Income inequality getting worse

Just two weeks ago, I wrote a column advocating that the problem of rising income inequality needed to be high on the agenda of the next government. I also repeated the warning of Pope Francis that this was the root cause of the world’s social ills and would be the main cause of violence.

This week, OXFAM, a highly respected international NGO, released a report stating that the global inequality crisis had become worse and was reaching new extremes. It said that power and privilege by the elites is being used to skew the economic system to increase the gap between the richest and the rest of the population.

Last year, OXFAM had predicted that sometime in the future the wealthiest one percent in the world would be wealthier than the remaining 99 percent of the world’s population. Recently, Credit Suisse announced that this had already happened in 2015 – much earlier than predicted.  Among OXFAM’s recent findings are the following:

• In 2015, 62 individuals had the same wealth as the bottom half of humanity – 3.6 billion people. In 2010, 388 individuals had the same wealth as the bottom 50 percent and this was already considered scandalous.

• The total wealth of the richest 62 individuals in the world had increased  by 44 percent in the five years since 2010. Their total wealth increased by $542 billion to a staggering $1.76 trillion.

• In the meantime, the wealth of the bottom 50 percent was reduced by over a trillion dollars in the same period.

• Since the beginning of the 21st century, the poorest 50 percent of the world’s population has received just one percent of the total increase in global wealth. The top one percent have received 50 percent of the increase in global wealth.

Those who defend the status quo say that all the concern about income inequality is the result of envy. Others say that the poor can only blame themselves for being poor by  not striving hard enough to enrich themselves. The argument they advance is that the rich deserve their wealth because they work hard to accumulate wealth.  There are those who still insist that by making the rich richer, the poor will benefit from the overflow of wealth that will” trickle down “ to the poor.

Pope Francis has clearly said, in his Apostolic Exhortations, that there is no evidence that the trickle down philosophy has worked to benefit the world. OXFAM agree and this is what it said:

“ A powerful example of an economic system that is rigged in the interests of the powerful is the global spider’s web of tax havens and the industry of tax avoidance which has blossomed over recent decades. It has been given intellectual legitimacy by the dominant market fundamentalist view that low taxes for rich individuals and companies are necessary to spur economic growth and are somehow good news for us all. The system is maintained by a highly paid, industrious bevy of professionals in the private banking, legal, accounting and investment industries.”

Even the International Bar Association has called tax avoidance “an abuse of human rights.” The World Bank President calls it  a form of corruption that hurts the poor.”

Pope Francis wrote: “ But until exclusion and inequality in society and between peoples are reversed, it will be impossible to eliminate violence... To all this we can add widespread corruption and self-serving tax evasion which have taken on worldwide dimensions. The thirst for power and possessions knows no limits.”

It is the government, not business, that must take the leading role. But governments rely on tax revenues to pay for public services , infrastructure, welfare systems, and the goods and services that keep a nation running. Sufficient and fair tax regimes are vital to enable governments to fulfil their functions properly. But the power of the elites to perpetuate tax evasion has become the biggest liability. Income inequality does not have to be inevitable. OXFAM has listed some recommendations to the governments of the world:

• Pay workers a living wage and close the gap with executive rewards. Executive compensation are skyrocketing while too many people do not have a living wage and decent working conditions .Minimum wages must be based on a “living wage.”

• Promote women’s economic equality and women’s rights. This includes compensation for unpaid care.

• Keep the influence of the power elites in check. This includes proposals to ban family dynasties, freedom of information laws, and the removal of bank secrecy laws.

• Change the global system for R&D and the pricing of medicines so that everyone has access to appropriate and affordable medicines. Big pharmaceutical companies should not be allowed to monopolize the making and pricing of medicines which deprives the poor of access to more affordable medicines.

• Share the tax burden to level the playing field.  The tax burden is falling on ordinary citizens while the richest citizens and individuals pay too little.

• Use progressive public spending to tackle inequality. There must be free public health and education to fight poverty and inequality at the national level. In the delivery of public services, expand the public sector rather than the private sector.

It is time for the rich to accept that this concentration of wealth and power in the hands of so few is a formula for a social revolution.

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The Aquino Legacy: An Enduring Narrative by Elfren Sicangco Cruz and Neni  Sta. Romana Cruz is a collection of essays and stories on Ninoy, Cory and the Aquino family who have played such a pivotal and dramatic role in shaping Philippine history. As mentioned in President Aquino’s foreword, the book “serves as a reliable source of information for Filipinos belonging to the millennial generation who may not be aware of how dire conditions were at the time and how we have, since then, moved forward as a people. “The Aquino Legacy,” published by Imprint Publishing, is now available at Fully Booked stores.

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