One percent of the world’s population holds more than half of all the world’s wealth.
This was the headline figure from a revealing new Oxfam report launched earlier this week. Just sixty-two billionaires possess as much wealth as the poorest half (3.6 billion people) of the entire population of the globe.
Global inequality is historically unprecedented and getting progressively more extreme.
The pattern is mirrored in Ireland, where a study released last month by the think tank TASC found that more than half of all the wealth in Ireland is held by the richest 10 percent of households, a level of inequality well above the European average. And inequality in Ireland has been intensified by every budget introduced by the current government.
That Ireland is an increasingly unequal society is probably not news to most people. What may be less well-known is the role Ireland plays in facilitating the rise of global inequality. The Oxfam report documents not only the scale of that inequality, but also the mechanisms through which the super-wealthy acquire their riches.
One such mechanism is, in the case of the pharmaceutical industry, through charging extortionate prices for patented drugs, an issue that is very relevant here in Ireland, where drug prices are extremely high because of agreements the government has negotiated with the pharmaceutical sector.
And Big Pharma not only makes money from price gouging, it is loath to part with its money in the form of taxes. The drugs giant Pfizer (maker of Viagra) has recently announced that it is merging with Allergan (maker of Botox), an Irish-based company. By presenting the deal as a takeover on the part of Allergan, Pfizer will pay tax at Irish rather than US rates, yet another instance of Ireland acting as a tax haven to allow wealthy companies to minimise their global tax bills.
Ireland’s facilitation of corporate tax avoidance is widespread and increasingly controversial, an issue I have written about previously. One of the most egregious examples is the fact that Google’s accounts for 2014 showed the company paying a mere €28.6 million in corporation tax in Ireland while declaring sales here of €18.3 billion. Google founders Larry Page and Sergey Brin are amongst the sixty-two billionaires identified by Oxfam as owning more wealth than half of the rest of the world.
The rich increasingly get richer not through genuine, productivity-enhancing innovation, but through gaming the system. Corporate investment in tax havens grew four-fold between 2000 and 2014.
And, as Oxfam also show, a growing proportion of global wealth is gained through speculative financial activities that are of limited social value – or that, indeed, may inflict actual costs on the rest of society, as evidenced by the public “bail-out” of the banks after 2008. The privatisation of gains and the socialisation of losses is how much of modern capitalism works.
It also often works through personal contacts and connections between the worlds of politics and economics (another theme of the Oxfam report). As I noted in my last column, oil and gas companies boosted their potential profits in Ireland after private meetings with former government minister Ray Burke.
And it is entirely in line with international trends that one of Ireland’s richest men got rich through precisely such connections.
The Moriarty Tribunal in 2011 concluded that former Minister Michael Lowry had “an insidious and pervasive influence” over the awarding of a mobile phone licence to Denis O’Brien’s Esat Digifone consortium.
Rising global inequality is not, for the most part, a result of dynamic individuals and companies competing with each other in free markets. It is more often a result of public-private “partnerships” that erode not just the public tax base but also the very notion of the public good.