World works to make the few richer

The 85 richest people in the world have as much wealth as the 3.5 billion poorest persons in the world.

It’s hard to choose a single appropriate adjective for this statistic – depressing, frustrating, incredulous, and startling. And what would be the public reaction? It has ranged from anger at such inequality, to cynicism with the idea that this is the “real world.”

Income equality is the worst it has been, on a global scale, since the 1920s. And just to remember, the 1920s was the period of the world depression. It also signalled the beginning of violent class warfare – the poor revolting against the rich. This led to the rise of communism and to the Second World War and the Cold War when the world was on the brink of nuclear annihilation.

Last November 24, 2013, in his Papal Exhortation, Pope Francis said, “Inequality is the root of social ills.”

The World Economic Forum considers the widening income disparities as one of the biggest worldwide risks in the coming 12 to 18 months. The report says: “…inequality is impacting social stability within countries and threaten security on a global scale.”

President Barack Obama made income inequality the theme of his State of the Nation speech.

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The British development foundation Oxfam has recently released a study with some serious and worrying trends. Among these are:

• Almost half of the world’s wealth is now owned by just one percent of the population.

• The wealth of the one percent richest people in the world amounts to $110 Trillion. That is 65 times the wealth of the bottom 3.5 Billion of the world’s population. The total wealth of this bottom half is actually equal to the richest 85 people in the world.

• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.

Here is another table that is revealing. For this one I focused on Southeast Asian countries.

There have been many proposals being made that will address this gigantic income inequality.

The first is to ensure progressive taxation. The higher the income, the bigger the percentage of tax that must be paid. There must be no dodging of taxes in their own countries and there must be an end to the use of tax havens as a means of evading taxes. There must be an end to practices that allow business owners, legally or illegally, to pay lower income taxes than their subordinates.

Pope Francis : “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.”

The second common proposal is to demand a “living” wage rather than just a minimum wage. This living wage will allow a typical family to at least have minimum nutrition, health care and decent shelter to live a life of human dignity. It should also allow families to afford decent public education for their children.

But any demand for an increase in minimum wage has always been met with opposition and warnings of economic doom by the business sector, whether here or in the United States. One way of equalizing the power of the rich and the poor is by supporting labor unions and workers’ rights organizations to allow the laborers to have a greater voice. The other way is for government to intervene more actively in business even if it is accused of being populist or socialist. Actually, Pope Francis defended the right of government to act with vigilance to defend the common good. He condemned the “ideologies which defend the absolute autonomy of marketplace and financial speculation.”

This rise in income inequality is the reason that poverty reduction has become less responsive to economic growth in countries like the Philippines, the United States and Thailand.

I came back from a recent trip to the richest country in the world – the United States. I spent a few weeks in Northern California with my daughter, son-in-law and two grandsons. We stayed in the suburban part of the so-called Bay Area and life here was the American dream. Every house had a well manicured lawn, at least two cars, and occasionally deer would cross the street at night. The public roads were very clean and everyone obeyed all the traffic laws.

There were literally several shopping centers and malls with a few minutes’ ride from the house. There were all types of outlets and great restaurants. But 45 minutes away by train was the San Francisco-Oakland area. And here there two Americas exist side by side.

There were large stores and very chic restaurants. But there were beggars on the street and homeless people sleeping on the streets and in the subway station. I overheard a policeman warning two tourists not to venture into a certain district because it was too dangerous.

My son went to see a football game in Oakland. After the game, he saw the police chasing away illegal vendors and a 15-year old approached him showing off a wad of dollar bills and what looked like drugs he was peddling.

Then I heard on American television that the Republicans refused to increase the minimum wage and offer health insurance to the 40 million who could not afford it. And this is the richest country in the world.

In Thailand, the political violence is caused by the disparity between the income of the rural, northern poor farmers and the Bangkok elite.

We must heed the warning of Pope Francis : “…until exclusion and inequality in society and between peoples are reversed, it will be impossible to eliminate violence. The poor and the poorer peoples are accused of violence, yet without opportunities, the different forms of aggression and conflict will find fertile terrain for growth and eventually explode.” –Elfren S. Cruz (The Philippine Star)