Wednesday, January 28, 2015


Last week anti-poverty NGO Oxfam released a report, which showed that in a few years the richest one percent will own more than the rest of us combined.

And the head of Oxfam, our very own Winnie Byanyima, was quoted as saying,

“Do we really want to live in a world where the 1% own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.”

She called for a reining in of powerful vested interests that perpetuate the status quo, where the rich get richer and the poor get poorer.

Byanyima said the major problem is that with the concentration of wealth comes a similar trend with power, leaving the poor voiceless and unable to cause change for the better.

The inequality is not only a reality but it is rising all around the world, destabilising national politics, aggravating environmental degradation and fuelling illicit trade. Something will have to give and the fallout is bound to be ugly.

Knowing the dangers this continuing trend poses to global stability the question is, what to do?
Obviously the wealth gap should be narrowed as much as possible.

"The knee jerk reaction seems to be, blame the situation on the “greed” of the rich. That they are taking more than their fair share and they are doing this by keeping salaries low, dodging taxes and repatriating the profits abroad.

The rich on the other hand recommend that the poor work harder and stop wasting their time on booze, sex and war....

In the words of Australian billionaires Gina Rinehart, “If you’re jealous of those with more money, don’t just sit there and complain. Do something to make more money yourself — spend less time drinking or smoking and socialising, and more time working.”

Needless to say the solution is somewhere in between those two extremes.

To get the poorest of the poor off the floor they need an income. Studies have shown that the better the education on average the better the income. They also need proper health care to ensure they can sustain a high level of productivity.

Basically the provision of quality education and health care is a function of government be it through public health services or creating an enabling environment for private health care to flourish.
Then we need to grow the jobs or create an environment in which businesses can be thrive so the rest can earn a living.

But income – what one earns, is different from wealth – how much of what one earns, one keeps. The wealthy are adept at converting earned income into wealth, making most of their income from what they own than from their salaries.

Steve Jobs at the time of his death was worth more than $10b but had annual salary of $1. If you used his salary as a measure he was living way below the poverty line of a dollar-a-day.
The world over – especially with the collapse of communism, the private sector is where the jobs are created.

It is no surprise that some of the countries with the narrowest wealth disparities rank highest in the World Bank’s Ease of Doing Business survey.

So again it’s the responsibility of governments to create an enabling environment for business. An environment where, there is adequate, functional infrastructure, corruption is minimised, the workforce is well skilled and the regulatory environment is efficient and responsive.

At the end of the day the wider the wealth disparities are in a county is how inefficient the government is in creating wealth, through the encouragement of business on the one hand and redistributing this wealth through the building of infrastructure and improvement of the quality of the human resource.

Governments are either ineffectual because they are held hostage by the business lobbies,  which force them to do their bidding by allowing them keep wages low, allowing tax loopholes to persist and abrogating its responsibility as driver of policies beneficial to the majority.

On the other hand, out of sheer incompetence or misplaced ideological bias, governments are incapable of generating the economic growth needed to lift up society as a whole.

The wealth gap will not be bridged by dishing out money as some charity organisations propose.

The real focus in tackling wealth inequalities in our countries and in the world should be on governments. One, do they have as their singular goal the improvement of the living standards of their citizens and if they do they have the willingness and competence to make this happen?

It’s popular to bash the rich, and granted there are some unscrupulous types among their number, but if you think about it, the genuinely rich grow in wealth by producing more, employing more and subsequently paying more in taxes.

It follows therefore, that to reduce the wealth gap we need more not fewer wealthy people, even if we are jealous of them...

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