How privilege, power in the economy drive extreme inequality in Asia

No trickling down

Over the last 30 years, the phenomena of unchecked deregulation, privatization, financial secrecy and globalization has allowed big companies and well-connected individuals to use their power and influence to capture an increasing share of the benefits of economic growth.

On the other side of the ledger, the benefits for the poorest have shrunk. This trend of a relatively few wealthy individuals and corporations having undue influence may damage fledgling democracies and create wider discontent in Asia.

As the President of the World Bank stated last year, wealth is simply not trickling down – it is being sucked up by a powerful and wealthy minority. And once there, an elaborate system of tax havens and an industry of wealth managers ensures that it stays there – far from the reach of ordinary citizens and their governments.

Tackling extreme inequality across Asia is going to require action on many fronts. Governments, businesses and those creating wealth in Asia must build inclusive and sustainable economies that provide decent jobs with fair living wages.

We must act to reduce gender discrimination in the workplace and the wage gap. Governments must invest more in healthcare and education, promote the economic empowerment of women, increase social protection expenditure and tackle injustices in the ownership of assets such as land.

Tax havens and poor wages

Amongst the most urgent actions is to put a stop to tax havens. Tax havens allow super wealthy corporations and individuals to avoid paying their fair share of tax. (READ: Tax havens and illicit money)

This denies governments of vital revenue that should be spent on schools, healthcare, roads, and other essential services and infrastructure. The United Nations Conference on Trade and Development (UNCTAD) estimate that developing countries lose around US $100 billion in tax revenues each year as a result of corporate tax avoidance schemes that route investments through tax havens.

Countries in Southeast Asia are moving towards more economic integration under the ASEAN Economic Community. The AEC could be an effective place to develop a common political vision for tackling inequality in Asia.

It could help to end the era of tax incentives to rich individuals and corporations. It could agree upon harmonized corporate tax in the region and demand transparency in the operations of corporations. Most importantly it should agree hard standards on fair living wages and conditions for workers.

G20 governments agreed steps to curb tax dodging by multinational companies in 2015, yet these measures largely ignore the problems posed by tax havens, and do little to help Asian governments claim their fair share of taxes.

Now, with tax havens becoming an ever more common way of doing business – 109 of the WEF's 118 partners have a presence in at least one tax haven – it’s time to put a stop to this practice.

Taking action

That is why I will be pressing political leaders, CEOs, and others in Davos to act. I will be asking wealthy individuals and business leaders to commit to bring their money back on shore and I will be urging our politicians to work together to agree a new global approach to end tax havens.

It would be wrong to suggest that many of those gathering for the WEF do not care about inequality – they do.

However, they have collectively failed to recognize that the solution to this crisis is not just about helping the poorest get a foot on the economic ladder – it must also be about tackling the corrupting influence of the extremely wealthy who are pulling up the ladder as the poor try to climb it.

If the men and women in Davos take this simple truth on board we can begin to build a new global economy that works for the many and not just the 62. –

Winnie Byanyima is the Executive Director of Oxfam International. Oxfam is an international confederation of 17 organizations networked together in more than 90 countries, as part of a global movement for change, to build a future free from the injustice of poverty. 

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