The world’s richest 300 people control more wealth than the poorest 3 billion, and the gap continues to grow, according to the latest report issued last month by the Capgemini wealth consultancy and the Royal Bank of Canada.
Data in the World Wealth Report 2013 shows that millionaires across the world increased their holdings by 10 percent in 2012, reaching a record high of $46.2 trillion. One million people joined the global “high net worth individual” population, which jumped to 12 million, an increase of 9 percent over the last year. A high net worth individual is defined as someone with “investable assets of $1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.”
But the growing population in the millionaires club doesn’t indicate that the wealth is being spread more evenly — quite the contrary.
Earlier this year, Oxfam published a report showing that the wealthiest 300 people now control more wealth than the poorest 3 billion people across the world.
“We wanted to do more than just illustrate the brutal extent of inequality; we also wanted to demonstrate that it has been getting progressively worse,” Oxfam reported.
“The richest 1 percent has increased its income by 60 percent in the last 20 years, with the financial crisis accelerating rather than slowing the process,” researchers found.
What are the conditions creating this growing gap? Tax avoidance for high-income individuals and corporations continues to be a major issue depriving developing countries of much-needed funds for developing infrastructure, jobs and education.
Citing data from the Oxfam report, Jason Hickel, a professor at the London School of Economics, reports that corporations are taking roughly $900 billion out of developing countries each year through a tax avoidance scheme called “trade mispricing.”
Here’s how it works: By registering a company in a country with favorable tax laws, a company can benefit from the cheap labor and resources of a developing country while putting little or no tax revenue back into the system.
The U.S. wealth gap may not be as bad as China, South Africa or India, but the growing inequality has become much worse in the years leading up to the recession of 2007-2009, the worst economic downturn since the Great Depression.
According to the Economic Policy Institute, income for the top 1 percent in the U.S. has increased by 275 percent over the past 30 years, while income growth for the rest of Americans has remained stagnant.
The Economic Policy Institute claims that from 1979-2007, roughly 30 percent of the expansion of the after-tax income gap was due to tax and budget policies becoming less redistributive.
Things have gotten even worse after the recession, during the so-called years of “recovery” when millions of Americans remain out of work and most Americans have lost wealth. According a 2013 Pew Research Center analysis of Census data, the mean net worth of households in the upper 7 percent of the wealth distribution rose by an estimated 28 percent from 2009-2011 while the mean net worth of households in the lower 93 percent actually dropped by 4 percent over the same period.