January 23, 2015
1% to Own More than Half the Wealth by Next Year
by Robert Kropp
A briefing by Oxfam reveals that lobbying on budget and tax issues in the US has contributed to
enabling the richest 1% of people in the world to compile 48% of global wealth, a percentage that
is likely to exceed 50% by 2016.
Three and a half billion people now share the same amount of wealth as do the 80 richest
individuals in the world, reports a new briefing by Oxfam entitled Having it all and wanting more. Yet as recently as 2010, “it took 388 billionaires to equal
the wealth of the bottom half of the world‟s population,” Oxfam found.
2014, according to Forbes, there were 1,645 billionaires in the world, 30% of whom are are US
citizens. Oxfam's research reveals that two industry sectors have experienced a disproportionate
increase in the number of billionaires. Thirty-seven individuals from the financial and insurance
sectors became members of the club since March, 2013, as did 29 from the pharmaceutical and
healthcare industry sectors.
Companies in the financial and pharmaceutical sectors enjoy
outsized profits—much of which derives from products and services that are unsustainable, from both
a financial and a social justice viewpoint—and as a result the largely white male executives are
rewarded with compensation that serves to further deepen wealth inequality.
But there is
another avenue for directing the profits of these sectors, besides lining the pockets of corporate
executives. The financial and pharmaceutical industries, especially in the US, are also among those
that invest most heavily in political and lobbying expenditures. “During 2013, the finance sector
spent more than $400m on lobbying in the USA alone, 12% of the total amount spent by all sectors on
lobbying in the US in 2013,” Oxfam reported. “In addition, during the election cycle of 2012, $571m
was spent by companies from this sector on campaign contributions.”
2013, the pharmaceutical and healthcare sectors spent more than $487m on lobbying in the USA
alone,” Oxfam found. “This was more than was spent by any other sector in the US, representing 15%
of $3.2bn total lobbying expenditures in 2013.” The sectors also spent more than $260 million in
campaign contributions during the 2012 election.
And toward what issues are these
profitable industry sectors directing their lobbying expenditures? The federal budget and taxes;
“The expectation is that these billions will deliver policies that create a more favourable and
profitable business environment, which will more than compensate for the lobbying costs,” Oxfam
states. A stark example can be found in the recent Omnibus bill passed by the Republican-dominated
House of Representatives. The bill includes the rolling back of key Dodd-Frank provisions that
prevent too big to fail banks from using taxpayer-insured deposits for investing in the same risky
financial instruments that led to the 2008 financial crisis. It has been reported that lobbyists
for Citigroup originally authored the measure, and that JPMorgan Chase Chairman and CEO Jamie Dimon
personally called legislators to persuade them to get on board.
corporations from the finance and insurance sectors spend their resources on lobbying to pursue
their own interests, and as a result go on to increase their profits and the associated wealth of
those individuals involved in the sector, ordinary people continue to pay the price of the global
financial crisis,” Oxfam states. And while three pharmaceutical companies have been commended for
donating $3 million to the Ebola relief effort in West Africa, those same three companies spent a
total of $18 million in lobbying in 2013.
“Rising inequality is not inevitable,” Oxfam
concludes, and in conclusion points to its own Even It Up campaign. A report published by the campaign in October details in greater depth
many of the causes of rampant wealth inequality, and offers a number of solutions that would begin
to turn the tide toward greater equality.
Few members of the current US Congress are
willing to listen to rational arguments in favor of raising the minimum wage and shifting current
tax burdens. And corporations, for all their claims of social responsibility, still work the halls
of Congress, dispensing millions in return for legislation favorable to the 1%. Wealth inequality
and corporate political spending are two issues on which sustainable investors have engaged with
companies for many years, with a measure of success. However, inequality fueled by lobbying
expenditures continues to grow worse.