There are over 2,100 billionaires in the world. A report released ahead of the forum by charity group Oxfam says they own more wealth than the poorest 4.6 billion people on Earth - and the gap between rich and poor is widening, with half the world’s population living in poverty. Their research builds on Forbes’ billionaires list among other sources and states that the number of billionaires has doubled in the last decade.
To highlight the level of inequality in the global economy, Amitabh Behar, CEO of Oxfam India, cited the case of a woman called Buchu Devi in India who spends 16 to 17 hours a day doing work like fetching water after trekking 3km, cooking, preparing her children for school and working in a poorly paid job.
“And on the one hand you see the billionaires who are all assembling at Davos with their personal planes, personal jets, super rich lifestyles,” he told Reuters.
Behar says that across the world, there is a narrative of anger. Anti-government demonstrations have erupted in more than 30 countries in recent months, from Chile to France, South Africa to South Korea. Their political aims may differ but they share the same resentment, says Behar.
“If you just look around the world, more than 30 countries are seeing protests. People are on the street and what are they saying? - That they are not to accept this inequality, they are not going to live with these kind of conditions,” he said.
"Our broken economies are lining the pockets of billionaires and big business at the expense of ordinary men and women. No wonder people are starting to question whether billionaires should even exist."
Oxfam says that billionaires need to pay their taxes, but that the responsibility lies on governments to ensure that they pay their fair share.
Also taking their message of higher taxes on the rich to Davos were a group who identify themselves as “members of the most privileged class of human beings ever to walk the Earth”. The Patriotic Millionaires, made up of more than 120 wealthy celebrities and business figures, signed an open letter titled “Millionaires Against Pitchforks” urging their peers around the world to call for tax increases to address economic disparities “before it’s too late”. The letter was released to coincide with the forum which the group’s president, Erica Payne, calls “one of the most obnoxious displays of privilege that is found on the world stage.”
The millionaires and billionaires from eight countries, including co-founder of Innocent Drinks Richard Reed, former chief executive of Unilever Paul Polman, and Disney heiress Abigail Disney, claimed the wealth gap had hit crisis level, resulting in erosion of trust within societies, increased resentment and the undermining of basic social cohesion.
Addressing their “fellow millionaires and billionaires across the globe,'' they said: "There are two kinds of wealthy people: those who prefer taxes and those who prefer pitchforks.’
“Taxes are the best and only appropriate way to ensure adequate investment in the things our societies need. Individuals who reject this truth pose a dual threat both to the climate and to democracy itself,” says the letter.
The letter also claimed tax avoidance had reached “epidemic proportions”, adding: "In some nations, the wealthiest actually pay lower effective tax rates than those of modest means."
Globalisation has made it easier for companies to seek shelter in countries with lower corporate tax rates. That challenge is heightened by the rising tech giants like Facebook, Amazon and Apple that render taxing based on physical presence an obsolete notion. The global corporate tax has essentially halved in the past 35 years. It stood at 49% in 1985 and is 24% today, according to the IMF.
But efforts to create change have been thwarted by diplomatic tensions. A frequently discussed potential solution is the imposition of a “digital tax” through which countries can tax an internet company doing business in its region. Several European nations are considering taxing search engines, social media platforms and online marketplaces due to claims they shift their profits to other countries to cut their tax liability. With most of the world’s largest technology companies based in the U.S, though, there are fears such a tax offers other nations a chance to prosper from the fruits of these American firms’ success. As such, the U.S. has been sparring with France, Italy and Britain over threats of a digital tax as it sees it as a “tax grab” on American companies. Speaking at the World Economic Forum in Davos, Switzerland, Chancellor of the Exchequer Sajid Javid confirmed Britain's intention to go ahead with the tax in April despite US Treasury Secretary Steven Mnuchin threatening the UK with retaliation by putting taxes on car companies.
It is against this stark backdrop that public relations firm Edelman, which has been measuring public trust in people and institutions for the past 20 years, surveyed over 34,000 people in over 28 countries. Just over half (56%) thought that capitalism was doing more harm than good, as trust in global an national institutions has collapsed. “We are living in a trust paradox,” says Richard Edelman, the CEO of Edelman, describing the fact that economic growth no longer appears to drive optimism in developed markets.
Rising income and wealth inequality in rich countries has seen a breakdown in the link between economic growth and faith in institutions such as governments, businesses, the media and NGOs, the research, released on Monday, found.
At the top of WEF's agenda this year is a "better kind of capitalism," but still many remain to be convinced the summit does not actually erode trust and has it has once again been targeted by protesters.
Rosalina Mueller, a spokesperson for the Young Socialists, which helped to organise demonstrations in South Africa, India, Kenya, Zambia, Philippines, Mexico, Netherlands and the UK, told the Associated Press that Davos attendees had failed to make a positive impact in previous years.
“They say they want to make the world better, but for 50 years they haven’t done anything,” she said.
