More on poverty and economic inequality
On the occasion of our launch of the report "Inequality Inc." we want to answer some common questions about poverty and inequality. Oxfam's vision is an equal and just world without poverty, where everyone's equal value and rights are respected and fulfilled, and where people have a say in their own lives. Our research is an important part of that vision.
How has global poverty evolved since 2020?
The World Bank, IMF and UN have sounded the alarm about high levels of inequality and that progress in eliminating poverty has stalled since 2020. For example, the World Bank has confirmed that the number of people living on less than USD 5.5 a day is higher now compared to 2019, and that the gap between the rich world and the Global South is growing for the first time in 25 years.
Although extreme poverty is decreasing again after a sharp increase during COVID-19, this is not the case for the poorest countries. If you look at poverty, and not just extreme poverty, using the World Bank poverty line of $5.5 a day, there are more poor people now than in 2019. This reflects what Oxfam sees in our work across the world. The world has almost certainly missed the target to eradicate extreme poverty by 2030 - and at the current rate, poverty will not be eradicated for 229 years. This is not alarmism or cherry picking, but a realistic picture of where we are in 2024.
But if the economy recovers, won't poverty decrease?
The whole message of the Oxfam report is that this decade, since 2020, is a sharp break from previous years in many ways. One of those things is that we don't believe that poverty will continue to decline at the rate it has in recent decades. We believe that our estimate is realistic - given the extraordinary crisis years that we have already seen in this decade - with pandemics, soaring food and energy prices, wars and many nations in the Global South having huge debts and facing bankruptcy. This is also the position of the World Bank, the UN and others.
You write that 5 billion people are poorer. How much poorer?
On average, the 5 billion poorest people in the world experienced a 0.2% reduction in assets.
Oxfam used the figures from the UBS Global Wealth Report 2023, which is divided into deciles, every 10 percent. The bottom 70% did not see their wealth decrease, but the bottom 60% did, and the bottom 50% even more. We have therefore chosen to cut the figures from the bottom 60% to show how many people saw a reduction in their assets. It is therefore natural that the average decrease is small for the 60% because that's where the difference starts between those who had increased assets and those who had decreased assets.
How have the finances of the richest developed since 2020?
In this year's report, Oxfam focuses on the five richest, but billionaires as a group have also seen huge gains since 2020. There are four times as many dollar millionaires in the world as there were at the turn of the century, and according to the UBS Global Wealth Report, huge increases in the number of millionaires and billionaires are expected in the coming years. Even though many people lost money at the beginning of the pandemic and the economic crisis, the wealthiest people have increased their wealth, even compared to 2019 before the pandemic.
Is it a problem that the world has successful companies?
Absolutely not, we want to see successful companies - but our understanding of success is not how much a company can enrich a handful of shareholders, but how well it contributes to the common good/pays decent wages and protects the environment. The economy, and more importantly millions of ordinary people, do not need the excessive profit chasing we have seen from companies in recent years. For example, according to the European Central Bank and the IMF, corporate profiteering is something that has significantly pushed up inflation.
Why do you complain about wealth? Aren't you supposed to work to fight poverty?
Oxfam has no problem with rich people per se. However, extreme wealth is a symptom of a broken economic system. Extreme wealth causes a society with a huge concentration of power in the hands of a few. When individuals are richer than countries, democracy risks being undermined, which should worry anyone who cares about free, democratic societies. The extreme inequality between rich and poor undermines the fight against poverty, damages economies and creates public frustration. Unequal societies create social unrest, political instability, crime and violence. In addition, the richest people emit by far the most carbon dioxide and fuel the climate crisis with their investments and lifestyles.
Nor are we alone in recognizing the problem of inequality. In addition to the World Bank, IMF and UN, a recent survey of over 2,300 millionaires and billionaires shows that 74% are in favor of increased taxation of wealthy individuals, with the proceeds going towards improving welfare and addressing the cost of living crisis. As many of them say themselves, they would be proud to pay more tax - not least to reduce inequality.