Skewed Economics

The collective net worth of the richest 1% of humankind recently broke above 50% of all the planet’s private wealth. Rich people care greatly about being rich, both absolutely and in comparison with others. They understand that relative wealth brings political influence – which can be used to amass even more wealth. They succeed at using their wealth and political influence to capture an ever-growing share of global wealth and income.

At the other end of the spectrum are the world’s poor. The collective net worth of humanity’s poorer half is only 0.6% of the planet’s private wealth – as much as is owned by the 62 richest billionaires. You saw this right: the 62 richest people now have as much wealth as the 3,700,000,000 poorest human beings.

It’s not that the rich hate the poor. They may even wish the poor were better off. But the rich care more about their own share of wealth and income. And as their share increases, the other shares must shrink – especially that of the poorest. During 1988-2008, the average income among the richest 1% increased by 66%, while the global average income increased by only 24.34%.

This is actually okay, the rich tell us: while the poor may be losing in relative terms, they are gaining in absolute terms thanks to global economic growth. The Millennium Development Goals have spread word of this progress, and their recent successors, the Sustainable Development Goals, continue to reinforce the message: the poor are becoming better off. Wherever anyone may draw the international poverty line, the proportion of humanity living below it is shrinking.

This information is less comforting once we attend to what those in the poorer half can actually afford with their tiny incomes of $4–$20 per person per week. Most of them suffer at least one severe deprivation such as lack of adequate nutrition, safe drinking water, adequate housing, electricity, adequate sanitation, literacy, schooling or access to essential medicines. Each year, some 18 million people die prematurely from poverty-related causes, such as malnutrition, diarrhea, childbirth complications, childhood diseases, pneumonia, tuberculosis, malaria, HIV/AIDS – conditions that hardly cause any premature deaths in affluent countries.

This global disaster engages human rights, for instance Article 25 of the Universal Declaration: “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services.” Where rights are at stake, immediate action is required. Those who continue to uphold the existing, highly skewed international economic and financial order delay the realization of human rights by many decades, thereby becoming responsible for hundreds of millions of poverty-related deaths in the meantime. If a more poverty-avoiding global order is possible, we must implement it as fast as we possibly can.

Rewriting the rules of the global economy

We can rapidly realize the human rights of the world’s poor through global institutional reforms if these reforms reduce inequality – if they reverse the relentless rise in the share in global wealth and income going to the richest 1%. Think about it. It would take 2.4% of global private wealth to multiply the net worth of the poorer half by 5, namely from 0.6% to 3%. If this shift came entirely at the expense of the richest 1%, their share would decline from 50.4% to 48% of global private wealth. Would they not still have enough?

What sort of institutional reforms would rapidly improve the situation of the world’s poor? After decades of forcing free trade upon the world, the affluent states should finally be required to abolish their protectionist barriers that impede exports from poor countries: subsidies, tariffs and “anti-dumping” duties. At the very least they should have to compensate poor countries for the economic losses these barriers cause them.

Similarly, those who produce disproportionally large amounts of greenhouse gas emissions should be required to compensate the world’s poor, who emit very little and are much more vulnerable to the effects of climate change. The needed funds should be raised by putting a price on emissions, with the additional benefit of slowing the increase of greenhouse gases in our atmosphere.

Rich corporations and individuals should finally be made to pay their fair share of taxes. There is an elaborate infrastructure of tax havens, secrecy jurisdictions, letterbox companies and sham trusts, with clever lawyers, bankers, accountants and lobbyists, all working hard to hide wealth and profits and to create and exploit loopholes. This shady network drains poor countries of capital and slashes their governments’ tax revenues. It also facilitates arms and drug trading, human trafficking, money laundering and terrorism. Reforms are underway, but they are driven by the interests of the affluent states, do not yet consider the poorer populations whose losses are much larger.

We should recognize the world’s poor as entitled to a share of our planet’s natural resource wealth. There is no good reason why a small minority of humanity should be accepted as owning these resources and as entitled to charge everyone else for access. It is especially pernicious to treat unelected rulers – dictators and juntas – as entitled to sell the natural resources of “their” country or to use them as collateral for loans that the population will then be required to repay. Such loans and resource purchases unjustly impoverish the country and strengthen its illegitimate rulers, thereby perpetuating the tyranny.

Poor people should not be excluded from medicines, seeds, and other important innovations by high patent-protected markups. It makes sense to reward innovators so as to incentivize the innovations we need. But we must find a way of doing so that does not exclude the poor. The Health Impact Fund is one feasible such way.

It is a modest but most stringent requirement that we rise together to change the rules of our global order so that they no longer violate the human rights of half the human population. Together we can do this and build a much more beautiful world.

Professor Thomas Pogge is the Director of the Global Justice Program and Leitner Professor of Philosophy and International Affairs at Yale University. He is also the founder of the Health Impact Fund and a board member of The Rules, a network of activists, writers, researchers, artists, coders and others focused on addressing the root causes of inequality and climate change.

* Professor Thomas Pogge is the Director of the Global Justice Program and Leitner Professor of Philosophy and International Affairs at Yale University. He is also a board member of The Rules, a network of activists, writers, researchers, artists, coders and others focused on addressing the root causes of inequality and climate change.

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