy, for example, private assets are worth almost 7 times the national income. Basically, as The Economist explains, “private wealth dwarfed national income and was concentrated in the hands of the rich families who sat atop a relatively rigid class structure.” The situation is more or less the same in other countries — as it can be seen in the chart.
Piketty’s message is that the future will likely look as the past. Indeed, after a short break in the mid 20th century, we are coming back to a class-structured society, in which “patrimonial capitalists” will rule our lives.
What could be done?
According to the Oxfam’s report, “rising inequality is not inevitable.”
A lot could be done to change the situation. For example, things could get better if: 1) governments will work for citizens and tackle extreme inequality; 2) women’s rights and economic equality will be promoted; 3) worker’s wages will increase, and the gap between workers’ and executives’ salaries will be reduced; 4) universal services will be granted; 5) the prices of medicines will be lowered down. And a lot more — the complete list can be found here.
The Davos World Economic Forum Annual Meeting has just finished. There, every year, hundreds of executives and, in general, the rich, set the agenda for the times to come. Funny enough, we have to trust that 1% to change things.
Yet, numbers and charts say that, so far, they have held a hand on the wallet, instead of the heart.
by Emanuele Del Rosso