Extreme wealth is indefensible

What is difficult to understand about those who make millions of dollars a year is why they ever need that kind of money for? Who could ever use that much? What are they even spending it on? Why do they actually want it?

• These people live like monarchs. They live in almost ludicrous luxurious excess.They make no effort to curb their consumption. 
• When they want something, like a piece of designer clothing or a fancy dinner, they simply buy it. An expensive meal does not require an occasion. If the family wants to go out to a pricey restaurant, they just do it.
• They don’t have to do household chores. Everything is taken care of by the housekeeper, gardener, housemaid, driver etc. It is difficult to fathom living like this.
• Yet most of their income still just gets tossed into their savings account. This is truly extraordinary. 
• Whether increased taxes on the wealthy will have useful consequences is arguable. What is unimaginable is that increased taxation would deprive these people in any serious way.
• These people donating to charities may not exceed 1% of their annual income. It’s almost as if they care far more about feeling like they are charitable than actually being charitable.
• They rarely encounter criticism for the moral aspects of this kind of life. In wealthy circles, everyone has a strong interest in allowing each other to feel like they are good people. So if one person mentions about their donating to charities, the friend is unlikely to criticize. Rarely do elites tell other elites that it is wrong to be an elite, for obvious reasons. 
• And the most contact this person has with the working class probably comes during chance encounters with the pool man, who is unlikely to voice any judgment he may secretly hold about their decadent bourgeois habits.
• Even $400,000 annually is far too much to live on. It is very difficult to even grasp the amount of money possessed by the 20 people who own more than half the country’s wealth. If it takes a lot of effort to fritter away $400,000 each year, imagine how the billionaires struggle to think of things to buy. That’s why their spending becomes outright ludicrous. Once you go past the first million, there’s not really much more pleasure you can buy, so you have to resort to nonsense.
• The tax policy implications are debatable. But it’s uncontroversial to conclude that the possession of enormous wealth, especially in a time of great suffering, is just indefensible in every way. Even $400,000 a year provides enough to live in extreme luxury. Anything over that is just obscene. 
• Risk-taking investors deserve higher returns, but actual returns do not necessarily reflect merit. The determining quality of  billionaires is to be lucky -- the other qualities being necessary but not sufficient. And luck is not meritocratic.

Inequality does not cause poverty. Capitalism has resulted in much more economic inequality in China, but much less poverty. Studies have shown that lower taxes for the wealthy don't necessarily result in increased economic growth. Extreme wealth contributing to inequality were seen as irrelevant and a prerequisite for the growth that would also help the poorest, as the wealth created trickled down to the benefit of everyone. But rather than creating jobs and lifting others out of poverty super-rich minorities cause social unrest and depress demand for goods and services, limiting growth and innovation as a result. Extreme wealth causes extreme inequality that impedes poverty alleviation, slows economic growth, compounds gender inequality, drives inequality in health and education outcomes, undermines economic mobility over generations, fuels crime, undermines social cohesion, and harms democracy.

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That man is rich, whose pleasures are the cheapest ... Henry David Thoreau
Honesty is incompatible with amassing a large fortune ... Mahatma Gandhi 

At least 50% of the world’s billionaire wealth is non-meritocratic owing to either inheritance or a high presumption of cronyism. Another 15% is not meritocratic owing to presumption of monopoly. All of it is non-meritocratic owing to globalization. By contrast, crime and technology are found to be negligible sources of extreme wealth. The argument that "These eight billionaires, through the salaries and stock paid to their employees and the stock owned by millions of shareholders, have made millions of people rich and improved the lives of billions of people through the use of their products. They have not made anybody poor." is fine but governments must tax them at higher tax rates and spend the proceeds for accelerating eradication of poverty. These billionaires have a greater obligation for contributing for this cause. 

Reward work, not wealth

Deccan Chronicle | Jan 23, 2018

The year 2017 saw the billionaires increase their wealth by $762bn. There are now 2,043 dollar billionaires worldwide. Nine out of 10 are men. This huge increase could have ended global extreme poverty seven times over. 82% of all wealth created in the last year went to the top 1%, while the bottom 50% saw no increase at all. Poorly paid work for the many is supporting extreme wealth for the few. Women are in the worst work, and almost all the super-rich are men. Governments must create a more equal society by prioritizing ordinary workers and small-scale food producers instead of the rich and powerful.

• We have an economy that serves the interests of the 1%. If we want to heal our fractured and unstable world, we need to change course fast.
• In 2016, annual share dividends received by super rich are several billions of dollars. Whereas Anju works sewing clothes in Bangladesh for export. She often works 12 hours a day and has to skip meals because she has not earned enough money. She earns just over $900 dollars a year.
• Inequality crisis is real. In many countries wage inequality has increased and the share of labour compensation in GDP has declined and profits have increased more rapidly. 
• Even in emerging countries with rapid economic growth, many workers, including a disproportionately large share of women, remain trapped in low pay and poverty wages.
• This is in contradiction to goal 10 of UN 2030 Agenda of Sustainable Development Goals that calls to ‘reduce inequality within and among countries’ and Goal 8 calls for inclusive economic growth, full and productive employment and decent work for all. The key to reducing inequality is ‘well paid, decent work'.
• The super-rich call this ‘stoking class warfare’ but the truth is that in many societies the super rich have in effect declared war on the poor. The urgent need is to rebalance the tables, defend the rights of the poor, and re-establish fair societies that meet the needs of all.
• The recipe for reducing inequality is simple. A minimum wage on which you can live, social protection and companies’ compliance with human and labour rights. Freedom of association and collective bargaining rights are fundamental enablers. Governments must act. Companies must face up to their responsibilities. The global economy will falter with too many billionaires. An economy for working people, not wealthy owners will end the inequality crisis.
• Brazen corporate tax evasion, privatization, service cuts and decades of stagnating wages have not happened by accident. Radical action is needed to fund universal public services, decent work and redistribute wealth to avoid continued rise of populism and racism of the far right.
• People need wages that they can live on with dignity. But uncontrolled corporate greed is accelerating inequality and insecurity. More widespread collective bargaining would re-balance the global economy so it works for everyone, not just the 1%. It’s time for governments to act.
• The current levels of extreme inequality far exceed what can be justified by talent, effort and risk-taking. Instead they are more often the product of inheritance, monopoly or crony connections to government.
• Monopolies fuel excessive returns to owners and shareholders at the expense of the rest of the economy. 
• Approximately two-thirds of billionaire wealth is the product of inheritance, monopoly and cronyism. Despite hard work, it is difficult or impossible for ordinary people to increase the money they have.
• Ever-increasing amounts are being returned to wealthy shareholders, fueling a relentless squeeze on workers.
• The fortunes of the richest are often boosted by tax dodging by rich individuals and by the corporations of which they are owners or shareholders. Using a global network of tax havens the super-rich are hiding at least $7.6 trillion from the tax authorities. This means the top 1% is evading an estimated $200bn in tax.
• Billionaires who have made their fortunes in competitive markets are often doing so by driving down the wages and conditions of workers, forcing countries into a suicidal race to the bottom on wages, labour rights and tax giveaways.
• The poorest children, and especially the poorest girls are condemned to die poor, as opportunities go to the children of richer families.
• Between 1990 and 2010, the number of people living in extreme poverty halved, and has continued to decline since then. This tremendous achievement is something of which the world should be proud. Yet had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty. Unless we close the gap between rich and poor, we will miss the goal of eliminating extreme poverty by a wide margin. Even if the target of reducing poverty to 3% is achieved, around 200 million would still be living on $1.90 a day in 2030.
• Those who have been lifted out of extreme poverty often remain very poor, in debt and struggling to feed their families. Many may be only one step away from slipping back. More than half of the world’s population lives on between $2 and $10 a day.
• This is a deeply inefficient way to eliminate poverty, with just 13 cents in each dollar of global income growth going to the bottom 50%, and 42 cents going to the top 10%. At this level of inequality, the global economy would have to be 175 times bigger just to push everyone above $5 a day, which would be environmentally catastrophic.
• Globally, more men than women own land, shares and other capital assets. Men are paid more for doing the same roles as women, and men are concentrated in higher paid, higher status jobs. It is no coincidence that women are vastly over-represented in so many of the poorest paid and least secure jobs. Social norms, attitudes and beliefs devalue the status and abilities of women, justify violence and discrimination against them, and dictate which jobs they can and cannot expect to hold.
• Gender inequality is neither an accident nor new. Our economies have been built by rich and powerful men for their own sake. The neoliberal economic model has made this worse – reductions in public services, cuts to taxes for the richest, and a race to the bottom on wages and labour rights have all hurt women more than men. 
• Our economic prosperity is also dependent upon the huge but unrecognized contribution made by women through unpaid care work. It could be 20% of GDP. Poor women have to do more unpaid care work than richer women.
• To secure equality between women and men, we must radically reduce economic inequality. We must define a vision for a new human economy, one that is created by women and men together, for the benefit of everyone.
• For many of the poorest, income is from small-scale food production. For many others, it is from wages. 
• Almost one in three workers in emerging and developing countries live in poverty, and this is increasing.
• The most shocking element of the global labour market today is modern slavery. About 40 million people were enslaved in 2016, 25 million of them in forced labour. Illegal profits from forced labour amounts to more than $44bn. Forced labour has broader social and economic costs, in terms of impeding economic development and perpetuating poverty.
• Almost 43% of the global youth labour force is still either unemployed, or working but living in poverty. More than 500 million young people are surviving on less than $2 a day.
• Four million of those in slave labour are children. There are more than 150 million children aged 5 to 17 undertaking some form of child labour, nearly one in 10. 
• Between 1995 and 2014, in 91 of the 133 rich and developing countries wages had failed to keep pace with increased productivity and economic growth.
• In many countries no minimum wage or collective bargaining and most minimum wages are significantly lower than what is needed to survive. Minimum wages are also poorly enforced, and the enforcement is worse for women than for men.
• Temporary is the norm in developing countries, and is on the rise in rich nations. Temporary employees have lower wages, fewer rights and less access to social protection. Women and young people are more likely to be in these jobs. 
• For many, their work is dangerous and harmful to their health. More than 2.78 million workers die every year because of occupational accidents or work-related diseases – one every 11 seconds.
• ‘Sexual harassment is very common in this kind of work. At least 90% of women workers are harassed by both the customer and the owners. Justice is on the side of companies.’ – Eulogia Familia, a union leader representing hotel workers in Dominican Republic.
• Organized workers form a counterbalance to the power of wealth and have been central to the creation of more equal and more democratic societies. Trade unions increase wages, rights and protections, not just for their members but also for workers throughout society. Unfortunately, a downward trend is observed in trade union density rates all over the world since 2000. This is linked  to increasing inequality. It has been compounded by the rise in use of outsourcing and temporary, short-term contracts to undermine labour rights. 
• Attacks on union members were recorded in 59 countries. Over three-quarters of countries deny some or all workers the right to strike. 
• The worst jobs predominate in the informal sector of the economy, which goes largely unregulated. Women and young people are over-represented in the informal sector. Large multinationals reduces costs by outsourcing production to smaller businesses that employ informal labour, that pay workers lower wages, and provide less secure work enabling multinationals to circumvent labour and social protection legislation. 
• A perfect storm of related factors is combining to simultaneously drive up the bargaining power of those at the top, and drive down the bargaining power of those at the bottom. 
• At the bottom, workers have seen rights eroded, and trade unions undermined, reducing their bargaining power. Corporations are consolidating more and more, and are under huge pressure to deliver ever greater returns to wealthy shareholders. These returns often come at the cost of workers and tax dodging. Corporations use the mobility of their investments to force the race to the bottom between countries on tax and on wages. The threat of greater automation also puts more power in the hands of wealthy owners, and more pressure on workers.
• The economy not need be the way it is. We can create a more human economy that puts the interests of ordinary workers and small-scale food producers first, not the highly paid and the owners of wealth that could end extreme inequality. 
• We must reject dogmatic adherence to neoliberal economics and the unacceptable influence of elites on our governments. The economy should be  more equal from the start, and use taxation and public spending to redistribute and create greater fairness. 
• Studies show that employee-owned companies generate more employment growth and higher pay for their employees. Decision making is democratic, job security is promoted and the highest paid earns no more than nine times the lowest. Our economies could be built with these progressive structures if political leaders prioritize policies that finance, support and foster such models. 

WHAT HAS TO BE DONE

• Stop talking and give people what they want. A more equal world.
• Clamp down on inequality not democracy.
• To tackle extreme economic inequality, we must end extreme wealth and gender inequality. 
• Increase access to decent work.
• Regulation can be used to ensure that workers have more bargaining power; that we end tax havens; that monopolies are broken up; and that the financial sector and technological progress benefit the majority. 
• Governments and businesses can both act to ensure that poverty wages, slavery and precarious and dangerous work are seen as morally unacceptable. 
• Trade and investment can spread opportunity, products, services and prosperity far and wide.
• Government must provide education, healthcare and social protection for all, and pay for this by ensuring rich individuals and corporations pay their fair share of tax. 
• Government's investment in healthcare, education and social protection reduces inequality. 
• Quality public services benefit women, as they reduce the need for unpaid care and redress inequalities in access to education and health services. 
• Both rich individuals and rich corporations should pay more in taxation, and avoid paying the tax that they owe. 
• We need to see an end to tax havens and the global web of secrecy that enables rich corporations and individuals to avoid paying their fair share of tax. 
• The global race to the bottom on tax for corporations and the rich needs to be reversed. Governments should follow the lead of Chile and South Africa, which have both increased taxes on rich corporations and individuals. 
• Governments should aim for the collective income of the top 10% to be no more than the income of the bottom 40%.
• To end extreme poverty, we must also end extreme wealth. Governments should use regulation and taxation to radically reduce levels of extreme wealth, as well as limit the influence of wealthy individuals and groups over policy making. 
• Every country should aim to produce data on the wealth and income of everyone in society annually, especially the top 10% and the top 1%. 
• Implement policies to tackle all forms of gender discrimination, promote positive attitudes towards women and women's work, and rebalance power dynamics at the household, local, national and international levels.
• Recognize and protect the rights of citizens and their organizations to freedom of speech and association.
• Incentivize business models that prioritize fairer returns, cooperatives and employee participation in company governance and supply chains. 
• Require all multinational corporations to conduct mandatory due diligence on their full supply chains to ensure that all workers are paid a living wage.
• Limit returns to shareholders and top executives pay is no more than 10 times their median employees’ pay. 
• Eliminate the gender pay gap and ensure the rights of women workers are fully realized.
• Eliminate slave labour and poverty pay. 
• Promote the organization of workers and protect the rights of workers to unionize and strike, and rescind all laws that go against these rights.
• Eliminate precarious work and ensure all new forms of employment respect workers’ rights. Ensure the rights of domestic workers, migrant workers and the informally employed. 
• Publicly commit to achieving universal free public services and a universal social protection floor.
• Refrain from directing public funding to incentives and subsidies for healthcare and education provision by for-profit private sector companies and expand public sector delivery of essential services. 
• Strictly regulate private facilities for safety and quality, and prevent them from excluding those who cannot pay. 
• Use tax to reduce extreme wealth.
• Call for a new generation of international tax reforms to end the race to the bottom on tax. Tax rates should be set at a level that is fair, progressive and contributes to reducing inequality.
• Eradicate the use of tax havens and increase transparency, by blacklisting tax havens and automatic sanctions against the corporations and rich people that use them.
• No dividends or paying bonuses or buybacks to executives if no living wage for workers or producers in their key supply chains. 
• Companies should ensure worker representation on boards and remuneration committees to include the voice of other stakeholders, like workers in supply chains and local communities, into decision making processes.
• Support transformational change in supply chains.
• Share profits with the poorest workers.
• Support gender equality in the workplace.
• Reduce pay ratios. Publish the company’s pay ratio between CEO and median pay, and reduce this ratio to no more than 20:1.

Support collective bargaining. Remove barriers to women workers participating in unions and leadership positions, and promote women workers raise their voices safely and effectively. We must redesign our economies to reward ordinary workers and small-scale producers. We must stop excessively rewarding the super-rich. It is what people want. It is what our leaders have promised. Together we can end the inequality crisis. We can build a more human economy and more equal world for our children. 

Read the source report at www.oxfam.org

We can have democracy in this country, 

or we can have great wealth concentrated in the hands of a few, 

but we can't have both ... Justice Louis Brandeis, US Supreme Court

The global economy on a wildly unequal trajectory is absurd and unsustainable. For getting everyone above poverty line (> $5 per day) would take 100 years, require $1m GDP per person and per capita income about $100,000. As a result, ending poverty under the current model is slow, inefficient and runs into planetary problems. Already the present global economy is in ecological overshoot. A radical shift in distribution to favour the poorest is the only way to reconcile the twin challenges of halting catastrophic climatic change and ending poverty.