THE NONE PERCENT

Kofi Annan on economic inequality: “People are seduced by the siren songs of cynical populists”

“Ill fares the land, to hastening ills a prey,
Where wealth accumulates and men decay.”

The Irish poet Oliver Goldsmith wrote these lines nearly 250 years ago, but as the world faces a chronic inequality crisis, they ring alarmingly true today.

The scale of global economic inequality is staggering and shaming. According to recent research, the number of billionaires rose by the biggest amount ever in 2017, while over half the world’s population lives on between $2 and $10 a day. The 2018 World Inequality Report shows the share of wealth held by the top 1% of earners in the US doubled from 10% to 20% between 1980 and 2016, while the bottom 50% fell from 20% to 13% in the same period.

This chasm between wealth and poverty both between and within countries is a space in which violent tensions and resentments foster; where avarice and corruption supplant compassion and solidarity; and where political courage to confront systemic failings is too often trumped by leaders’ self-interest to court oligarchs and line their own pockets.

Anger is further fuelled by the growing realization that those at the top of the economic pile do not “earn” their wealth in the traditional sense of the word: Their fortunes are less the reward for their talent, hard labor, or risk-taking, and more the product of inheritance, monopoly, or cronyism with political elites.

In Goldsmith’s era, these tensions exploded violently from rebellions against colonial rule in his native Ireland to the American and French Revolutions, which respectively demanded “life, liberty and the pursuit of happiness” and “liberté, égalité, fraternité.” Today, such utopian sentiments are heard more rarely and believed even less. Ten years after the devastating financial crash of 2008, there is still widespread anger at the political, business, and economic leaders who failed to avert the crisis and have shown scant remorse or restraint in their policies and actions since.

Millions of people across the world feel left behind and betrayed as the uneven benefits of globalization divide societies into winners and losers on an unprecedented scale. Incomes of the middle and working classes in developed countries have stagnated, and their livelihoods are becoming ever more vulnerable to technological change and global competition.

 Many people in economically precarious situations are seduced by the siren songs of cynical populists. From the rust belts of Pennsylvania to the abandoned coalfields of south Wales and northern France, many people in economically precarious situations are seduced by the siren songs of cynical populists. Yet while advocates of “America First,” Brexit, and xenophobic nationalism may rail against “elites,” in reality they promote economic policies that reinforce privilege while offering scapegoats in the form of migrants and other vulnerable minorities.

Compounding inequality and increasingly integrated financial markets have allowed globalization’s winners to park their profits in tax havens. This is where governments have a clear responsibility to act, and a clear way of achieving rapid results if the necessary political will is applied. Policies are now changing, but a wholesale paradigm shift is now required in international economic policy toward a holistic approach that values access to health, education, and justice as drivers of growth.

Since the 2008 crash, international bodies like the G20 and OECD have taken some welcome steps to promote tax transparency, ending loopholes and increasing the pressure on companies, individuals, and jurisdictions that flout their responsibilities. For decades, these international financial institutions have encouraged developing countries to move toward greater reliance on indirect taxes such as VAT, which are much more of a burden on the poor.

From the boardrooms of Wall Street to the streets of Athens, there is a growing consensus that the current economic model is not fit for purpose. We are far from agreement though on what should replace it. What is absolutely crucial is that the voices of the people most affected by inequality must be heard in the debates that follow.

This is why The Elders, a group of independent leaders founded by Nelson Mandela of which I have the honor to be the chair, is working with civil-society activists from the Fight Inequality Alliance to promote an inclusive, just, and bold agenda.

When contemplating global challenges and injustices, Mandela remains a constant source of inspiration. As we celebrate the centenary of his birth this year, let us take heed of his words and follow his example to create a freer, fairer, and more just world for all:

“The real makers of history are the ordinary men and women; their participation in every decision about the future is the only guarantee of true democracy and freedom.”

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