THIS week, as the world’s richest and most powerful individuals meet in the retreat of Davos in Switzerland, Oxfam has published our latest report on the shocking scale of global economic inequality. An Economy for the 99 Per Cent shows the gap between rich and poor is far greater than had been feared. Just eight people own the same wealth as the poorest half of the world. Those eight billionaires are sitting on more financial assets than 3.6 billion people put together.
The report details how big business and the super-rich are fuelling the inequality crisis by dodging taxes, driving down wages and using their power to influence the rules of the game. We call for a fundamental change in the way we manage our economies so that they work for all people, and not just a fortunate few: the creation of a human economy. Oxfam cares about extreme economic inequality because we believe it is a barrier to reducing poverty. While the number of people living in extreme poverty has decreased in recent decades, 700 million more people could have escaped poverty if action had been taken to reduce the gap between rich and poor.
When the economic system allows such an obscene gap between the richest and the poorest in society to develop, it’s a system that is measuring and valuing the wrong things. The man who created gross domestic product (GDP), Simon Kuznets, warned that “the welfare of a nation can scarcely be inferred from a measurement of national income as defined [in GDP]”.
GDP fails to count the huge amount of unpaid work by women across the world. It also fails to take inequality into account, which means a country like Zambia can have high GDP growth when the number of poor people is actually increasing.
But how can we collectively shift away from our obsession with this crude and flawed measure of success? I’ve been working on defining what we should measure instead for many years, and I’ve found Scotland to be the perfect test-bed for more progressive economics. Through the Oxfam Humankind Index, released in 2012, we developed a framework for measuring what makes a good life. We found that people in Scotland most valued a safe home, being physically and mentally healthy and a clean environment.
Encouragingly, Scotland has taken steps to widen our measure of success through the National Performance Framework, though there’s much work to do to embed this alternative approach. But as well as measuring more of what matters, we need an economy that helps achieve it. The extreme economic inequality challenge is global but action to tackle it is needed at national level.
In 2013, we issued the report Our Economy, setting out recommendations to re-position the Scottish economy as the servant of the people rather than the other way, including through fairer work.
Last year, we released research with low-paid workers which revealed their priorities for decent work, including, job security and having a supportive manager. The report outlined recommendations for how work can become a reliable route out of poverty, including better enforcement of basic employment conditions. Some of the foundations for a fairer Scotland are being laid. A poverty and inequality adviser is in place and there’s cross-party support for the Living Wage. The goal of reducing inequality is at the heart of the Scottish Government’s economic strategy and both the Fairer Scotland Action Plan and the Fair Work Convention point towards Scotland’s progressive future.
The Scottish Government has also committed to establishing a poverty and inequality commission. This can be a vehicle for delivering a more human economy, but only if its ambition matches the scale of the challenge. A focus on those in poverty is critical but there’s still too little focus on those with the most: to truly tackle inequality, we need to look at both ends of the wealth spectrum.
Oxfam’s new figures outlining the incredible scale of global inequality should give world leaders a wake-up call. Scotland can claim to be awake to this challenge but it’s still hiding under the covers. In proactively sharing our wealth more fairly and leading the way in measuring success in a way meaningful for everyone, Scotland can help demonstrate that global progress towards a human economy is possible.
Katherine Trebeck is senior researcher at Oxfam GB.
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