The world’s wealthiest residents have been getting far richer, far faster than everyone else over the past two years.
The top 1% have captured nearly twice as much new wealth as the rest of the world during that period, according to Oxfam’s annual inequality report, released Sunday. Their fortune soared by $26 trillion, while the bottom 99% only saw their net worth rise by $16 trillion.
And the wealth accumulation of the super-rich accelerated during the pandemic. Looking over the past decade, they netted just half of all the new wealth created, compared to two-thirds during the last few years.
The report, which draws on data compiled by Forbes, is timed to coincide with the kickoff of the annual World Economic Forum meeting in Davos, Switzerland, an elite gathering of some of the wealthiest people and world leaders.
Meanwhile, many of the less fortunate are struggling. Some 1.7 billion workers live in countries where inflation is outpacing wages. And poverty reduction likely stalled last year after the number of global poor skyrocketed in 2020.
“While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams,” said Gabriela Bucher, executive director of Oxfam International. “Just two years in, this decade is shaping up to be the best yet for billionaires — a roaring ’20s boom for the world’s richest.”
Though their riches have slipped somewhat over the past year, global billionaires are still far wealthier than they were at the start of the pandemic.
Their net worth totals $11.9 trillion, according to Oxfam. While that’s down nearly $2 trillion from late 2021, it’s still well above the $8.6 trillion billionaires had in March 2020.
The wealthy are benefiting from three trends, said Nabil Ahmed, Oxfam America’s director of economic justice.
At the start of the pandemic, global governments, particularly wealthier countries, poured trillions of dollars into their economies to prevent a collapse. That prompted stocks and other assets to soar in value.
“So much of that fresh cash ended up with the ultra-wealthy, who were able to ride this stock market surge, this asset boom,” Ahmed said. “And the guardrails of fair taxation weren’t in place.”
Also, many corporations have done well in recent years. Some 95 food and energy companies have more than doubled their profits in 2022, Oxfam said, as inflation sent prices soaring. Much of this money was paid out to shareholders.
In addition, the longer term trends of the unwinding of workers’ rights and greater market concentration is heightening inequality.
By contrast, global poverty increased greatly early in the pandemic. Though some progress in poverty reduction has been made since then, it is expected to have stalled in 2022, in part because of the war in Ukraine, which exacerbated high food and energy prices, according to World Bank data cited by Oxfam.
It’s the first time that extreme wealth and extreme poverty have increased simultaneously in 25 years, said Oxfam.
Tax the rich
To counter this growing inequality, Oxfam is calling on governments to raise taxes on their wealthiest residents.
It proposes introducing one-time wealth tax and windfall taxes to end profiteering off global crises, as well as permanently increasing taxes on the richest 1% of residents to at least 60% of their income from labor and capital.
Oxfam believes the rates on the top 1% should be high enough to significantly reduce their numbers and wealth. The funds should then be redistributed.
“We do face an extreme crisis of wealth concentration,” Ahmed said. “And it’s important before all, I think, to recognize that it’s not inevitable. A strategic precondition to reining in extreme inequality is taxing the ultra-wealthy.”
The group, however, faces an uphill battle. Some 11 countries cut taxes on the rich during the pandemic. And efforts to hike levies on the wealthy fell apart in the US Congress in 2021, even though Democrats controlled both chambers and the White House.