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The danger of opulence amid extreme inequality

by Sue Blaine, 22 January 2013, 14:42
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Picture: THINKSTOCK
ROLLING IN IT: The top 100 billionaires in the world last year added $240bn to their wealth. Picture: THINKSTOCK

ANTI-poverty organisation Oxfam International’s call for an end to extreme wealth and inequality is backed up by solid evidence, starting with the World Economic Forum’s highlighting of inequality as one of the top global risks for this year.

To do this, Oxfam says, the world has to start with “decent work for decent wages”.

It’s hard to argue with that in principle, but easy to vote against it in practice when you stand there, money in hand, and weigh up the cost of the Fair Trade chocolate over the ordinary type. That is, of course, if the size of your wallet allows you to consider the chocolate in the first place.

It’s pretty easy, as a “have” (and no matter how much of a “have-not” you consider yourself, if you are reading this you are highly likely to be a have), to pony up the extra cash to pay for goods, from jeans to coffee, that are produced by people who are well rewarded for their efforts. It’s not so easy when you really need that coffee (and who doesn’t?) and you have to feed your family on a meagre salary.

However, if you do have the luxury to pay for the Fair Trade jeans and the warm fuzzy feeling that goes with it, it is likely, argues Oxfam, to repay you, or at least the economy in which you exist, in cold cash. If more people are paid more, then there will be more people with more money able to buy more things. The economy will grow.

To do this, however, the NGO argues that the super-wealthy will have to be paid less. I suppose that depends on whether you believe there is a finite economic pie from which to slice.

It is, however, hard to argue against the vast amounts of money paid to those at the very top. If this doesn’t shock, then nothing will: the top 100 billionaires in the world last year added $240bn to their wealth — enough to end world poverty four times over.

There is a finite amount of natural resources, from potable water to the minerals we dig from the ground and the oil we pump. That is not theory; that is reality. For starters, yes, the largest part of the Earth is water (about 70% of the planet’s surface is covered in water), but something like 0.1% is safe for humans to drink. This, say scientists, is well-established.

Across the world, ordinary people are beginning to question the economics by which the majority of the world is run. It is there in the Occupy movement, in the move towards sustainability — now less a “tree hugger” ideology, more a business one. In South Africa, we are confronted right now with a very tangible practical example: the riots in the Western Cape’s fruit-growing region.

It doesn’t really matter, in this instance, whether you believe those riots to be purely about whether it is fair that farm workers are paid less than R150 a day, or more about politics and destabilising South Africa’s only Democratic Alliance-run province. The fact remains the situation was ripe for exploitation — economic or political.

Few South African farmers can be accused of living in opulence, but South Africa’s Gini coefficient was 0.63 (2011) — a coefficient of zero means a country has complete equality in terms of salaries. There is no way this wage gap is sustainable. The Western Cape farmers are simply the latest target, and admittedly an easy one.

Even the country’s solidly middle-class citizens, in South African terms, have vastly more than the have-nots.

I remember a short period of personal unemployment and the emotional and psychological turmoil it inflicted on me — and I had no children and the back-up of a reasonably secure family background. Although I did not call on it, I had that safety net. I also had a good education and skills.

How dreadful it must be to be unemployed, young, lacking skills and unemployable. That is the situation in which many of our youth find themselves. Youth unemployment is about 70% (not all of these people are without skills and uneducated, but many are).

It is easy to imagine their feelings of hopelessness, disaffection and anger. Not a large step from there to rioting.

Opulence amid extreme poverty and inequality is what the French Revolution was all about, and we all remember how that one ended for the top dogs.

Here are some other things to think about, from the Oxfam document, which is not long and worth a read:

• Unequal societies are a meaningful threat to democracy because big money buys big influence. We don’t have to look far to see that.

• If rich elites use their money to buy services such as private schooling and healthcare, they have less interest in public services or paying the taxes to support them. We don’t have to look far to see that either.

It’s probably rather dicey to quote bank adverts now, but: “Makes you think, doesn’t it?”

COMMENTS [ 4 ]

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South_One

The main reason that South Africa has the world's second worse gini co-efficient is not because rich incomes are too large; and it's not because the poor's are too low. The reason behind our terrible inequality is because so many are not being paid at all. Raising the minimum wage will exasperate unemployment and thus increase the country's inequality.

Jan 22, 2013 4:30 | 0 replies

onions

Sue Blaine - I sincerely hope that you sent a copy of this article to the NEC of the ANC and all the top leaders in the parastatals and businesses. I doubt they will read it and even if they do , they will not give a damn for the sentiments. The ANC et al will duly blame capitalism and business without looking in the mirror and seeing the Rolex and smart suits going to go riding in their R1 m + cars.

Jan 22, 2013 4:47 | 0 replies

Australopithecus

Sue, Agreed, the numbers are worrying but as Mark Twain famously said "There are lies, damn lies and statistics". One only has to take a look at the planet's human population growth curve, then take a closer look at the numbers to realise that the main contributors (to population growth) are the poor. This is a worldwide phenomenon. The result is a skewing of the data leading to the conclusion that, numbers wise, the poor are getting poorer and the rich richer. Individually, with more mouths to feed, the poor are indeed getting poorer and concomitantly the (fewer by far) wealthy individuals are getting richer. Money makes money due to its so-called "time value".

Jan 28, 2013 7:42 | 0 replies

Humfree

Who wrote that stupid, redundant headline? You mean the danger of opulence amid extreme poverty, or is extreme equality by itself dangerous? What do you think of the following solution? Allow the wealthiest 12500 South Africans to take their families and their wealth with them, and leave these shores, unobstructed. Those 50 000 emigrants would comprise only 0.1% of the population, but their departure would do absolute wonders for the country's Gini Coefficient. And much easier than uplifting the Zero Official Income / Wealth lowest 20 million, to get the same levelling effect on the Gini. Of course the market economy would collapse, if the 0.1% who are the successful movers and shakers were to abandon SA, but then at least the socialists, communists and the legions of envious would be happy that there are no more extreme opulents about to show them up.

Jan 31, 2013 10:55 | 0 replies
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