On one side stand the tall, white, pristine homes, barely lived in, owned by the sultans, tyrants, tycoons and oligarchs, immaculate and untouched. Just down the road a couple miles away, fickle, and struggling to survive are the overcrowded, damp, underlit and unheated flats of parents who go without lunch or dinner to feed their toddlers. This is London, in 2015. This is the inequality gap.
As the news bulletins and tabloids have reported in the last few years, many of us know that the inequality gap is increasingly on the rise. Therefore, it comes as no surprise that in Britain the richest 1 per cent have accumulated as much wealth as the poorest 55 per cent put together, and that 5 billionaire families control the same wealth as 20 per cent of the population. This wealth inequality has risen four times faster in the 7 years after the economic crash compared with the 7 years before the crash.
This is not only true for the UK. Oxfam says that a mere 85 richest people own the same wealth that the poorest 3.5 billion people own. The richest 1 per cent own 48 per cent of global wealth, i.e., 1 per cent own 65 times as much as the poorest half.
In Russia, 110 billionaires control 35 per cent of the nation’s wealth and 93 per cent of the country have assets of less than $10,000.
A UN-Habitat’s State of the World’s Cities report has published that South African cities have the highest levels of inequality in the world and an Oxfam report states that the inequality gap in South Africa, is even bigger than during the Apartheid.
And in India, which is estimated to house one-third of the world’s poor, businessman Mukesh Ambani’s 27-storey, 400,000 square-foot skyscraper home, complete with a health floor and a full size ballroom stands tall.
The US Bureau of Labor Statistics said in a report that ‘real wages for most U.S. workers have increased little if at all since the early 1970s, but wages for the top 1 per cent of earners have risen 165 per cent, and wages for the top 0.1 percent have risen 362 percent’.
A report published by Credit Suisse has suggested that by 2019 there will be a 40 per cent rise in this wealth. This forecasted increase is a colossal assertion over the lives of others. It is a claim over their labour, their property and their livelihood.
This inequality gap is not one that has occurred due to luck or chance. Oxfam argue that this growing inequality has been determined by a ‘power-grab’ by wealthy elites, who have simply rigged the political process to bend the economic system in their favour. One may say that the recent tax avoidance scandal with HSBC is proof of this.
Further, in the UK for example, as Cole Moreton states in the Independent, ‘the Sultan paid £1,942 a year in council tax for a house in 2012: just £32 a month more than the council tax paid by the Braithwaites, a pensioner couple living with their daughter and grandchildren in a rented home in Golborne’. This low property tax and a discount for a second home in London has drawn in more wealthy people, thereby fuelling further growth in inequality.
Oxfam Executive Director, Winnie Byanyima, states that ‘the widening inequality is creating a vicious cycle where wealth and power are increasingly concentrated in the hands of a few’. She goes on to say that developed and developing countries alike have created this vicious cycle generated by low tax rates, the best health and the best education for the wealthy, which in turn gives them and their children the best opportunity to influence both politics and the economy. This, she argues creates a ‘cascading spiral of privilege and disadvantage which will continue down the generations’. Thus, the rich are able to multiply their wealth through influence to skew policies in their favour on issues such as financial regulation, tax havens, anti-competitive business practices, low tax rates on high incomes and cuts in public services, for the majority.
Reports have suggested that opinion polls in Spain, Brazil, India, South Africa, the US, the UK and the Netherlands have found that a majority in each country believe that wealthy people exert too much power. These polls have found that in the UK 67 per cent agreed that the rich have too much influence over where this country is headed.
Ownership and control of various facets of a society by a certain group of people, namely the wealthy, will mean that they will influence policies to reflect their wellbeing. For example, if they own a public media outlet, then they will ensure that the public see them, in the way they want to be portrayed. Further, politicians would have to depend on the rich to sponsor their campaigns. As a result, politicians will be more reactive to the interests and demands of the wealthy. Consequently, the poor will be underrepresented in society.
Moreover, economic inequality makes it easier for the wealthy to secure job opportunities because, the unwealthy will find it harder to sponsor a degree or find a loan for their business ventures, in order to create better career progression for themselves.
Everyone is equal and everyone matters. Therefore, it is everyone’s right, to be able to participate in the current economic system fairly and equally. However, it cannot be said that, today’s system functions through this equality because most decisions and policies are influenced by the wealthy. Thus this system is flawed and cannot be justified, as the wealthy reap the benefits of a race that they have won, but conveniently excluded others from participating in the contest.
How do we overcome this inequality gap? Hope for the future?
The best way to bridge the gap is through the redistribution of wealth. Redistributing assets increases the quality of life of the poor far more than it diminishes that of the rich. Peter Singer has argued that voluntary redistribution is vital as increased income tax and other mechanisms are no different to the activities of figures such as Robin Hood, who steal from the rich to fund the poor.
Following wise words from Shakespeare: ‘So distribution should undo excess, and each man have enough’. Individuals like Bill Gates, Warren Buffet and Michael Bloomberg are great examples to learn from. They are all stellar philanthropists who have donated over 38 billion US dollars towards a good cause. Gates has donated over half his net worth, valued at 56 billion USD. Gates and Buffet together, have created the Giving Pledge, where 69 wealthy individuals and families have signed up to commit to giving the majority of their wealth to philanthropy. Therefore, as Singer argues, it is essential to motivate the rich to take part in acts of altruism and philanthropy in order to recreate a fair and equal world.
By Amayi Mandawala