Plutocratic Insurgency Note 10: Increasing Global Wealth Concentration, Record Private Jets at Davos, and the Demise of the American Dream

Plutocratic Insurgency Note 10: Increasing Global Wealth Concentration, Record Private Jets at Davos, and the Demise of the American Dream   

Pamela Ligouri Bunker and Robert J. Bunker

This plutocratic trifecta focuses upon the increasing global wealth concentration of the world’s billionaires—as well as the falling tax income tax rates on the rich and their corporations—discussed in a new Oxfam report, the fact that a record number of private (multi-million dollar+ jets) are ferrying global elites to the Davos meeting this year, and that a majority of the U.S. poor (per a World Economic Forum commissioned poll) now recognize that they and their children have little hope of working hard and, as a result, ever becoming rich in American society.

Key Information: Laura Paddison, “26 Billionaires Own The Same Wealth As The Poorest 3.8 Billion People.” Huffington Post. 20 January 2019, https://www.huffingtonpost.com/entry/oxfam-report-wealth-inequality-poverty-tax_us_5c408586e4b027c3bbbeb91d:

A new economic system is needed to tackle rampant inequality, says a new Oxfam report.

 

The gap between rich and poor is fracturing society, poisoning politics and fueling public anger, according to a new report from anti-poverty nonprofit Oxfam, which found that last year just 26 people owned the same amount of wealth as the poorest 3.8 billion people. This figure is down from 43 the year before.

 

The Public Good or Private Wealth? report, published Sunday, found that the wealth of billionaires has increased by $900 billion in the last year, or $2.5 billion a day. This bonanza has not been felt by the poorest half of the world, which saw its wealth decline by 11 percent.

 

Since the 2008 financial crisis, the number of billionaires has doubled, according to the report, and the very rich along with corporations are paying lower taxes than they have in decades. At the same time, 3.4 billion people are living in poverty on less than $5.50 a day, and women are often hardest hit. Men hold 50 percent more of the world’s wealth than women, according to the report….

 

… Unfair tax regimes are one of the core problems highlighted by Oxfam. In wealthy countries, average top personal income tax rates fell from 62 percent in 1970 to 38 percent in 2013, according to the nongovernmental organization’s report.

 

“People generally are beginning to realize that they have been sold a bad bill of goods,” said O’Brien. “Today, 262 million kids are going to stay home because there is no funding for their education, 10,000 people today will die because they don’t have access to basic health care that could easily be funded through proper fiscal systems.”

 

While talk of poverty and inequality often focuses on the developing world, rich nations are far from immune. A report published this week by the Institute for Policy Studies, a left- leaning Washington, D.C., think tank, found that the 400 richest Americans own more wealth than all black households and a quarter of Latino households. And social mobility in America is falling. Yet Donald Trump’s administration has slashed taxes for the wealthiest. The 2017 tax bill, trumpeted as a break for the middle class, in reality was found primarily to benefit the wealthiest 1 percent.

 

In its report, Oxfam calls for a new economic model, a “human economy” where tax systems for corporations and the super-rich are overhauled to eliminate tax avoidance and evasion, and to increase tax revenues. This money would then be plowed into providing universal public services like education and healthcare as key to tackling inequality and poverty. “Inequality is not inevitable,” the report says, “it’s a political choice.”

Key Information: Max Lawson et al., Public good or private wealth? Oxford: Oxfam GB. Brief. 20  January 2019, https://www.oxfamamerica.org/static/media/files/bp-public-good-or-private-wealth-210119-en.pdf:

Boomtime for the world’s billionaires

 

It is 10 years since the financial crisis that shook our world and caused enormous suffering. In that time, the fortunes of the richest have risen dramatically:

 

• In the 10 years since the financial crisis, the number of billionaires has nearly doubled.

 

• The wealth of the world’s billionaires increased by $900bn in the last year alone, or $2.5bn a day. Meanwhile the wealth of the poorest half of humanity, 3.8 billion people, fell by 11%.

 

• Billionaires now have more wealth than ever before. Between 2017 and 2018, a new billionaire was created every two days.

 

• Wealth is becoming even more concentrated – last year 26 people owned the same as the 3.8 billion people who make up the poorest half of humanity, down from 43 people the year before.

 

• The world’s richest man, Jeff Bezos, owner of Amazon, saw his fortune increase to $112bn. Just 1% of his fortune is the equivalent to the whole health budget for Ethiopia, a country of 105 million people.

 

• If all the unpaid care work done by women across the globe was carried out by a single company, it would have an annual turnover of $10 trillion– 43 times that of Apple.

 

While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own:

 

• Wealth is particularly undertaxed. Only 4 cents in every dollar of tax revenue comes from taxes on wealth.

 

• In rich countries, the average top rate of personal income tax fell from 62% in 1970 to 38% in 2013.31 In developing countries, the average top rate of personal income tax is 28%.

 

• In some countries like Brazil and the UK, the poorest 10% are now paying a higher proportion of their incomes in tax than the richest 10%.

 

• Governments should focus their efforts on raising more from the very wealthy to help fight inequality. For example, getting the richest to pay just 0.5% extra tax on their wealth could raise more money than it would cost to educate all 262 million children out of school and provide healthcare that would save the lives of 3.3 million people.

 

• The super-rich are hiding $7.6 trillion from the tax authorities. Corporates also hide large amounts offshore. Together this deprives developing countries of $170bn a year.

 

[Citations have been removed—refer to the original document]

Key Information: Rebecca Ratcliffe, “Record private jet flights into Davos as leaders arrive for climate talk.” The Guardian. 22 January 2019, https://www.theguardian.com/global-development/2019/jan/22/record-private-jet-flights-davos-leaders-climate-talk?CMP=twt_gu:

David Attenborough might have urged world leaders at Davos to take urgent action on climate change, but it appears no one was listening. As he spoke, experts predicted up to 1,500 individual private jets will fly to and from airfields serving the Swiss ski resort this week.

 

Political and business leaders and lobbyists are opting for bigger, more expensive aircrafts, according to analysis by the Air Charter Service, which found the number of private jet flights grew by 11% last year.

 

“There appears to be a trend towards larger aircraft, with expensive heavy jets the aircraft of choice, with Gulfstream GVs and Global Expresses both being used more than 100 times each last year,” said Andy Christie, private jets director at the ACS.

 

This is partly due to the long distances travelled, he said, “but also possibly due to business rivals not wanting to be seen to be outdone by one another”. Last year, more than 1,300 aircraft flights were recorded at the conference, the highest number since ACS began recording private jet activity in 2013.

 

Countries with the highest number of arrivals and departures out of the local airports over the past five years included Germany, France, UK, US, Russia and the United Arab Emirates, according to ACS…

Key Information: Jo Confino, “Americans Have Lost Faith In Their Ability To Move From Poverty To Riches.” The Huffington Post. 21 January 2019, https://www.huffingtonpost.com/entry/american-dream-world-econo...rum-poll_us_5c4583b7e4b027c3bbc33c48?ncid=engmodushpmg00000006:

More than two-thirds said it’s no longer commonplace for hard work to be a path from poverty to wealth, according to a new World Economic Forum poll.

 

DAVOS, Switzerland – People in the United States and other developed countries are losing faith in the capitalist system to improve their lives, according to a new global poll commissioned by the World Economic Forum, published on the eve of its annual meeting in Davos, Switzerland.

 

Almost two-thirds of U.S. respondents said it was no longer commonplace for hard work to be a sure path from poverty to riches, with only 10 percent saying it was extremely common.

 

The lack of faith in the current system to deliver upward mobility was even more marked in Western Europe, where only a fifth of respondents said it was common to be able to start poor and become wealthy through hard work….

 

 … The WEF points to an analysis in Harvard Business Review that found that almost half of American workers surveyed said they are “often or always exhausted due to work” — up by a third in 20 years…

 

… The WEF emphasizes the importance of considering well- being rather than profit and growth at any cost. It warns that if we continue as we are, “beyond the economic risks, there are potential political and societal implications. For example, a world of increasingly angry people would be likely to generate volatile electoral results and to increase the risk of social unrest.”…

Key Information: SAP + Qualtrics, GLOBALIZATION 4.0: The Human Experience. Presented to the World Economic Forum. 18 January 2019, http://www3.weforum.org/docs/WEF_globalization4_Jan18.pdf:

Who: The global rich and poor with an increasingly smaller middle class segment within Western societies and a rising—yet stunted middle class—emerging in developing countries.

What: Rising inequality around the world as a component of increasing predatory capitalism, as a post-modern form of dark (deviant) globalization. Laissez-faire capitalism—the invisible hand—free of state-moderation resulting in the failure of the liberal-democratic order by allowing vast sums of wealth to be concentrated within smaller and smaller segments of humanity.         

When: The present; January 2019.

Where: A global phenomena; with key information focusing on Davos, Switzerland, the perceptions of the poor in the United States, and national tax policies throughout the globe. These elite super rich are found not only within democratic societies but also within authoritarian ones. 

Why: Increasing wealth polarization between the world’s elites (roughly +2,200 billionaires and their families) and the rest of humanity.[1]

Analysis: Three interrelated themes are covered in this plutocratic insurgency note. The major takeaway from the Oxfam report—addressing the initial theme of increasing global wealth concentration—is that “Wealth is becoming even more concentrated – last year 26 people owned the same as the 3.8 billion people who make up the poorest half of humanity, down from 43 people the year before”[2]. Within the last year, the wealth of the world’s billionaires has increased by $900 billion while the world’s poorest 50% saw their wealth decline by 11%.[3] This concentration of wealth at the top is due to a recovering global economy benefiting the rich and their multinational (i.e. stateless) corporations which are pulling in record breaking profits as well as shielding more and more revenues via a) falling tax rates for the highest income brackets (in both the developed and developing world) and b) the extensive use of tax havens with some ‘$7.6 trillion’ being sheltered from sovereign taxing entities.[4] Hence, this finely tuned extractive capacity of the super rich (directed at the global masses) and their ability to achieve impunity from governmental (i.e. public goods directed) taxation represents a global economic insurgent strategy benefiting the plutocracy.

The second theme focuses on private jetliner records being broken at the annual Davos, Switzerland World Economic Forum (WEF) focusing on the state of the world—which also serves as a ‘behind the scenes’ ultra rich deal cutting conclave. It is closely linked to the Fourth Industrial Revolution project which seeks to ‘maximize the benefits of science and technology for society’[5], with Davos corporate executive attendance fees beginning at 60,000 francs (€53,000; $60,000).[6] This year, 1,500 private jets were expected to fly in for the WEF as contrasted with the 1,300 estimated to have flown in last year. Further, heavier expensive jets are increasingly being seen as a component of conspicuous consumption and plutocratic one-upmanship behaviors.[7] This significant increase in privatized elite transport is representative of wealth concentration amongst WEF attendees and the value that they place in attending the yearly Davos meeting for global elite networking—facilitating both corporate and family advancement—purposes.

The third and final theme in this note focuses on the present perceptions and mindset of the poor within American society. According to a section of the new SAP + Qualtrics poll commissioned by WEF, “Almost two-thirds of U.S. respondents said it was no longer commonplace for hard work to be a sure path from poverty to riches, with only 10 percent saying it was extremely common.”[8][9] This perception of the poor in the United States—along with the acknowledgement that their (and their children’s) chances for social mobility within America is severely limited[10]—is reflective of their disenfranchisement with 21^st century Laissez-faire capitalism. It signifies the demise of the American dream linked to the Horatio Alger ‘hard work and integrity will result in your success’ mythos underpinning our belief in the fairness of our economic system and the potential to pull oneself up by one’s bootstraps to rise from rags to riches. These shifting perceptions are very dangerous from a societal cohesion perspective because they indicate that a widening perceptual—and actual according to numerous indicators—firebreak is emerging in our country between the economic elite (the plutocrats) and the masses.[11] Such increasing gulfs between the haves and have nots, if left to fester, may result in increased levels of criminality as well as street protests and other forms of civil unrest directed at what is considered to be unjust governance and a rigged economic system exploiting those on the lower socio-economic rungs of American society.            

Sources

Jo Confino, “Americans Have Lost Faith In Their Ability To Move From Poverty To Riches.” The Huffington Post. 21 January 2019, https://www.huffingtonpost.com/entry/american-dream-world-econo...rum-poll_us_5c4583b7e4b027c3bbc33c48?ncid=engmodushpmg00000006.

Max Lawson et al., Public good or private wealth? Oxford: Oxfam GB. Brief. 20  January 2019, https://www.oxfamamerica.org/static/media/files/bp-public-good-or-private-wealth-210119-en.pdf.

Laura Paddison, “26 Billionaires Own The Same Wealth As The Poorest 3.8 Billion People.” Huffington Post. 20 January 2019, https://www.huffingtonpost.com/entry/oxfam-report-wealth-inequality-poverty-tax_us_5c408586e4b027c3bbbeb91d.

Rebecca Ratcliffe, “Record private jet flights into Davos as leaders arrive for climate talk.” The Guardian. 22 January 2019, https://www.theguardian.com/global-development/2019/jan/22/record-private-jet-flights-davos-leaders-climate-talk?CMP=twt_gu.

SAP + Qualtrics, GLOBALIZATION 4.0: The Human Experience. Presented to the World Economic Forum. 18 January 2019, http://www3.weforum.org/docs/WEF_globalization4_Jan18.pdf.

End Notes

[1] Catherine Clifford, “There are a record 2,208 billionaires in the world, according to Forbes’ 2018 rich list.” CNBC. 7 March 2018, https://www.cnbc.com/2018/03/07/forbes-there-are-a-record-2208-billionaires-in-the-world.html.

[2] Max Lawson et al., Public good or private wealth? Oxford: Oxfam GB. Brief. 20 January 2019, https://www.oxfamamerica.org/static/media/files/bp-public-good-or-private-wealth-210119-en.pdf

[3] Ibid.

[4] Ibid.

[5] World Economic Forum, Centre for the Fourth Industrial Revolution. 2019, https://www.weforum.org/centre-for-the-fourth-industrial-revolution.

[6] “Davos 2019: What you need to know about ‘the world’s most exclusive business bash.’” The Local/AFP. 21 January 2019, https://www.thelocal.ch/20190121/davos-2019-what-you-need-to-know-about-the-worlds-biggest-business-bash-switzerland-wef.

[7] Rebecca Ratcliffe, “Record private jet flights into Davos as leaders arrive for climate talk.” The Guardian. 22 January 2019, https://www.theguardian.com/global-development/2019/jan/22/record-private-jet-flights-davos-leaders-climate-talk?CMP=twt_gu.

[8] Jo Confino, “Americans Have Lost Faith In Their Ability To Move From Poverty To Riches.” The Huffington Post. 21 January 2019, https://www.huffingtonpost.com/entry/american-dream-world-econo...rum-poll_us_5c4583b7e4b027c3bbc33c48?ncid=engmodushpmg00000006:

[9] SAP + Qualtrics, GLOBALIZATION 4.0: The Human Experience. Presented to the World Economic Forum. 18 January 2019, http://www3.weforum.org/docs/WEF_globalization4_Jan18.pdf.

[10] Ibid.

[11] See these recent wealth polarization statistics: “About 172,000 U.S. households have net worths of at least $25 million, Spectrem estimated last year. That’s up from 84,000 in 2008.” and “Even as more young people entered the top 0.1 percent, most of their Millennial and Generation X compatriots were struggling. Americans 75 and older are the only age group whose median net worth rose from 2007 to 2016, according to the Federal Reserve Survey of Consumer of Finances released in July 2018. Typical Americans age 35 to 54 saw their wealth—heavily concentrated in housing—plunge by more than 41 percent in that time frame.” Ben Steverman, “Super Rich Americans Are Getting Younger and Multiplying.” Bloomberg. 23 January 2019, https://www.bloomberg.com/news/articles/2019-01-23/super-rich-americans-are-getting-younger-and-multiplying.

Further Reading

Jake Bernstein, Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite. New York: Henry Holt and Co., 2017.

Anand Giridharadas, Winners Take All: The Elite Charade of Changing the World. New York: Alfred A. Knopf, 2018.

Brooke Harrington, Capital without Borders: Wealth Managers and the One Percent.  Cambridge, MA: Harvard University Press, 2016.

Paul Kennedy, Vampire Capitalism: Fractured Societies and Alternative Futures. New York: Palgrave Macmillan, 2017.

David Rothkopf, Superclass: The Global Power Elite and the World They Are Making. New York: Farrar, Straus and Giroux, 2009.

All opinions are strictly those of the authors and in no way reflect the viewpoints of any U.S. Governmental, academic, or corporate entity.