The poverty across the world is on an incessant rise. But this year, for the first time in twenty years this surge in poverty has been accompanied by a phenomenal jump in the income of the world’s richest people.
The novel coronavirus pandemic is being called the reason behind the paradox of poverty amidst plenty which has pushed millions globally into perpetual poverty.
The United Nations has recently commemorated the International Day for the Eradication of Poverty. This comes at a time when the rich are getting richer and the poor are getting poorer, reflecting the harsh truth of the saddening widespread economic inequalities in most of the nations across the world.
There are nearly 7.8 billion people around the world out of which over 736 million people are surviving on bread and butter living below the international poverty line.
A report released by the World Bank last week says that this year it is expected that the entire human race can get a step into extreme poverty for the very first time in more than 20 years. The circumstances are further exploited with the pandemic, which has pushed more than 115 million people down the cliff into the depths of poverty. The COVID-19 pandemic has also exponentially aggravated the forces of conflict and climate change. These forces were indirectly working towards reducing poverty. It is also estimated that as many as 150 million people could be added to the list of extremely poor people by the year 2021.
On the extreme opposite, the billionaires across the world have been adding more and more to their wealth setting and crossing new records every other day in the middle of the pandemic. According to a report by UBS Global Wealth Management and PwC Switzerland last week, the rise in wealth of these billionaires majorly comes as the tech stocks drive a major boost in their fortunes. It also stated that the cumulative wealth held by the global elites has crossed $10.2 trillion last July in comparison with $8.9 trillion in the year 2017. Currently, there are 2,189 billionaires as against 2,158 in 2017. Only three major sectors were responsible for these gains which were- tech, health care, and industry. But at the same time, the rise in the wealth of the billionaires has also lead to a jump in philanthropy and social welfare activities. Data shows that nearly 209 billionaires have pledged $7.2 billion as donations for social good. A report by the Swiss Bank UBS shows that from April to July only the richest people in the world saw their wealth jump 27.5% to $ 10.2 trillion.
This concentration of global wealth in the hands of a few people is not an appreciated sign by any of the economies, especially when a lot of developing countries are trying hard to row their boats across the debt crisis they are stuck in. This crisis has been further elevated by a dismantled tax system, taking benefit of which wealthy individuals and companies successfully pay little or no tax at all. To battle the disastrous consequences it is quintessential for governments to immediately focus on systematic solutions such as debt cancellations. A multilateral and universally binding framework for dealing with the debt crisis and a tax convention under the United Nations shall also be formed to address the unsustainable and illegitimate debt and to fix loopholes in the international tax system. The challenge here is to arrange and channelize additional resources to low-income countries, the areas where global poverty is concentrated through the Official Development Assistance. For this mobilization of resources, the United Nations can take the flag in playing a crucial role by financing the contributions by various member states for fighting the effect of COVID on the vulnerable of their countries.
Not only this, all the 17 sustainable development goals set by the UN to eradicate the high-level hunger and poverty by 2030 have been undermined due to the virus. People who have been surviving under $1.90 a day are said to fall under the category of “Extreme poverty”.
Before the economic fallout due to the virus came into play, the rate by which extreme poverty was supposed to drop in 2020 was 7.9% whereas now, after taking into account the pandemic, 9.1% to 9.4% of the population is expected to be affected by the virus. Analyzing the data, David Malpass, says that the global recession may result in 1.4% of the total population surpassing the bar of extreme poverty.
The countries need to tie their seat belts and sit ready for facing an entirely different economy after the coronavirus is contained. Countries need to do this by easy movement of capital, skills, money, labor, and innovations into new businesses and industries.
One thing to keep in mind is that the pandemic has not created this inequality we are talking about rather it has just supercharged it and escalated its effects. That is absolutely doable – indeed, we’ve done it before – but markets cannot self-correct, and elites never bestow a fair economy from on high. Only pressure from ordinary people can win an economy that is humane and safe. Developing countries should also reclaim their taxing rights on global profit. For this, an UN-led intergovernmental process, in which member states participate on an equal footing, should be established to pave the way for the reform of international tax rules and standards. Multinationals and the wealthy do not pay their share of taxes, thus depriving countries of the public revenue needed to address inequality.