Wealth inequality in the world is once again on the rise, according to the World Inequality Index statistics. At the same time, an increasing number of countries are accumulating debt, and to curb that debt, cuts are being made on the lowest-income individuals. The direction is entirely wrong, and narrowing wealth disparities requires an end to austerity policies.
The World Inequality Index report speaks starkly about the distribution of wealth globally. In 2022, the richest one percent of people own 38% of the world’s wealth. This figure is outrageously high and indicates that fiscal policy has been tremendously unsuccessful, especially when, at the same time, an increasing number of people are living in poverty against their own will.
Many crises have resulted in even more wealth flowing to the wealthiest. Unfortunately, this is intentional policy, part of neoliberalism – where losers lose, and the rich get richer. When not everyone can even participate in the game of economic growth, the benefits of economic growth are not distributed evenly. Neither are the drawbacks, as the ones paying the price are the poorest. This trend in wealth disparities shows, in part, that the Trickle-down theory is mere nonsense. Wealth definitely does not distribute evenly, and the poor do not benefit in the slightest from the enrichment of the rich.
By examining the chart, it can also be observed that the richest 10% already owns 76% of all wealth. The wealthiest 10% also produce over half of the world’s emissions, so it cannot be said that the enrichment of some does not come at the expense of others. The lifestyle of the richest is at the expense of everyone, especially the poorest, who suffer immensely from the extravagance of the rich, particularly in the global South.
Wealth disparities between the richest 0.01% and the poorest 50% have grown tremendously
In the same article, WID also published a table on the growth of wealth for the richest 0.01% in comparison to the 50% poorest, representing half of the world’s population.
In 1995, the richest 0.01% owned 8% of the world’s wealth; by 2022, this figure had risen to nearly 12%. To enter this 0.01% group in 1995, one needed to possess wealth of 7.8 million euros, while in 2022, the requirement increased to 21.9 million euros. The gap between the poorest 50% and the wealthiest has grown by 50% during this period. Despite a tremendous increase in global productivity, it unfortunately does not reflect in anything but the wealth of the richest.
The gap between the richest and the poorest leads to increasingly economically unstable societies, a rise in economic crises, mounting national debts, and accelerated inflation. This trend has been particularly noticeable in societies since the 1990s when neoliberalism gained ground in more and more countries. In Finland, for example, public debt has increased significantly due to the neoliberal policies of the 1990s and is at risk of growing further due to cuts proposed by the new government.
Reducing wealth disparities with a global wealth tax could eliminate extreme poverty and create prosperity for the masses
Western welfare states cannot withstand unjust financial policies. Unfortunately, the narrative controlled by the right has shifted the discussion to the notion that state spending has swollen too much or that the economies of states cannot endure because of the poor. In Finland, this is used as a justification for cutting benefits for the unemployed, even though no one would be unemployed if they could choose.
The global growth of income inequality has led to a situation where an increasing number of states are heavily in debt and stifle growth through various cuts. Due to these cuts, a state’s economy is limited to a moderate growth of at most 2%, followed by new cuts that enrich the rich but impoverish the poor. In addition to examining individual states, it is essential to remember that disparities between the global South and North continue to widen, even though there is more wealth in the world than ever before to distribute. Profits are made by exploiting those individuals who have the least wealth and opportunities to demand fair income distribution.
According to various reports, the most effective way to eliminate unjust wealth disparities would be a global wealth tax. According to a study, a progressive wealth tax could generate up to $1.7 trillion in annual revenue. This tax would apply only to the genuinely wealthy, and, for example, homeowners in Finland would not have to fear taxation. To put this into context, this amount could pay off Finland’s national debt over ten times. It’s also nearly as much as the entire GDP of Africa in a year. A global wealth tax could potentially address extreme poverty and famine.
The Current State Persists as Long as the World Adheres to the Right-wing Narrative
Unfortunately, the world adheres to the right-wing narrative, where the status quo regarding wealth is deemed necessary, and growth is believed to require cuts. A sufficient number of people do not question this, leading more and more to live in relative and absolute poverty. The world is burning because idiots are leading it, and we are constantly living beyond our natural resources. If this pace continues, welfare societies will cease to exist, and future living standard cuts will primarily affect the poor and the middle class. Those responsible for the worsening global situation contribute the least to fixing it.
Reducing wealth disparities should be at the core of global politics in the future. If not done, peace and prosperity will not endure much longer.
What’s your take on inequality in the world? How would you solve the problem? Let me know in the comments!