Its been reported in this newspaper as well, a fact that is rather difficult to digest; the richest 62 people in the world now own as much wealth as the poorest half of the world's population, according to Oxfam's annual report on the menace of inequality, released yesterday.
Around a year ago, BR Research attended the last reports' launch, back when this number was 80 people. As recently as 2010, it was 388. This is the rate at which wealth is being accumulated at the top. Meanwhile, the wealth owned by the bottom half of humanity (3.5 billion people) has fallen by over a trillion dollars in the past five years - a decline of 41 percent.
In the global context, the report mentions an "elaborate system of tax havens and an industry of wealth managers" to ensure the top players can retain their wealth. Indeed, $7.6 trillion of individual wealth is currently held offshore, at places like the Cayman Islands or the Isle of Man.
Its the same with corporate taxes. Most of the world's biggest corporations relocate their headquarters to lands where tax laws are more relaxed, what is called a "race to the bottom;" for instance, Apple Inc., an American company (and one of the largest in the world), enjoys paying meager taxes in Ireland, taking advantage of what is commonly known as the "Double Irish" arrangement. Oxfam estimates that 9 out of 10 companies have a presence in at least one tax haven.
The report states that economic and policy changes over the past 30 years such as deregulation, privatization, and financial secrecy and globalization have fed this system. Labour income has declined over time. It is not proportional to productivity and growth, and the output is going either to CEOs or to the top 1 percent. The financial sector has resulted in the growth in wealth outpacing the growth in productive capital.
At the report launch in Islamabad, the discussion was narrowed down to a more national context. Renowned economist and adviser to CM Balochistan, Dr. Kaiser Bengali spoke at the occasion, saying that social inequality results in economic inequality. He said that feudalism needs to be abolished so the captive workers and labourers may have better opportunities. He, along with Oxfam Country Director Arif Jabbar, was of the view that Pakistan has plenty resources to go around. Poverty is thus not a result of low growth, but rather, inequitable distribution of existing wealth and resources. Dr. Bengali even went as far as saying that overpopulation - something that most economists consider the root cause of all the problems in the country - is not as problematic as inequality.
The echoes of Joseph Stiglitz and Thomas Piketty were heard in the audience, as well as in the speakers; the trickle-down effect was a lie, and its time to do something about it. But even when everything is said and done, the unfortunate fact remains that inequality isn't even on the agenda in Pakistan. While the topic has been catching steam abroad, the issue isn't given any importance here whatsoever.
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