Text size:

  • Small
  • Normal
  • Large

Extreme wealth is economically and socially inefficient

Governments must work in concert to reverse the polarising effects of decades of 'trickle-down' economic policy.

US President Barack Obama famously declared during his 2008 campaign that "the old trickle-down theory has failed us": the idea that tax breaks and other benefits provided by the state to businesses and the wealthy ultimately leads to prosperity for everyone is deeply flawed and must be abandoned in favour of an economic model that emphasises fairness.

No one understands the dangers inherent in trickle-down economics, one of the most famous proponents of which is the failed US presidential candidate Mitt Romney, better than charitable organisations trying to tackle poverty.

Ahead of the World Economic Forum's annual meeting this week in Davos, Switzerland, Oxfam declared that the increasingly bloated super-rich are undermining human progress and boldly called for serious redistributive measures to be taken by governments to address the problem of rapidly growing economic inequality.

The campaigning NGO has challenged governments to meet a 2025 deadline for ending extreme wealth by reversing a two-decade rich people "feeding frenzy" trend in most countries, returning inequality to 1990 levels through what it terms "a global new deal".

In a statement entitled The Cost Of Inequality: How Wealth and Income Extremes Hurt Us All, Oxfam said the net income of the planet's 100 wealthiest people in 2012 was US$240 billion (Dh882bn), enough to not just eliminate extreme poverty but eliminate it four times over.

The organisation says that globally, the incomes of the top one per cent have increased 60 per cent in just 20 years, and that the growth in income for the top 0.01 per cent has been even greater.

Barbara Stocking, Oxfam's chief executive, said the wealth gap was "economically inefficient, politically corrosive, socially divisive and environmentally destructive".

She added: "We can no longer pretend the creation of wealth for a few will inevitably benefit the many - too often the reverse is true.

"Concentration of resources in the hands of the top one per cent depresses economic activity and makes life harder for everyone else - particularly those at the bottom of the economic ladder.

"From tax havens to weak employment laws, the richest benefit from a global economic system which is rigged in their favour.

"It is time our leaders reformed the system so that it works in the interests of the whole of humanity rather than a global elite.

"We need a global new deal to reverse decades of increasing inequality. As a first step world leaders should formally commit themselves to reducing inequality to the levels seen in 1990."

The World Economic Forum, a Swiss non-profit foundation "committed to improving the state of the world", shares Oxfam's concerns, citing in its Global Risks 2013 report severe and widening income disparity as one of the world's most urgent problems - along with systemic financial failure, government debt and crises in the water supply.

Oxfam's goal of reversing this socially and economically destructive trend is extremely laudable. However, it can only be achieved if the world's governments make a strong and concerted effort to bring in progressive taxation regimes, clamp down on tax havenry and other avoidance schemes that rob billions of dollars in vital revenue from public coffers, effectively tackle official corruption, take steps to cut the ludicrously inflated bonuses awarded to executives regardless of their performance, improve labour protection, and hold those who run institutions such as banks accountable for wrongdoing.

Sadly, that is about as likely to happen as a Bangladeshi garment factory employee showing up to work behind the wheel of a Lexus.

* Paul Muir

Back to the top

More articles


Editor's Picks

On our sixth birthday, today’s news told visually

Today in print, we are doing something different: we use only photos, graphics, illustrations and headlines to capture the news in a one-off collector’s edition.

 Rolling out the structure for the set. Mona Al Marzooqi / The National

Star Wars: Episode VII evidence in Abu Dhabi desert

After more than a week of speculation, The National has what are believed to be the first photos of a Star Wars shoot in the Abu Dhabi desert.

 Children walk past an Indian voter awareness mural in Mumbai ahead of the sixth phase of India’s national elections. Indranil Mukherjee / AFP

Inside India: Election, Promoting the Vote

A view of news and daily life on the Indian subcontinent for the week of April 10, 2014.

 INVERNESS, SCOTLAND - APRIL 16:  A general view of Urquhart Castle, Drumnadrochit on April 16, 2014 in Scotland. A referendum on whether Scotland should be an independent country will take place on September 18, 2014.  (Photo by Jeff J Mitchell/Getty Images)

Map of seperatist movements around the world

The conflict in Ukraine is a classic example of competing aspirations and identities – here’s a look at seperatist movements around the world.

 Hassan Abdullah, who goes by the name Abu Mahmoud, an Emirati fisherman, poses for a portrait at the Al Rughayalat Port. Abu Mahmoud was born and raised in Fujairah city and has been working as a fisherman since 1968. “I’m a shark man”, he says, “I was born in the sea.” Silvia Razgova / The National

In pictures: Fishing communities in the Northern Emirates

Fishermen in Fujairah and Umm Al Qaiwain worry that new regulations to protect fish stocks are harming their trade. We look at both communities through the lens of our photographers.

 The cast of Fast & Furious 7, including Michelle Rodriguez and Vin Diesel, centre, on set at Emirates Palace in Abu Dhabi. Jeffrey E Biteng / The National

Fast & Furious 7 filming in full swing at Emirates Palace

Filming for Fast & Furious 7 has started and we have the first photos of the cast and crew on set at Emirates Palace hotel this morning. Visitors staying at Emirates Palace say they have been kept away from certain areas in the grounds.

Events

To add your event to The National listings, click here

Get the most from The National