Recent global data paints a stark picture. Despite corporations across the world in the aggregate reporting rising record-breaking corporate profits year after year, millions of people worldwide are struggling to make ends meet. Rising food and energy costs, coupled with stagnant wages and rising unemployment, have pushed many into precarity. The COVID-19 pandemic brought the issue into sharp focus by exposed the stark inequalities in our societies, with the wealthy thriving while the poor suffered disproportionately.
It’s time to confront the root cause of this crisis: “wealtherty”.
The concept has been articulated by Sarah Kerr in her book “Wealth, Poverty and Enduring Inequality: Let’s Talk Wealtherty” . Itdescribes the complex relationship between wealth, political power, and democratic processes. It captures the dangerous concentration of wealth and power in the hands of a few, a trend that has exacerbated global inequality and poverty. As the gap between the rich and poor widens, the humanistic ideals of fairness and opportunity are increasingly eroded.
The Widening Wealth Gap: A Global Phenomenon
In India, Oxfam’s 2023 report revealed that the top 1% owns more than 40% of the country’s total wealth, while the bottom 50% holds just 3%. The number of billionaires in India increased from 102 in 2020 to 166 in 2022, despite the pandemic’s economic toll on the majority–an estimated 75 million people into poverty, according to a 2021 Pew Research Center study.
In the United States, the Federal Reserve’s 2022 Survey of Consumer Finances showed that the wealthiest 1% of Americans held 32.3% of the country’s wealth, while the bottom 50% owned just 2.6%. This disparity has grown over time, with the top 1%’s share increasing from 23.5% in 1989.
The United Kingdom is not exempt from this trend. The Office for National Statistics reported in 2022 that the richest 10% of households held 43% of all wealth, while the bottom 50% owned only 9%. The pandemic exacerbated this gap, with UK billionaires’ wealth increasing by 22% between 2020 and 2021. The Joseph Rowntree Foundation found that 22% of the population (14.5 million people) were living in poverty in 2019/20, a figure that has likely worsened post-pandemic.
The core issue, thus, is not poverty itself, but wealtherty, the concentration of wealth and power, or wealtherty. This phenomenon is starkly evident in all three countries.
The Pernicious Nature of Wealtherty
Wealtherty’s built-in inequality causes and deepens poverty through various mechanisms. Political influence is one such mechanism. In India, the Association for Democratic Reforms reported that 88% of donations to national political parties in 2019-20 came from corporate houses. In the US, the 2020 federal elections saw a record $14 billion in spending, with large donors playing a significant role. The UK’s “revolving door” between government and business was highlighted in a 2022 report by the Committee on Standards in Public Life.
Media control is another crucial aspect of wealtherty. In India, the Reuters Institute Digital News Report 2022 found that 82% of top media outlets are owned by individuals with political affiliations. In the US, five companies control about 90% of media outlets. The UK’s national newspaper market is 90% controlled by just three companies, according to a 2021 Media Reform Coalition report.
The wealthy can also shape economic policies that favor their interests. For example, the 2017 US tax cuts disproportionately benefited the wealthy and corporations, while in India, corporate tax rates were cut from 30% to 22% in 2019, potentially reducing funds available for social programs.
Furthermore, wealth concentration limits opportunities for the less privileged. In the UK, the Social Mobility Commission’s 2021 report showed that privileged backgrounds continue to dominate top professions. In India, a 2022 study by Azim Premji University found decreased intergenerational mobility.
Tackling Wealtherty to Reduce Poverty and Inequality
Addressing wealtherty requires comprehensive strategies. Progressive taxation, such as implementing wealth taxes and closing tax loopholes, can help redistribute resources. For instance, a 2% annual tax on net worth above $50 million could raise $3 trillion over 10 years in the U.S., according to economists Emmanuel Saez and Gabriel Zucman.
Campaign finance reform, with stricter regulations on political donations and lobbying, can reduce the influence of wealth on politics. The U.S. For the People Act, while not passed, proposed significant campaign finance reforms.
Media ownership regulations can promote a range of perspectives. The UK’s ongoing debate over media plurality, particularly regarding Rupert Murdoch’s media empire, highlights this issue.
Investing in social programs such as education, healthcare, and social safety nets can improve social mobility. The UK’s “levelling up” agenda, while criticized for its implementation, aims to address regional inequalities.
Worker empowerment, through strengthening labor rights and promoting employee ownership, can help distribute wealth more equitably. For example, the US has seen a resurgence in union activity, with high-profile unionization efforts at companies like Amazon and Starbucks.
Recent initiatives show potential for addressing wealtherty. The global minimum corporate tax agreement, signed by 136 countries in 2021, aims to reduce tax avoidance by multinational corporations. India’s recent proposed increase of tax on stock market capital gains is another step towards progressive taxation.
By tackling wealtherty, countries can effectively reduce poverty and inequality. The Nordic model provides an example, with countries like Denmark achieving lower inequality (Gini coefficient of 27.5 in 2019) through progressive policies. These measures not only alleviate immediate poverty but also create more equitable societies with stronger democratic foundations.
Addressing the challenge of wealtherty is crucial for creating fairer, more prosperous societies. By recognizing the interconnected nature of wealth concentration, political influence, and societal outcomes, policymakers and citizens alike can work towards systems that promote broader economic participation and reduce entrenched inequalities. The obvious consequence will be the reduction of poverty.
Dev Chandrasekhar advises decision-makers on Big Picture narratives and strategy
