As TPP looms, report reveals top one per cent own more than the rest of the world

The UK charity Oxfam has revealed that the top one per cent of the world now own more than the rest of the world put together.

Jan 21, 2016

By Anil Netto
The UK charity Oxfam has revealed that the top one per cent of the world now own more than the rest of the world put together.

It also pointed out in a statement, released ahead of the annual Davos gathering of the business elite, that 62 of the world’s richest people now own as much as the poorer half (3.6bn) of the global population. This is worse than 2010, when 382 of the richest people owned as much as the poorer half.

Since 2010, the wealth of the 62 richest people has risen by half a trillion US dollars to US$1.8 trillion. Over the same period, the wealth of the poorer half of the world has plunged by half a trillion dollars, a 41 per cent drop.

Thomas Picketty, in his book Capital in the Twenty-First Century, has shown us that income inequality is driven by a higher rate of return on capital (i.e. dividends or interest) compared to the rate of economic growth.

Another key reason for rising inequality, points our Oxfam, is the lower share of national income going to workers, apart from the widening gap between salaries at the top rung and the bottom rungs. The bottom rung is where the majority of the workers tend to be women — and migrant workers.

Widening inequality can stir social discontent and give rise to social ills.

If that’s not bad enough, a report Illicit Financial Flows from Developing Countries: 2004-2013 published last month by Global  Financial Integrity, found that US$7.8tn flowed illicitly out of developing and emerging economies in that period. The illicit outflows increased by 6.5 per cent per year — almost twice as fast as the global GDP increase.

The report said Malaysia alone lost almost half a trillion US dollars or US$419bn, ranking us No. 5 globally. Using today’s exchange rates, that would amount to a staggering RM1.8tn! Just imagine how much wealthier the nation would have been, how much funds would have been available to empower the poor.

Oxfam wants to see an end to tax havens that enable wealthy individuals and companies to avoid paying tax. It notes that offshore centres, such as the British Virgin Island and the Cayman Islands, have increasingly been used by wealthy individuals and companies to store their (ill-gotten?) wealth.

The wealthy elite around the globe are estimated to have parked US7.6 trillion in offshore accounts. (The Cayman Islands also  happens to be where the debt-ridden 1MDB parked some of its ‘funds’ recently.)

It is also estimated that tax dodging by multinational corporations costs developing countries more than US$100bn every year, says Oxfam.

Loss of tax revenue erodes government finances, which could have been used to reduce poverty and narrow inequalities.

Governments then cope with the loss of tax revenue from the wealthy and the rich corporations by imposing regressive taxes such as, in our case, the deeply unpopular goods and services tax, which has burdened the public.

Or governments may decide to slash subsidies on essential services, which could give rise to higher fees or tariffs. Take a look at the way the government has cut its funding of public universities in the last federal government budget.

Oxfam proposes a three-prong strategy to tackle widening inequality:

-- crack down on tax dodging
-- increase investment in public services and
-- take action to boost the incomes of the lowest paid

As if the advantage enjoyed by the superrich is not enough, the Trans-Pacific Partnership Agreement now looms.

We won’t get technical here, but suffice to say that the TPPA will give more power to the multinational corporations to extend their market share and protect their profits, even if a national government wants to act to protect the interests of the public.

The TPPA makes it even more likely for national governments to be sued if their profits are threatened by government policy. The MNC can haul the government — not to our Malaysian courts but to opaque international arbitration tribunals, with no accountability to the Malaysian public.

If the MNC succeeds in its case, the Malaysian government may have to fork out billions of ringgit in public funds, even if it had acted to protect public interest.

As Catholic Social Teaching tells us, the economy must serve the people — not the people serving the economy, and certainly not the economy serving MNC interests.

Which is why our members of parliament deliberating on the TPPA on January 26-28 must send a clear message that they reject the TPP Agreement and will not allow our economy to be overwhelmed by MNC interests.

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