Pope Francis would like the international business mandarins assembled at Davos for the annual meetings of the World Economic Forum to know that they really ought to be doing something about economic inequality in the world.
In remarks read by an emissary, Francis urged the crowd gathered at the event to combat inequality and to direct their efforts to fighting global inequality. "I ask you to ensure that humanity is served by wealth and not ruled by it," he implored.
As if to punctuate his remarks, Oxfam, the international charity group, released a report Tuesday highlighting the deplorable state of inequality in the world. The report describes a global economy in which an increasing share of income and wealth has been concentrated among the world’s elite. The highlights of the report add up to a sobering picture of the state of the world:
- Almost half of the world’s wealth is now owned by just one percent of the population.
- The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
- The bottom half of the world’s population owns the same as the richest 85 people in the world.
- Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
- The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
- In the U.S., the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.
Apparently, that great big sucking sound you’ve been hearing for the last few years was the vacuuming up of global wealth by the world’s 1 percent.
Nonethless, the World Economic Forum is emphasizing that it is most definitely hip to this problem. And the organization — which describes itself as dedicated to "improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas" — has an uncomparable ability to get the world’s most powerful in the same room talking about a given issue. In the parlance of the information economy, it is the pre-eminent "convener," capable of attracting celebrities, magnates, and dealmakers. And this year, the organization has decreed, that they will spend most of their time talking about inequality, declaring it inequality the top item on the agenda. To further underscore its emphasis on inequality, the World Economic Forum’s annual report examining the greatest risks facing the global economy over the next decade settled on inequality as the most pressing problem.
The incongruous nature of all of this is rather spectacular. As Tuesday’s report from Oxfam points out, few have benefited quite so much from the post-financial crisis economic recovery as the world’s elite. While stock markets have recovered and corporate profits returned, the titans of business have been quite well for themselves, thank you very much. Profits have returned and jobs have not — only all the better to keep costs down. But business leaders at Davos say they are busy working on a solution to this problem. "They can spend a week in the most luxurious circumstances, flying in their private jets, precisely because of the inequality that we are talking about," FP contributor and development economist Daron Acemoglu told NPR’s "Marketplace."
It’s easy to be cynical about Davos, but perhaps awareness of the employment crisis that has marked Western economies really has breached the gilded chambers of Davos’ meeting rooms. "We need to push the reset button. The world is still much too much caught in a crisis-management mode," Davos founder Klaus Schwab told reporters last week. "We should look at our future in a much more constructive and strategic way. That is what Davos is about."
If Schwab and his colleagues are looking for a place to start in thinking about how to tackle inequality, they might as well begin with Oxfam’s recommendations. Here’s what business leaders, according to Oxfam, can do to combat global inequality: pledge to no longer dodge taxes, no longer use their wealth to gain political influence and undermine the democratic will of their fellow citizens, support progressive taxation on wealth and income, urge governments to provide universal healthcare, and demand a living wage for workers in their companies.
For a sense of why these things will probably not happen at Davos, it’s instructive to have a look at another report, this one by the accounting firm PricewaterhouseCoopers and which was released shortly after the Oxfam report. It describes the outlook among a group of nearly 1,500 business executives and their views on the global economy. Some 44 percent are sufficiently optimistic to say that the economy will improve in the next 12 months. But if Oxfam is hoping business leaders will take the hand of government and walk together down a path of more equitable prosperity, they may be somewhat deluded. A full 72 percent of executives believe government over-regulation to be the most-pressing challenge facing their businesses.
Here’s how Dennis McNally, the chairman of PwC, summed up the reports gloomier findings: "Worries continue to loom large on CEO horizons, with CEOs sending a clear message to government with their levels of concerns about over-regulation, fiscal deficits, and tax burdens at their highest levels."
Doesn’t sound like business leaders are eager to line and pay their taxes in the name of ending global inequality.