Oxfam’s new inequality report, which reveals that billionaires’ fortunes grew by $2.5 billion a day last year, as the poorest half of humanity – 3.8 billion people – saw their wealth fall, is making headlines around the globe. Since we launched, we have received lots of questions. Here’s our response to five of the most frequently asked questions.
1. Why is Oxfam attacking billionaires – they are talented entrepreneurs who create jobs and wealth. Billionaires such as Bill Gates have even given millions to charity.
Oxfam is not anti-wealth but anti-poverty. We shine a spotlight on the billionaires growing wealth to highlight the problem with our broken economic system. Our economies enable a small number of people to accumulate unimaginable wealth while paying relatively little tax, even as vital public services such as healthcare and education are crumbling for want of funds. This doesn’t make sense.
It’s true that some billionaires have created vast business empires from nothing – and created jobs and prosperity for themselves and others. However, this is not true of all of them. Oxfam estimates that two-thirds of billionaire wealth is inherited or tainted with monopoly or cronyism. Equally not all billionaires ensure their workers get a fair share of the profits from their businesses by for example paying a living wage.
It’s also true some billionaires such as Bill Gates are using their wealth to help others – and they should be congratulated. But charitable giving does not replace a company or individual's responsibility to pay their fair share of tax. And many wealthy people agree with us - Bill Gates says the first responsibility of the super-rich is to pay their taxes and Warren Buffet has been calling for higher taxes for the super-rich.
2. Isn’t capitalism working – the global economy is growing, and poverty is declining?
The number of people living in extreme poverty – on less than $1.90 a day – has been falling globally. This is something to be celebrated. However, the rate at which extreme poverty is falling is slowing and in some parts of the world, the number of people living in extreme poverty is actually rising.
But this is only part of the story. Almost half of humanity is still living on less than $5.50 a day. They are not living in extreme poverty but they are still very poor – struggling to keep their heads above water and just one medical bill away from extreme poverty. It’s this much bigger group of poor people who are seeing their wealth decline.
The problem is that the benefits of economic growth are not shared equally. Wealth created in today’s economies is captured by those who are already wealthy, and the poorest in society see little benefit. That is why billionaire fortunes increased by 12 percent last year – or $2.5 billion a day - while the 3.8 billion people who make up the poorest half of humanity saw their wealth decline by 11 percent.
In short, our economies are broken. That is why Oxfam is calling for governments to build new economies that work for everyone and not just a privileged few.
3. Aren’t low taxes a good thing? Won’t raising taxes will put a break on economic growth and job creation?
The idea that low taxes for the wealthy is good for economic growth and job creation has been widely questioned. Even the International Monetary Fund is saying that there is ample scope for redistribution without hurting economic development
It simply does not make sense that the tax bills for the very richest people and corporations are systematically lowered while vital public services such as healthcare and education – that benefit society as a whole - are struggling for want of funds. We need more schools – not more superyachts.
4. What’s wrong with private schools and private healthcare. Public healthcare and education is very poor quality in many countries – private services give people an alternative?
Lack of investment in public services does mean the quality of education and healthcare they provide is very poor in many countries. However, the solution to this problem is to invest more in public services – not outsource to the private sector.
The private sector doesn’t deliver for the poorest in society because there is little incentive for private companies to provide services for people who can’t afford to pay for them. Moreover, private healthcare and education providers are often subsidized by governments, which means public money is often diverted to serve the needs of the wealthiest in society – at the expense of the poorest. For example, a public-private initiative to build a hospital in Lesotho ended up consuming, as much as 51 percent of the countries total health budget in 2014 – depriving clinics in rural areas of much-needed funds.
Only by investing in free universal public health and education services can governments deliver good-quality healthcare and education for all.
Read more Pratima, a casualty of India's growing inequality
5. Oxfam’s calculations are wrong – the data has holes in it and the way wealth is calculated means people on high incomes but lots of debts are counted amongst the worlds poorest?
Oxfam bases its calculations on the best data available at the time – Credit Suisse’s annual Global Wealth Report and the annual Forbes Billionaires list. Of course, the data is not perfect – the quality of data available varies from country to country but it is being improved and expanded every year. One of the big problems is that the very rich often hide their wealth offshore to avoid tax – which means that their fortunes are likely to be significantly underestimating. Despite these problems, most experts agree the data is good enough and provides a relatively accurate overview of how wealth is distributed globally.
It is equally true to say that the way wealth is calculated means people who are high earners with large debts – such as graduates with big loans – are placed in the same category as people who are very poor. However, this is a tiny fraction of people globally and has little impact on the figures.
The vast majority of people at the bottom fifty percent are very poor people who are really struggling to get by. Those who are in debt are, overwhelmingly, poor people who are forced to borrow to stay afloat – think of single mothers having to go to loan sharks to pay medical bills in the US or smallholder farmers borrowing at huge interest from money lenders in India.
No data set or methodology is ever 100 percent perfect and figures may change slightly from year to year as new and better data becomes available. However, the overwhelming and consistent pattern we are seeing is that the gap between rich and poor is growing ever bigger and that small number of people are accumulating vast fortunes while paying relatively little tax, even as vital public services such as healthcare and education are crumbling for want of funds.
Read more: 10 powerful quotes to help you understand the global inequality crisis
6. Inequality doesn’t fuel poverty.
The evidence and experience of millions of people around the globe suggest it does. In countries like Kenya, a child from a rich family will spend twice as long in education as a child from a poor family - and so will be much better placed to secure a well-paid job when they leave school. By closing the gap between rich and poor – more fairly taxing wealth and investing the proceeds in education and healthcare for all – governments can ensure no child misses out on a better future simply because they are poor.
The World Bank agrees – it says unless we close the gap between rich and poor, extreme poverty will not be eliminated and 200 million will still living on $1.90 a day in 2030.
7. Isn't Oxfam getting too political?
The decisions that governments make have a critical impact on people's lives. So, in that respect, poverty is political. People across the globe are losing faith in our political system because governments put the demands of big business and the super-rich over the needs of their own citizens.
It does not make sense that the tax bills for the very richest have been systematically lowered for years, while vital public services such as healthcare and education – that benefit all of society in so many ways - are struggling for want of funds. This is not a question of politics or ideology – it's a matter of justice and human dignity.
You can support our fight against inequality as well. Stand in solidarity. SMS SMASHINEQUALITY TO 56263
Find out how Oxfam India is enabling communities by working to provide a life of dignity and equal opportunity for all.Get to know more about Oxfam India`s latest projects.
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