It was the poet Percy Bysshe Shelley who observed in the 19th century that the rich get richer and the poor get poorer. And things are no different today.
Over the last couple of years, the wealthiest 1% of people worldwide have accumulated close to two-thirds of all new wealth created, the nonprofit Oxfam found.
According to a new report, $42 trillion in new wealth has been created since 2020.
Of that amount, $26 trillion, or 63%, was amassed by the top 1% of the ultra-rich. The remaining 99% of us pocketed just $16 trillion of new wealth.
“A billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90%,” the report observed.
This is nothing new. The richest 1% has scored about half of all new wealth created over the past 10 years.
That is, of course, a crazy — and unsustainable — situation.
Put simply, when only a small fraction of the global population has all the money, that leaves relatively little for everyone else.
This is economically toxic because consumer spending represents much of economic activity in capitalist countries. In the United States, consumers account for about two-thirds of gross domestic product.
This is why most reputable economists say the wealth and income gaps pose a major threat to economic growth and vitality.
Gabriela Bucher, executive director of Oxfam International, called for taxes to be increased for the ultra-rich. She called this a “strategic precondition to reducing inequality and resuscitating democracy.”
“Taxing the super-rich and big corporations is the door out of today’s overlapping crises,” Bucher said. “It’s time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else.”
Indeed, there’s virtually no evidence that so-called trickle-down economics actually work.
While the hope is that as the rich prosper, they’ll improve things for everyone else, the reality is that wealthy individuals and businesses are guided first and foremost by self-interest.
That’s why sales of luxury yachts and mansions keep rising, whereas investment in more public-spirited endeavors can languish.
Will things change any time soon?
Ask the super-rich. They’re hobnobbing this week at the World Economic Forum in Davos, Switzerland.
Chances are, you weren’t invited.