European Development Days - An Economy For The 1%, June 2016

EDD 2016 - An economy for the 1%

On 15 - 16 June 2016, Winnie Byanyima attended the "European Development Days" (EDDs) in Brussels. 

Organised by the European Commission, the European Development Days bring the development community together each year to share ideas and experiences in ways that inspire new partnerships and innovative solutions to the world’s most pressing challenges. For its tenth anniversary, the EDD 2016 focused on the ‘2030 Agenda for Sustainable Development’.

At the EDDs, Winnie Byanyima together with colleagues from Oxfam's EU office represented Oxfam in bilateral meetings, high-level engagements and media opportunities.

Ms Byanyima's spoke at two high-level engagements: firstly, on "An Economy For The 1%", joining Ruba Ahmad (Young Leader - Inequalities Jordan), Nora Lustig (Professor of Latin American Economics, Tulane University), Philippe Orliange (Director for Strategy, Partnership and Communication, Agence Française de Développement) and Maria Shaw-Barragan (Deputy Director, Operations in Africa, Caribbean, Pacific, Asia and Latin America, European Investment Bank). The discussion was chaired by Jaime Atienza (Campaigns and Policy Director, Oxfam Intermon).

More content and info available here: https://eudevdays.eu/sessions/economy-1

Ms Byanyima also was interviewed for two short accompanying videos by the EC, which can be found here and here.

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NOTES FOR REMARKS

For me, inequality has never been an academic subject – although I’m so happy academics are paying a lot of attention to it and highlighting what it is and what it costs us.

I grew up with in Uganda in a little town in a very simple home with no power, no running water. But I was a local elite: my parents were school teachers!

In the school where I went, there was a girl called Agnes. She was the cleverest girl in my year, always finishing at the top of the class despite often having to miss school because she had to care for a sick family member, or because she had to help collect water, or harvest crops. Or sometimes she couldn’t pay that little bit of school fees that had to be paid every term.

Agnes was a girl, and she was a refugee, and she was poor. These factors intersected to mean that she never had a fair chance in life. She did well in primary school despite the obstacles put in her way, but she never made it through secondary school.

I am saddened when I think of where Agnes probably is now. She was not allowed to fulfil her potential – because education was only available for a few; there was not the critical investment in free education for all to give her and others like her the chance. 

That meant that Agnes missed out, but so did the rest of us, because we never got to see what she might have been capable of.

This of course was some decades ago, but Agnes story lives on: hundreds of millions of girls and boys and their families are kept poor by an economic system that has inequality in its very design. Just imagine how many engineers are today herding goats, or scientists pounding maize in the hot sun.  The world cannot afford this incredible waste of talent. 

Oxfam’s report called ‘An Economy for the 1%’ released earlier this year showed how just 5 years ago, 388 individuals had the same wealth as the poorest half of the planet.

    - Now that number is 62 – 62 people who have what three and half billion others have to share between them. 

    - The wealth of these 62 individuals has gone up by half a trillion dollars in just five years. 1% of people now own more wealth than the other 99% combined.

And as I’m here in Brussels I must say that this isn’t just a Southern crisis. 

    - In Europe today one in ten people live in poverty, and the majority of countries have seen an increased number of people living in severe deprivation since 2009. During the same period the number of European millionaires has increased by 50% .

    - Credit Suisse estimates that the richest one percent of Europeans hold almost a third of the region’s wealth, while the bottom 40 percent of the population share less than one percent of Europe’s total net wealth.

It makes no economic or moral sense to have so much wealth in the hands of so few people. 

Around the world, inequality puts a brake on the fight against poverty.  Unless we act to reduce inequality, we will not achieve the global target to eradicate extreme poverty by 2030.

Inequality also undermines economic growth, and it threatens the very health of our democracies when rich individuals and corporations use their wealth and power to skew public and economy policy in their favour.

The Panama Papers scandal is a lesson in what happens when a corporate interest such as the Mossack Fonseca firm uses is power to write and bend the rules in favour of its rich clients.  As the whistleblower of the story said: The Panama Papers give a compelling answer to why income inequality has been allowed to increase so much in recent years. 

There are no magical solutions, but inequality is not inevitable if governments take a stand against such corporate power and decide to lead in the public interest. There are a number of measures governments can take which I hope we can discuss today.

For one, take fair and progressive tax and public investment.  Well-designed tax systems that redistribute wealth and drive spending on public goods are one of the best weapons we have in the fight against inequality and poverty. 

    - I spoke about inequality in Europe before, but there are also still some of the world’s most positive examples here: Finland halved income inequality thanks to progressive and effective taxation accompanied by wise social spending. Contrast that with the austerity programmes in some EU countries that have placed the burden of reducing the public deficit squarely on the shoulders of the poor and vulnerable.  In the UK a million people now have to use food banks to avoid going hungry, in one of the richest economies in the world. This is a scandal. 

And nothing is more powerful in fighting inequality than universal healthcare or education, as Nora’s work shows. Universal public services provide the basic capability for all citizens to not face the fate that Agnes did, and truly be able to benefit from economic opportunity. To work best they must be free at the point of use, and publicly delivered; we must resist the unevidenced and dangerous push towards private healthcare and private education on the part of some donor agencies as this will only add fuel to the inequality fire. 

The poorest people need their governments to have the resources to deliver these essential services. That is why at Oxfam we are calling for long-overdue global tax reform, as well as closing tax loopholes and progressive tax reform within countries.

But at Oxfam we want to bring about a shift in thinking, too.  We need to go beyond specific policies to a new economic model. 

On this we were heartened indeed to see the IMF recognising the failings of neoliberalism earlier this month, and its intention to research this further, and in particular its conclusion that neoliberal policies have been and are a key cause of the inequality crisis.  Yet despite the evidence of their failure that the IMF points to, these policies retain a strong hold on the minds of those who running the global economy.  

We have to move away from the policies and ideas that have created an economy for the 1%. But what should we have instead?

I do believe that we are poised now, like never before, to answer this question and redefine the very nature of what we mean by an economy – towards something more human, in which governments act on behalf of the majority, and not in the interests of a tiny but powerful elite. Which embraces business, and technology – but asks how they serve people and people’s needs not just profit for the few.

This Human Economy, as we are calling it, is something I believe we can shape together- that we have the talent, the technology, and the imagination to challenge vested interests, take on the powerful,  build a fairer and more equal world and make this economy of the 1% once again something for the history books. 

Thank you.

ENDS