Battling inequality at a global level

James Serizawa (R) sells Mega Millions lottery tickets at Bluebird Liquor in Hawthorne, California December 13, 2013. The US Mega Millions jackpot has grown to an estimated $425 million, prompting a rush of ticket-buying by people betting their luck will hold out when the second-largest drawing on record takes place on the night of Friday the 13th.

EDITORIAL

ANTI-POVERTY campaigner Oxfam's graphic factoid on income inequality - that the 85 richest billionaires own as much wealth as the 3.5 billion poorer half of humanity - may grate but will not shock.

Short of revolution and a remix of economic orthodoxies, the prevailing belief is that the rich can only get richer.

In Russia, 110 oligarchs hold one-third of the country's privatised wealth.

China? Imagine, in the absence of credible data.

America, which loves to claim exceptionalism, can point to one family alone (the Waltons of Walmart) having as much lucre as the bottom 30 per cent of the population.

Overall, the top 1 per cent of Americans captured 95 per cent of the wealth created after the 2009 financial crash, while 90 per cent became poorer.

The issue received a requisite airing most recently at the Davos economic forum, where the organisers warned that inequality was threatening social stability within countries, besides global security.

These risks are acknowledged widely at international forums, and governments tailor policies towards reducing disparities where they can. Is enough being done?

Oxfam raised the little-discussed matter of "opportunity capture", wherein the lowest tax rates and the best education and health care are claimed as of right by the children of the rich, to create over time "mutually reinforcing cycles of advantage that are transmitted across generations".

Singapore's leaders have warned against an equivalent winner-take-all mentality, against which the Government counters by expanding the scope for social mobility through education and career choices.

But equal opportunity is a mantra that is dishonoured more than observed. In most of South-east Asia, discriminatory practice is the norm.

Taxation policy is one tool that can redress many social ills if properly done. Oxfam found that tax rates for the richest have gone down since the 1970s in 29 out of 30 countries it had data on.

This is wealth perpetuation for the few by statute, at which America's congressional Republicans are adept. Tax avoidance or evasion by corporates is more insidious as it is the single largest contributor to wealth concentration in private hands.

Individual governments on their own cannot combat the scourge as multinationals have shown how good they are at taking advantage of different tax regimes to reduce their liability.

It will require concerted action by the G-20 and the International Monetary Fund to make a stand against the practice of MNCs paying disproportionately low tax in countries where they operate.

Australian leaders have given notice the matter will be debated when their country hosts the G-20 in November. Let there be real action taken this time.


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