Five years ago, the combined wealth of the globe’s top 388 billionaires was equal to half the world’s population. If that contrast is shocking, consider how many billionaires it takes for that same divide today: 62. According to a new report from Oxfam on global inequality, it’s now just 62 of the world’s richest billionaires who own as much wealth as half the world’s population. The wealth of the poorest half—that’s 3.6 billion people—has fallen by $1 trillion since 2010. At the same time, the wealth of the world’s richest 62 people has increased by more than half a trillion dollars. Oxfam faults a global financial system that has, quote, “supercharged the age-old ability of the rich and powerful to use their position to further concentrate their wealth.”
The report singles out deregulation, privatization, offshore tax havens that have let trillions of dollars go untaxed. Oxfam says denying governments of this massive source of revenue has hampered efforts to provide basic social services and tackle inequality. A review of some 200 major companies shows 90 percent operate in at least one tax haven. The Oxfam report is timed to coincide with the meeting of the global elites at the World Economic Forum in Davos, Switzerland.
Raymond Offenheiser talking:
this has been an accelerating pattern. I think what our report is trying to do is really point out the fact that I think we have a global inequality crisis, and we’re trying to legitimize that narrative and through the use of these kinds of numbers. I think what’s been stunning to us is not only the fact that we have, you know, that level of concentration, but the process is accelerating. And I think what we’re trying to understand is, if we allow this process to accelerate, not only here in the United States, but literally in countries around the world and in regions where you’d not expect it—in the Chinas and the Indias and even in Africa—it raises a lot of questions about some of the things you talked about in your earlier broadcast about Michigan, which is: How do we fund public services for the poor? How do we finance development into the future? How do we alleviate poverty, if in fact we’re seeing, you know, underfinancing of infrastructure and schools and health systems and so forth? So, we’re really trying to underline the fact that there is an inequality crisis, and we’ve got to really address directly this accelerating concentration of wealth and the mechanisms and systems, really, that enable it.
tax havens basically is a mechanism that’s been created by the financial industry and corporations to allow them to basically produce value in one location and then transfer that value—that may have a high tax base or tax rate, and then transfer it, in some fashion or another, to another location with a much lower tax rate, and then pay the tax rate in those locations where it’s much more favorable. And there’s all sorts of accounting mechanisms that allow this to happen, and also legislation that provides loopholes that enable companies to move value overseas. So, for example, here in the United States, companies actually can deduct the cost of moving jobs overseas, in one case. They can actually move the value of brands and trademarks overseas. They can actually—they’re exempt from, for example, taxing the value of subsidiaries overseas. So there’s a variety of ways these tax havens—that tax rules enable the tax havens to work. The banking industry has been a major beneficiary of all this, because this money is then put in bank accounts in these tax havens, so you’ve seen an explosion of banking—you know, offshoring of the banking industry to the Cayman Islands and the British Virgin.
Stop Tax Haven Abuse Act. is an act that’s been put forward in Congress by Carl Levin and Senator Whitehouse from Rhode Island—Carl Levin from Michigan, Whitehouse from Rhode Island, and Lloyd Doggett from Texas. And it’s an act—it now has 41 sponsors in the House, three in the Senate—that basically tries to close exactly the loopholes I just mentioned and a variety of other ones. Quite frankly, what it really does is it closes those loopholes, and it tries to force, through SEC regulation, greater levels of transparency, and try to get rid of this disconnect between where you generate value and where you report it. And what we really want to force the companies to do is to say—if you produce value in the United States, you know, and you produce value overseas, that should be fully transparent to citizens, so we actually can get a fair deal on taxation of corporations, because it’s that diminished corporate taxation that’s creating the situations we see in Flint and a variety of other locations around the United States and around the world.
a large number of the billionaires listed in Forbes have inherited their wealth.
I think we believe that the whole issue of wealth of individuals is as important in corporate tax. We’ve been focusing on corporate tax, in some sense, because we see it as really a global issue. I think 47 of the 62 [billionaires] are actually Americans, so we have a really particular problem here at home. But what Oxfam is really focused on is: What does this mean for developing countries, where we’re trying to address poverty issues? What does it mean in Africa? And what does it mean in some of these emerging economies where we see actually wealth and high rates of growth? What we’re trying to focus on is, if we allow the system to continue in the way it’s continuing, those countries will lose critical value they need now to fund their own development. And the endgame we seek is actually one in which countries are taking responsibility for their own development by building strong institutions and building a tax system that will fund their citizens’ welfare.
in the United States, I think we estimate that if we close the loopholes through the Stop Haven Abuse Act, we’d probably have—we’d probably have 220 billion additional dollars that we could invest in the economy over about a five- to 10-year period.
how have they achieved this value? Well, I mean, many of these individuals are people who have been in the tech sector. Many of them, we know their first name—almost on a first name basis. And many others—actually, one out of five of them are actually from the financial sector, which is a sector that has benefited dramatically from the kind of tax loopholes and other sort of regulatory and—or deregulation processes that have actually enabled this accumulation of wealth and concentration of wealth to happen.
this is what we’ve seen over the last 20 or 30 years. We’ve seen sort of a dismantling of the economic system in a way that has produced the kind of volatility that produced the financial crisis of 2008 and 2009, which bankrupted many poor families across the United States. But ironically, in the period subsequent, we saved the banking sector. It’s been making record profits. There’s been an enormous amount of accumulation and concentration of wealth at the top end post the financial crisis, meanwhile while Main Street has not necessarily benefited.
Martin Luther King has a wonderful quote about philanthropy, which basically, in sort of—if I can paraphrase, basically says, you know, we should encourage philanthropy, but we cannot—but even while encouraging it, we should remember what the reasons are that it exists in the first place and what the problems are that it’s seeking to solve.
And I think the—that’s the essence of sort of, I think, the question that we’re raising here, is, fundamentally, what we’re talking about here is a rigged system that lacks transparency and in which there’s all kinds of opportunities for abuse, tax evasion and tax avoidance, that actually is undermining, I think, a number of things—democracy in the United States and around the world, the social cohesion and social contract that hold countries together, and even, I think, most importantly, I think, for your listeners here in the United States, social mobility. I mean, the basis of the American dream is social mobility. And it’s interesting to note that the United—most Americans would presume—and if we polled them, I think they would agree to this—that we’re number one in the world in social mobility. That’s why people come here. By all statistical research by, you know, reputable institutions, we fall into 19th in terms of social mobility globally. And there’s many countries—
That was not the case. And this is a consequence of what we’re seeing now, where the rules are rigged, and it’s much harder for people that are working two and three jobs in this country to make even a poverty wage, let alone sort of, you know, enable their children to get out of the sort of cycle of poverty that they live within.
you’ll find tax havens, you know, in islands across the Caribbean. You tend to find them in these very small states that really don’t have much other basis for an economy of any serious stature. So, I mean, one rather profound example is the British Virgin Islands. There are 24,000 people who live in the British Virgin Islands, and there are 800,000 shell companies there that actually are servicing corporations from throughout the world, enabling them to put—offshore their profits and put them into the British Virgin Islands. And then you have a whole massive number of international banks. There are some 50 banks that are the—kind of the transaction agents for all this money moving around the world to tax havens. And if you sort of look at the profits that they’re achieving through this—in managing all that money, they’re astronomical over the last number of years. And so, you sort of have a system now where policies of major countries allow these loopholes to exist and allow the tax havens to exist, and then you have a banking system that’s found it very profitable to engage in this kind of enterprise.
the company executives feel under pressure to shareholders to deliver more value, in terms of shareholder return, and that pressure is relentless, and it’s measured quarterly. And I think this sort of crazy logic of, you know, more shareholder, more shareholder value, you know, everything for the shareholder, loses sight of the whole question of what’s the public good obligation of any company in its home jurisdiction. And I think that, the globalization process that I think we’re living today, actually has disconnected companies’ sense of responsibility to their—to the public that they actually should be serving. And so, we basically expatriate all this value, and then we tax some minimal amount in our home countries. And meanwhile, these same companies actually require public services, roads, infrastructure, all sorts of things that if they didn’t exist, their companies would actually suffer, but they want the tax burden of that to be shifted to the individual taxpayer and away from the corporation itself, in the name of, as the speaker said, tax efficiency.
42 of the 62 of the wealthiest individuals in the world are in the United States. it’s not just the individuals. It’s actually the particular industries themselves, through all sorts of trade associations in Washington that fund a massive lobbying machinery that is actually very, very focused on tax legislation. And I don’t think it’s any accident that both parties here in the United States have been talking about the need for tax reform for literally the last 20 years, and we haven’t seen anything done. And I think part of what we’re trying to do with this report is actually underline the fact that we’ve got an inequality crisis. We’ve got lots of people talking about this issue. It’s now legitimate. Everything from politicians on both sides on the aisle running for the presidency, the pope, Obama, and even individuals among these wealthy people—Bill Gates, Warren Buffett, Zuckerberg and others—I think, acknowledge this. But we don’t see an action agenda going forward, and we see a lot of sort of avoidance behavior. And I think what we’ve really got to do now is build the public will here in the United States, raise public awareness about things like tax havens and all the loopholes in these—in the tax legislation that’s there, that has been a victim of what we would refer to as political and economic capture of our system, and unpack these rigged rules and force a reform under whatever administration assumes power after the next election.
I’m delighted actually to see that this whole issue of inequality is at the center of the debate. And in other words, it’s—you know, this has been an issue that we’ve been avoiding. We sort of talk about, you know, the middle—you know, the need for supporting the middle class. We don’t talk about poverty. We don’t talk about the poor. But I think—this election cycle, I don’t think we can avoid this issue. I think the whole point being made here about Wall Street’s influence on Washington is a very profound one, and it’s a very clear one.
And when you look at who—whose interests were served and who got saved in the aftermath of the financial crisis in 2008 and 2009, we see much—an enormous amount of damage to, you know, families that are trying to kind of—that are living by the rules and trying to educate their children and put food on the table. We do not—and many of them are still suffering the consequences of that collapse, in terms of lost pensions. But we see Wall Street thriving and booming and, at the same time, assuming, to some degree, in some cases, even a victim narrative, in which they need more deregulation, fighting the Dodd-Frank Wall Street Reform Act and the elements within it to this day and trying to block the writing and implementation of the rule-making process under the SEC, which still is not complete yet. And they’re, you know, fighting tooth and nail to kind of resist the kind of change that we really need to make for a more fair and equitable tax system in this country.
the Even It Up campaign is Oxfam’s effort to really take on the question of inequality. And we’ve chosen to do that, in part because we began to realize, as an organization that’s been working on poverty issues around the world and social justice issues, that if we didn’t—if we didn’t address the inequality question and we allow the sort of processes and rigged system to endure, all the work we might be doing with communities and all the work we might be doing to kind of build social infrastructure would be compromised, because there wouldn’t be the money to actually fund the social services or fund the environmental services or build the infrastructure, because it was all going to be moving to the top.
And so, we basically are trying to bring this—put this issue very centrally into the domain of leadership in countries around the world. So, in addition to this particular study that we’ve released, which is really our effort to kind of drive the global narrative and, to some degree, push it through the Davos event, we’ve also released studies on inequality in Mexico, in Peru, in Malawi. And so we’re actively driving the discussion on inequality down to the country level. At this point in time, for example, there are 19 billionaires in Africa, something that people aren’t aware of. And yet—and so, this same phenomenon is happening on the African continent in the way it’s happening here in the U.S.
30 percent of all African financial wealth was thought to be held offshore. In other words, that’s the sort of evidence of sort of the same kind of phenomenon we see here in the U.S. of using tax havens, that probably a lot of that money is, you know, in Isle of Man and Guernsey and so forth. I think we’re seeing a lot of kind of interesting things happening with, you know, money in the financial system kind of pursuing sort of odd kinds of outcomes. For example, one of the things we found was, in the aftermath of the financial crisis, when the value of equities went down, we actually found moneys from pension funds in the United States actually becoming a part of a land grab process in Africa, where actually money was going into the African continent to kind of participate in efforts to secure long-term leases on valuable agricultural land as a hedge against a potential future food crisis. So, in other words, that money had to find some place to go, and the equities market wasn’t a good place, so it starts to move in perverse ways in other parts of the world.
climate change is actually occurring. It’s not something that’s down the road. It’s—people are living the experience of climate change in many countries of the world. And the poorest populations across the world, particularly in Africa and South Asia, are experiencing the consequences of that. They’re experiencing increased rainfall or unpredictable rainfall. They’re experiencing, you know, reduced drought cycles that are having a variety of impacts on their agriculture. And what we’re arguing for is adequate, if you will, finance for those countries that are suffering the consequence of climate change, in the form of, I suppose you might say, a part of the package deal of support—what’s referred to as adaptation. So, while we’re focused, as with the environmental community, very heavily on mitigation of carbon increase and trying to get our—get the carbon levels down, we also think there’s an equity issue there in terms of the responsible countries—our own, which produces 25 percent of the carbon annually—to actually finance the consequences in the developing world.
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Raymond Offenheiser
president of the international relief and development organization Oxfam America. The organization has just released new report called “An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped.”
— source democracynow.org