While the cost of energy and food for citizens is skyrocketing, billionaires in the food and energy sector are increasing their wealth by nearly $ 600 million every day. The extreme wealth of billionaires stands in stark contrast to rising poverty. Compared to the pre-pandemic period, 263 million more people are estimated to be living in extreme poverty by the end of this year. This is according to the calculations from the new Oxfam Novib report, which will be published at the same time as the start of the World Economic Forum in Davos. For the first time since the start of the pandemic, government leaders and the business elite will meet again in person in Switzerland.
“The pandemic and the massive rises in global food and energy prices since the crisis in Ukraine increase the wealth of billionaires active in these sectors by almost $ 600 million a day. At the same time, decades of progress in the fight against poverty are being wiped out. Millions of extra people are faced with an unpaid increase in their cost of living, “says Esmé Berkhout, financial expert at Oxfam Novib.
The calculations in the new Oxfam report Profiting from Pain show that 573 people became billionaires during the pandemic, of which 62 were new billionaires in the food sector. While it is estimated that another 263 million people will end up in extreme poverty this year compared to the pre-pandemic period. That’s about a million people every 33 hours. The total wealth of the world billionaires now corresponds to 13.9 percent of global GDP. It has tripled since 2000.
“Billionaires’ wealth has not increased because they have now become wiser or have worked harder. Employees have started working harder for less pay and under poorer conditions. In the meantime, millions of people are forced to skip meals, turn down or turn off the heat and are behind in paying their bills, ‘says Berkhout.
Companies in the energy, food and pharmaceutical sectors in particular are making record profits, while wages are barely rising. The wealth of food and energy billionaires has increased by $ 453 billion in the last two years, or $ 596 million a day. Along with just three other companies, the Cargill family controls 70 percent of global agricultural trade. Last year, Cargill delivered the largest profit in its history with $ 5 billion. This record profit is expected to be achieved again in 2022. Before the pandemic, the Cargill family consisted of eight billionaires, now 12.
From Sri Lanka to Sudan, record high food prices are creating social and political unrest. 60% of low-income countries are on the brink of a debt crisis.
- Today, 2,668 billionaires – 573 more than in 2020 – own $ 12.7 trillion, an increase of $ 3.78 trillion from March 2020.
- The ten richest men in the world own more wealth than the poorest 40 percent of humanity, 3.1 billion people.
- An employee in the bottom 50 percent of the global income distribution would have to work 112 years to earn what a person in the top 1 percent gets in a year.
- It is especially women who bear the consequences. They work relatively often in the lowest paid sectors and in the informal economy. By 2020, women were 1.4 times more likely to lose their jobs than men. Millions of women have not gotten their jobs back since the pandemic and are, among other things, hit extra hard by the current price increases because of this.
The pandemic has added 40 new pharmaceutical billionaires. Pharmaceutical companies like Moderna and Pfizer charge governments up to 24 times more than the potential cost of generic manufacturing their coronavirus vaccines.
“The pursuit of profit by many large corporations is creating problems for governments and citizens around the world. To tackle rising extreme inequality and poverty, governments and the private sector should no longer prioritize profit but welfare.” says Berkhout.
Oxfam urges governments to:
- Make sure that the rules of the economy no longer lead to extreme inequality and increased poverty. Extreme inequality is a political choice, and tackling it should be at the heart of government policy. It is now time for heads of government to put the interests of the citizens above the excessive profits of the very rich. Fair tax rules can make a big difference.
- Introduction of progressive taxes, including one-off and permanent wealth taxes, to provide greater support to people facing rising food and energy costs. In Argentina, a one-time “millionaire tax” brought in about $ 2.4 billion. There should also be an extra tax on extraordinary profits from large companies benefiting from the crisis. Oxfam estimated that such a tax on just 32 super-profitable multinationals could have generated $ 104 billion in revenue by 2020.
- Combating tax evasion and avoidance. The super-rich have nearly $ 8 trillion parked in tax havens.
- Introduce permanent wealth taxes to curb extreme prosperity. As an indication, an annual wealth tax for millionaires as low as 2 percent and 5 percent for billionaires could bring in $ 2.52 trillion a year – enough to lift 2.3 billion people out of poverty, produce enough vaccines for the world and universal social and health care for all living in low- and low-middle-income countries.