The Cheat Sheet

Uncle Scrooge, and an unequal world

JINOY JOSE P | Updated on January 09, 2018 Published on December 20, 2017
You mean our very own Scrooge McDuck?

Yes, uncle to the naughty Donald Duck and, inarguably, the wealthiest ‘character’ in this world.

Wealthy? C’mon!

Well, in case you don’t know, Mr Scrooge is the richest fictional character in the world, according to the ‘Fictional Fifteen’ ranking of the Forbes magazine, which also compiles a list of the world’s wealthiest people every year. Forbes estimates Scrooge has an estimated net worth of $65 billion, closely followed by dragon Smaug from JRR Tolkien’s The Hobbit.

But why tag Monsieur Piketty to this fantasy?

Just the past week, the French economist published The World Inequality Report, which revealed some startling truths about wealth formation in the world, showing that Uncle Scrooge’s real world peers have gone far ahead in amassing riches, and making our humble planet a very bad place to be for the rest of its inhabitants. For starters, Piketty’s report reveals the richest 0.1 per cent of the world’s population have increased their total wealth, since 1980, by as much as the poorest half (3.8 billion people) of the world’s total population.

Phew! That’s extreme!

You bet! Piketty warns that inequality has ballooned to “extreme levels” in a few countries and the situation is only going to get worse unless governments rise taxes and tackle tax avoidance, especially in advanced countries such as Russia and the US.

Ha, Ha!

Why this loud smirk?

Sorry, I just saw reports on the new US tax Bill.

Ah, that! I don’t blame you. It is supremely ironic that at a time when the world is starting to seriously worry about income inequality and the alarming changes in indices such as the Gini Coefficient, one of the world’s largest democracies approves a $1.5 trillion (that’s nearly ₹100 lakh crore) tax Bill, which offers huge tax breaks for big companies and rich people. Experts say the legislation can become the most drastic changes to the US tax code since 1986.

That’s pathetic!

The World Inequality Report is not your run-of-the-mill data compilation. It gleans numbers from works of more than 100 researchers around the world. It says the richest 1 per cent of the global population now owns 27 per cent of the world’s total wealth (1980-2016). Worse, the richest of the rich (0.1 per cent of the population) increased wealth many fold (controlling 13 per cent of the global wealth). Scan closer, the picture gets eerier: the top 0.001 per cent (that’s some 76,000 people) amassed 4 per cent of all the whole world’s wealth created since 1980.

Oh!

Take Jeff Bezos, the world’s richest person and founder of global e-tailer Amazon. He sits on a $98.8 billion fortune. In 2016 alone, Bezos’ wealth went up by $33 billion. The world’s five richest people (Bezos, Bill Gates, Warren Buffett, Amancio Ortega, the owner of Zara, and Facebook’s Mark Zuckerberg) hold $425 billion of assets, notes a recent report in The Guardian. That equals a-fifth of India’s GDP.

So, what does it actually mean for the poor?

Such concentration of wealth is not an organic phenomenon. Individually, these billionaires may not be responsible for the plight of the poor, but the system (tax rules, business regulations and other policies) certainly has to bear the blame.

So what should immediately be done is to raise taxes for the rich (which seems to be an idea whose time hasn’t come yet in many parts of the world as the US example shows) and formulation of stringent rules to check tax havens and black money (which, again, seems to be a tall order as the Paradise Papers investigation has shown us). Piketty says a tenth of the world’s wealth now rests in tax havens.

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Published on December 20, 2017
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