Davos: Donate or Tax?

The “elite” at the recent World Economic Forum in Davos considered a novel “old” cure: Wealth redistribution for decreasing income inequality. Is this voluntary or through taxation?

The Brexit vote, Donald Trump and nationalist sentiments from Europe to China have put income inequality on a higher plane at Davos. Oxfam, an international confederation of charitable organisations, with focus on alleviating global poverty reported “8 men in the world have the same wealth as 3.6 billion of the world’s poorest people”. In 2017, the richest 1% held 82% of all wealth created. Billionaires gained USD762 billion in 2017. “Something is very wrong with the global economy”, says Mark Goldring of Oxfam. “The concentration of extreme wealth at the top is not a sign of a thriving economy but a symptom of a system that is failing the millions of hard-working people on poverty wages”.

“We must rebalance this unjust economy” said Winnie Byanyima, Executive Director, Oxfam International. This was echoed by Oxford academic Ian Goldwin. But how do we get equality? Oxfam reports that the USD762 billion that went to the richest 1% could have solved world poverty. Not once. Not twice. But SEVEN times over. But instead, that USD762 billion went to making the richest 1% just that much richer. Walter Scheidel in his book “The Great Leveller: Violence and the History of Inequality from Stone Age to the Twenty-first Century” argues that there are a couple of ways:

       i.          complete collapse of states and economic systems;

      ii.          epidemics and pandemics; and

    iii.          a world war

We don’t need any of the above if we have states willing to tax the “super-rich” to pay for the “super-poor” on basics – food, shelter, education, employment and health. Without a tax system will they voluntarily donate? Unlikely! But a system that benefits 8 or 42 individuals cannot be sustained indefinitely and will definitely lead to collapse or war.

Reference:

1. “A report that beggars belief”, Jason Godfrey, Star2@thestar.com.my

2. “Davos Leaders agree: share more wealth, or face the consequences”, Peter Vanham, 2018 World Economic Forum