As business and political leaders meet at the World Economic Forum's annual event in Davos, international NGO Oxfam has released a scathing report on global wealth inequality.
In its paper titled "An Economy for the 99%," the organization estimates that just eight men own the same wealth as the poorest half of the world. The eight individuals are Microsoft (MSFT) founder Bill Gates, Inditex founder Amancio Ortega, Warren Buffet of Berkshire Hathaway, Mexican telecom mogul Carlos Slim Helú, Amazon Inc (AMZN) CEO Jeff Bezos, Oracle (ORCL) CEO Larry Ellison, controversial former NYC mayor Michael Bloomberg and the face of millenial startup success - Facebook (FB) CEO Mark Zuckerberg. Together, they are worth a staggering $426 billion, the same as 3.6 billion people. (See also: Oracle Founder in Wealthy, Controversial Club)
Last year Oxfam had estimated that the 62 richest billionaires owned as much wealth as the poorer half of the world's population, however this number has whittled down to just 8 in their current report owing to an overestimation of the assets owned by the poor in countries like China and India in the 2016 report. Mark Goldring, chief executive of Oxfam GB, told the Guardian,“This year’s snapshot of inequality is clearer, more accurate and more shocking than ever before. It is beyond grotesque that a group of men who could easily fit in a single golf buggy own more than the poorest half of humanity." (See also: A Brief History of Income Inequality in the United States)
The report argues that the rising wealth of the already wealthy is leaving little behind for anyone else as the super-rich avoid taxes, put pressure on wages and influence major governmental decision-making in their favor. Another shocking statistic is that one-third of the world's billionaire wealth is derived from inherited wealth, and 43% is linked to cronyism.
Oxfam's report also states that people across the world have lost faith in governments and democracy is under threat as 'grotesque' economic inequality continues to grow unchecked; instead of the trickle-down effect, wealth is being sucked upwards by the richest of the rich. (See also: The Richest and Poorest Countries Per Capita in 2016)
Many have poked holes in Oxfam's latest report which uses data from the Forbes rich list and Credit Suisse's Global Wealth Databook. The report computes student and other debt as negative net wealth therefore pushing scores of young people in Europe and North America in the bottom half of the world's wealth distribution. Forbes argues that the report ignores the positive steps taken to equalize wealth, such as state pensions and subsidies. It also ignores future earning power, as IBTimes pointed out, which cannot be easily estimated and is omitted from the report's analysis entirely.
Sam Dumitriu of Huffington Post has argued that the report unfairly targets business tycoons who have provided services that benefit masses of people, presenting a skewed view of the world economy where "increased wealth for Gates, Zuckerberg and Bezos means less wealth for everyone else."
Vehement criticism was also presented by Mark Littlewood, Director General at the Institute of Economic Affairs, who accused Oxfam of demonizing capitalism and "conveniently skimming over the fact that free markets have helped over 100 million people rise out of poverty in the last year alone." He took issue with the methodology as did others, stating that adding assets and subtracting wealth to make net wealth estimates gave spurious results. He admonished the organization over their focus on the rich advising them instead to focus on ensuring that 'the right institutional frameworks are in place to encourage economic growth, instead of obsessing over the wealthy.”