National and Global Inequality
Recent AfricaFocus Bulletins | More on illicit financial flows and tax justice
Social and economic inequality results from the intersection of different
dimensions of inequality, including not only strictly economic forces
but also inherited disadvantages and current discrimination along multiple other axes: race, gender,
sexual orientation, disability status, and more. This reality has
been theorized in the concept of "intersectionality,"
made prominent by feminist critical race scholars such as Kimberlé
Williams Crenshaw. Yet one of the fundamental aspects of inequality
often missed is that based on geography. High levels of inequality
are found within cities, between urban and rural areas, and between
states or regions within a single country.
Illicit
financial flows, in particular, are closely linked to inequalities
within countries and, most strikingly, to inequalities between
countries. These two intersect to form "global inequality."
And they are in turn intertwined with all the other dimensions of
inequality cited by intersectional theorists.
There is abundant
documentation of the stark inequalities within the United States, and
new data is coming out all the time. In December 2015, the Institute
for Policy Studies released a new report,
"Billionaire
Bonanza," comparing different
sectors of the US population in terms of their wealth. Among the
results:
America's 20
wealthiest people now own more wealth than the entire bottom half of
the American population, a total of 152 million people in 57 million
households.
The wealthiest 100
households now own about as much wealth as the entire African
American population in the United States.
The wealthiest 186
members of the Forbes 400 own as much wealth as the entire US Latino
population.
The same month, Pew
Research Center released statistics
on changes in household income between 1971 and 2015.
A chart
from this data shows households with
annual earnings of $200,000 or more moving from a small share of the
total to the largest single share, easily outstripping all other
income segments. The share of total income going to people in the
middle income range has been going down, while the share going to the
top 1% keeps going up. As is often noted, these trends are
fundamentally reshaping the electoral landscape through the powerful
and growing influence of money in politics.
It is also increasingly
recognized that income inequalities reflect not only the inequalities
of economic class but also those of race, gender, ethnicity,
immigrant status, and other human characteristics that can be used to
shape privilege and vulnerability. How these different forces
interact and what to do about them is intensely contested in both
scholarly and political arenas. Less noted is how they interact with
"place," and particularly with the divisions between
countries at the global level.
Yet "big data"
is also revealing a global pattern of inequality that is even more
extreme than the inequality within any one country. One of the most
insightful analysts of this reality is Branko Milanovic. His latest
book, Global
Inequality, both shows the dramatic rise
of the global 1% in the last 20 years and traces variations in
patterns of change within countries and between countries. While the
middle classes in China and India are rising, inequality remains high
and is even growing within countries, including rich countries in
North America and Western Europe, new emerging powers such as China
and Brazil, and oil-rich kleptocracies in the Middle East and Africa.
The standard
Gini index of incomes, which measures
inequality on a scale from 0 (perfect equality) to 100 (perfect
inequality), ranges from over 60 in South Africa to the low 50s in
Brazil and Guatemala, the low 40s in China and the United States, and
under 30 in the most egalitarian European countries such as Sweden
and Norway.
But inequality between
countries also means that people in different countries have
different chances to be at the top of the global heap. Thus 12% of
Americans are in the top 1% globally, while only the very wealthiest
1% of Russians, Brazilians, and South Africans make into the global
top 1%. Africa, despite rising average growth rates and its own crop
of millionaires and billionaires in many countries, remains on
average the most disadvantaged continent in the global distribution
of income. The "citizenship premium" means that average
income in the top 10% in an African country is far below average
income in the top 10% in the United States or another rich country.
So too, Africans in the bottom 10% of their countries' income
distributions are far worse off, on average, than people in the bottom
10% in rich countries. The disparities purely from the accident of
birth are staggering.
As can be seen in the
table below, calculated from Milanovic's
data, if one compares selected African
countries to the United States, the average income per person in the
United States of $23,133 in the period just before 2010 was more than
seven times the average income in South Africa. It was almost 25
times the average income in Ghana, and almost 50 times that in
Nigeria. The average income of even the bottom 10% in the United
States was slightly more than the average income in South Africa as a
whole, and far greater than average income in other African
countries. While the exact numbers may be contested, based as they
are on household surveys and referring only to cash income, there can
be no doubt that these contrasts are striking.
|
Country
|
Mean income
(in 2005 US$)
|
Ratio USA Mean
to Country Mean
|
Ratio Mean of
Bottom 10% in USA to Country Mean
|
|
United
States
|
|
USA
|
$23,133
|
1.00
|
0.14
|
|
Lowest income 10%
in USA (if it were a country)
|
$3,283
|
7.05
|
1.00
|
|
Selected
African Countries
|
|
South Africa
|
$3,081
|
7.51
|
1.07
|
|
Tunisia
|
$2,614
|
8.85
|
1.26
|
|
Egypt
|
$1,368
|
16.91
|
2.40
|
|
Ghana
|
$963
|
24.02
|
3.41
|
|
Ethiopia
|
$617
|
37.49
|
5.32
|
|
Nigeria
|
$479
|
48.29
|
6.85
|
|
Kenya
|
$344
|
67.25
|
9.54
|
|
Congo (DRC)
|
$179
|
129.23
|
18.34
|
Source and notes:
Calculated from data downloaded from the World
Income Distribution (WYD) dataset 1988-2008.
For a Google spreadsheet including a wider selection of countries
from the database, click
here.
Most recent bulletins on illicit financial flows and tax justice
July 20, 2022 Africa/Global: Oligarchs of All Nations
http://www.africafocus.org/docs22/books2207.php
"Biden Concedes Defeat on Climate Bill as Manchin and Inflation Upend Agenda" - New York Times, July 16, 2022
June 9, 2022 Africa/Global: Ukraine, Africa, and Our Planet
http://www.africafocus.org/docs22/upd2206.php
“An end to this terrible war based on dialogue must be the international community’s highest priority. Support to the
people of Ukraine must be matched by efforts to advance Russian/Ukrainian negotiations, European security dialogue,
and wider risk-reduction measures to prevent nuclear escalation.” - The Elders, May 25, 2022
May 11, 2022 Africa/Global: Debt, IFFs, and Inequality in Africa
http://www.africafocus.org/docs22/ineq2205.php
“43 African governments are facing expenditure cuts totalling $183 billion
(equivalent to 5.4 percent of GDP) over the next five years, reveals new
analysis from Oxfam and Development Finance International (DFI) today. If
these cuts are implemented, their chances of achieving the UN’s Sustainable
Development Goals will likely disappear.” - Oxfam International and
Development Finance International
December 23, 2021 USA/Africa: Pandora Papers Keep Giving
http://www.africafocus.org/docs21/iff2112.php
2021 was a banner year for attention to national and international tax reforms to reduce tax evasion and avoidance, with legislation in the United States spearheaded by the FACT Coalition and a global reform deal proposed by the Organization of Economic Cooperation and Development (OECD). But the Pandora Papers also demonstrated the pervasive scale of illicit financial flows that siphon off wealth into an “offshore” world of secrecy.
May 31, 2021 Mozambique/Global: Fossil Fuels, Debt, and Corruption
http://www.africafocus.org/docs21/moz2105b.php
“The scandal of Mozambique’s “hidden debts” has already cost the
country at least 11 billion US dollars, and has plunged an
additional two million people into poverty, according to a detailed
study of the costs and consequences of the debt published on Friday
by the anti-corruption NGO, the Centre for Public Integrity (CIP),
and its Norwegian partner, the Christian Michelsen Institute. The
term “hidden debts” refers to illicit loans of over two billion US
dollars from the banks Credit Suisse and VTB of Russia in 2013 and
2014 to three fraudulent, security–linked Mozambican companies –
Proindicus, Ematum (Mozambique Tuna Company), and MAM (Mozambique
Asset Management).” - report by Centre for Public Integrity
(Mozambique) and Christian Michelsen Institute (Norway)
March 8, 2021 USA/Global: Taxing the Tech Giants
http://www.africafocus.org/docs21/dig2103.php
“How should we determine the corporate tax a big tech company should
pay in each country where they operate? There are many ways that this
could be calculated, but most recommendations suggest looking at
their sales, their assets and the number of employees they have in
each country. In the absence of transparent reporting, collecting
such data is not easy, but we can get a useful estimate through
looking at a proxy indicator: the number of users they have in each
country. For example, in just 20 developing countries there are
nearly 1.5 billion internet users accessing Google, about 900 million
people using Microsoft on their desktops and over 750 million
Facebook users. For these companies, the number of users is a good
indicator of both their sales and their assets.” - ActionAid
February 22, 2021 Africa/Global: The Inequality Virus
http://www.africafocus.org/docs21/ineq2102.php
“COVID-19 has been likened to an x-ray, revealing fractures in the
fragile skeleton of the societies we have built. It is exposing
fallacies and falsehoods everywhere: The lie that free markets can
deliver healthcare for all; The fiction that unpaid care work is
not work; The delusion that we live in a post-racist world; The
myth that we are all in the same boat. While we are all floating
on the same sea, it’s clear that some are in super yachts, while
others are clinging to the drifting debris.” – António Guterres,
UN Secretary General
December 14, 2020 Africa/Global: State of Tax Justice 2020
http://www.africafocus.org/docs20/tax2012.php
“Of the $427 billion in tax lost each year globally to tax havens,
the State of Tax Justice 2020 reports that $245 billion is directly
lost to corporate tax abuse by multinational corporations and $182
billion to private tax evasion. Multinational corporations paid
billions less in tax than they should have by shifting $1.38
trillion worth of profit out of the countries where they were
generated and into tax havens, where corporate tax rates are
extremely low or non-existent. Private tax evaders paid less tax
than they should have by storing a total of over $10 trillion in
financial assets offshore.” - Tax Justice Network, November 2020.
June 8, 2020 Africa/Global: Thinking Post-Covid-19
http://www.africafocus.org/docs20/post2006.php
“Calls for debt relief—or more timid debt service moratorium—are
drops in the ocean. Something much more ambitious and radical
should be envisaged. This crisis allows us to think big. … [F]or
these exceptional times, we need exceptional solutions. This virus
does offer Africa an opportunity to exercise agency and embark on a
more robust structural transformation process. Building on the
gains of the last few years and the resilience of its population,
there will probably be no better time to fast-track change.” -
Carlos Lopes, former Executive Secretary of the United Nations
Economic Commission for Africa
February 24, 2020 USA/Global: National and Global Inequalities Are Intertwined
http://www.africafocus.org/docs20/iff2002.php
The recession that began in 2008 brought new life to the public debate on class and racial inequality in the United States. The #OccupyWallStreet demonstrations in 2011 may have left no institutional legacy, but they shined a spotlight on a yawning wealth gap and the role of the “one percent.” #BlackLivesMatter and related movements challenged complacency on entrenched racism … Public awareness of inequality, like awareness of climate change, was rising even before President Trump took office. But his administration’s sharp turn toward denial and regression on both issues has spurred active opposition and cut into the complacency of conventional Democratic Party politics.
October 9, 2019 Africa/Global: Targeting Corporate Shell Games
http://www.africafocus.org/docs19/iff1910.php
“Across the world, citizens who want their governments to implement
policies to reduce inequalities, address climate change and looming
ecological disaster, provide better public services and amenities,
ensure social protection, generate quality employment and so on,
are always confronted with one question: where is the money? We are
constantly told that governments cannot afford the necessary
expenditure; that running fiscal deficits will lead to financial
chaos and crisis; and that raising taxes will simply drive away
investment. But this is not just misleading; it is simply wrong.
Governments are constrained in their resources because they tolerate widespread tax evasion and avoidance. ” - Professor Jayati
Ghosh, Jawaharlal Nehru University
August 12, 2019 Africa/Global: #MauritiusLeaks Reveals Tax Dodges
http://www.africafocus.org/docs19/iff1908a.php
“Based on a cache of 200,000 confidential records from the
Mauritius office of the Bermuda-based offshore law firm Conyers
Dill & Pearman, the investigation reveals how a sophisticated
financial system based on the island is designed to divert tax
revenue from poor nations back to the coffers of Western
corporations and African oligarchs, with Mauritius getting a share.
The files date from the early 1990s to 2017.” - International
Consortium of Investigative Journalists
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