Wealth and Income Inequality at Home and Abroad
By ZACH BALL | February 7, 2018
A recently published report from Oxfam International found that 82% of all new global wealth generated in 2017 went to the world’s wealthiest 1% of people. The year was particularly lucrative for worldwide billionaires, who saw combined gains in excess of $700 billion. The report additionally found that there was no increase in wealth for the poorest 50% of the world’s population in 2017. Developing regions of the world feature the most egregious inequality, with two-thirds of sub-Saharan African workers living below the global poverty line. An Oxfam analysis of the report places the blame for high levels of global inequality on the economic prioritization of “shareholders and corporate bosses” over labor and the working-class by nations across the globe.
Though the United States is the wealthiest country on Earth by measure of nominal GDP, its distribution of wealth and income remains strikingly unequal by many objective calculations. This chart from the University of Oxford illustrates the United States’ position as relative outlier in the developed world for income inequality, as its Gini coefficient, a commonly used metric to observe income inequality within the world’s countries, is significantly higher than other wealthy countries like Sweden, France, and South Korea. A 2014 report from the Social Security Administration showed that over 50% of wage earners in the United States earned less than $30,000 that year. According to a report from Citizens for Tax Justice from the same year, the top 1% of income earners received over 20% of the country’s income share. Economist Josh Bevins of the Economic Policy Institute has claimed that the United States is currently experiencing levels of income and wealth inequality not seen since the Gilded Age of the late 19th century, when wealthy industrialists amassed enormous fortunes and many modern labor reforms and regulations, such as the 8-hour work day and the prohibition of child labor, had not been codified into law.
The issues of domestic income and wealth inequality have been at the forefront of national political discussion for years now. In a 2013 speech sponsored by the Center for American Progress, President Barack Obama referred to income inequality as the “defining challenge of our time”, voicing his intentions for his administration to focus on the issue for the remainder of his presidency. With the 2016 Democratic primary campaign of Senator Bernie Sanders (I-VT), who championed a reduction of the widening gap between the rich and the poor as a core policy initiative, the topic began to be more widely discussed in the national media.
Left-leaning American journalists have condemned the recently passed Tax Cuts and Jobs Act of 2017, arguing that, because the wealthiest of Americans will see the most savings in tax reductions as a result of the law, it will ultimately worsen the country’s existing income and wealth inequality, an argument put forward by Charles Ballard in an opinion piece published in The Hill. On the other hand, conservatives, like journalist Bob Bryan of Business Insider, argue that the tax cuts will stimulate economic growth, with many others, including London School of Economics professor Christopher Pissarides, contending that higher taxes and a redistribution of wealth from the rich to the poor is unfairly punitive to the wealthy, disincentivizing employers from capital investment.
The Oxfam International report calls for governments around the world to shift their political focus from the wealthy elite to “ordinary workers” and to enact economic and labor reforms to address inequality in their respective countries.