Propaganda, politics & power — The global north’s pro-poverty agenda
by Marla Dukharan
As always, just as the world’s elite gather in Davos, Switzerland — the world’s second largest financial secrecy jurisdiction by the way — Oxfam published its annual exposé on the increasingly acute global inequality and poverty problem. Kudos to Oxfam for tirelessly collecting and compiling this important data, and for demonstrating the solutions. According to the Oxfam report:
• Poverty has increased for the first time in 25 years and tens of millions more people are facing hunger.
• The IMF is forecasting that a third of the global economy will be in recession in 2023.
• For the first time, the UNDP has found that human development is falling in 9 out of 10 countries.
• In 2022, the World Bank announced that we will fail to meet the goal of ending extreme poverty by 2030 and that ‘global progress in reducing extreme poverty has come to a halt,’ amid what it said was likely to be the largest increase in global inequality and the largest setback in addressing global poverty since World War II.
• The richest 1% bagged nearly 2/3 of all new wealth over the past two years, nearly twice as much money as the bottom 99% of the world’s population.
• The richest 1% hold 45.6% of global wealth, while the poorest half of the world have just 0.75%.
• 81 Billionaires hold more wealth than 50% of the world combined, and billionaire fortunes are increasing by USD2.7 billion a day.
• Food and energy companies more than doubled their profits in 2022, paying out USD257 billion to wealthy shareholders, while over 800 million people went to bed hungry. Corporate price profiteering is driving at least 50% of inflation in Australia, the US and Europe, in what is as much a ‘cost-of-profit’ crisis as a cost-of-living one.
• In 2020, Oxfam and the Stockholm Environment Institute showed that the richest 1% generate more emissions than the whole of the bottom half of humanity,
• As tax rates on the rich and corporations have fallen, governments have compensated by increasing regressive taxes on goods and services, like value added tax (VAT). These taxes fall disproportionately on the poorest people, who spend a higher share of their income on consumption. They also exacerbate gender inequality. For example, a study carried out in Guatemala, Honduras and El Salvador found that hikes in VAT resulted in an increase in poverty in female-dominated households.
• Today, taxes falling on citizens, be it through personal income, payroll or consumption, account for more than 80% of total tax revenue, while taxes on corporations contribute around 14% and taxes on wealth 4%.
• In January 2022, over 100 millionaires signed a letter calling for higher taxes.
Clearly, we have a global problem which is not new, but which is accelerating exponentially. Inequality is a driver of poverty, and poverty will not solve itself with growth / economic recovery alone. Specific policy intervention is crucial, and the scale and complexity of this problem requires global policy coordination just as much as the GFC and pandemic did. What is shocking however, is that instead of uniting to address this poverty tsunami, the Global North’s agenda appears to be pro-poverty. For example, Oxfam further stated that “countries face significant challenges in taxing wealth, and there is a need for concrete proposals on how to do so, especially for developing countries. There are very real constraints that revenue authorities face.” Really Oxfam? The world’s largest financial secrecy jurisdictions are the USA, Switzerland, Singapore, Hong Kong, Luxembourg, Japan, and Germany, with a total weight of ~59%. I am pretty sure that those countries do not face any technical or capacity challenges to ‘tax the rich’ if they wanted to. But why would they if they are never held to account? The USA alone is weighted 26% but the USA is STILL not part of the automatic exchange of information. Oxfam is again playing into the prevailing false narrative that this global inequality and poverty problem because we don’t tax the rich is a developing country problem, when all the data show that it most certainly is NOT. This is not what we need from Oxfam.
The OECD and EU also, in particular, relentlessly hold smaller, weaker states to a higher standard and paint us as the main culprits behind tax evasion, money laundering, and terrorism financing, while virtue-signalling via blacklisting and downplaying the abundant evidence that they are in fact the best-in-class for financial crime. Their actions against smaller states make us undeniably weaker and poorer. The fact that they continue with this agenda suggests one thing — their strategy is working.