There’s a new billionaire every other day, the report finds.
A new report by British charity Oxfam finds that the gap between the rich and the poor increased substantially in 2018. Every year, the NGO releases an annual evaluation of economic inequality on the planet. Although the work is not published in a peer-reviewed journal, Oxfam works closely with researchers and the report is one of the most important benchmarks for assessing global wealth. They used data from Forbes and the Credit Suisse Global Wealth datebook for its calculations, calculating individual wealth as an individual’s assets minus debts.
The results are striking: the world’s 26 richest people own as much wealth as the poorest 3.8 billion people. The number of billionaires owning as much as half the population is in a continuous decrease, from 62 in 2016 to 43 in 2017 to 26 in 2018.
It’s not that the poor are getting poorer. Overall, the standard of living has increased systematically in the past few years. However, the rich are gathering wealth at an unprecedented rate. In the 10 years since the economic crisis, the number of billionaires has doubled, and last year saw the biggest increase in the number of billionaires in history. In 2018, there were at least 2,200 billionaires in the world.
“Last year saw the biggest increase in billionaires in history, one more every two days. Billionaires saw their wealth increase by $762bn in 12 months. This huge increase could have ended global extreme poverty seven times over. 82% of all wealth created in the last year went to the top 1%, while the bottom 50% saw no increase at all,” Oxfam writes.
There’s nothing fundamentally wrong with the rich getting richer. The problem, Oxfam emphasizes, is that the extreme wealth is often not earned, undertaxed, and causing dramatic inequality. In the UK, for instance, the poorest 10% are paying a higher effective tax rate than the richest 10% (49% compared with 34%) after VAT is taken into account. In total, Oxfam says, 2,200 billionaires worldwide saw their wealth grow by 12%, while the poorest half saw its wealth decrease by 11%.
“Because of high and rising inequality within countries, the top 1% richest individuals in the world have captured twice as much growth as the bottom 50% since 1980. Wealth is skyrocketing at the top and becomes entrenched. Oxfam’s research, which describes these worrying trends, is essential reading. Now is the time to reward work, not wealth,” comments Gabriel Zucman, Professor of Economics at University of California, Berkeley.
Not everyone is convinced by Oxfam’s methodology, though. For instance, the survey also counts people with negative wealth. For instance, if a student starts university and gets a massive loan while having no assets to his name, he will have negative wealth — although he would (very likely) not be among the world’s poorest. In 2015, Oxfam’s Nick Galasso conceded that their database featured over 158 million Americans and Europeans in the bottom decile that year — which is unlikely to be truly accurate. However, Galasso also offered a solid defense: if the bottom decile is removed, the overall wealth trend remains similar. Furthermore, even considering these Americans and Europeans, the vast majority of the world’s poorest people consists of people in the developing world which are struggling. But according to the World Bank, the number of people living in extreme poverty is consistently decreasing, so it’s hard to reconcile the two sides.
The truth is that we’re not really sure how to measure wealth and wealth distribution — but here’s the important takeaway. While some scientific criticism on Oxfam’s report is certainly warranted, the overall picture it paints is absolutely true. The rich are getting richer, and economic inequality is rising at an unprecedented pace. We will all have to bear the consequences.