This column appeared in the Jersey Evening Post on the 25th of January 2016
As the world’s business and political leaders gather in the Swiss resort of Davos to discuss global economic development, recent reports by Credit Suisse and Oxfam paint a damning picture of global inequality. The main conclusion is that humanity has now created an economy that serves the richest 1%, who own the same amount of wealth as the other 99% of the world’s population. Instead of laying the foundations for future generations, and ensuring the survival of our ecosystems, we have put in place mechanisms that solidify and increase the huge differences between rich and poor, whilst carelessly undermining the sustainability of our planet. This is indeed a peculiar form of ‘development’ and it is threatening the very fabric of our existence. Are world leaders discussing an emergency operation to reverse this shocking trend?
Oxfam advises a threefold approach to tackle this crisis: higher wages for the lower paid; higher investment in public services and a crackdown on tax dodging, facilitated by offshore finance centres. All three seem highly relevant to Jersey. A report commissioned by the States and published in November 2015 echoes some of the trends highlighted by the Oxfam report. Since 2010, the poorest 20% of our population have seen their net incomes drop by a sixth. No other group was hit this hard. Moreover, the income of the top 10% outstrips the income of the bottom 10% 19:1. This was only 12:1 five years ago! This is the highest increase in inequality anywhere in the rich world.
Housing costs are identified as the main driver of this increasing gap. These costs obliterate any correction our tax or benefit system might have made. Simple tax measures will not address the challenge, although one of Oxfam’s recommendations advises governments to shift the tax burden away from labour and on to capital and wealth. Would this even be imaginable in Jersey?
Indeed, in spite of Oxfam’s global recommendations, the States have embarked on an opposite course. In the long-term financial plan it is outlined how our government has committed itself to austerity: wage freezes and voluntary redundancies, cutbacks in public services and a staunch commitment to its status as an offshore financial center, while neglecting other priorities that could be considered important. According to UNESCO, Jersey spent only 2.5% of its GDP on education. This is less than Burundi, Liberia and Malawi.
As a recent Guardian article points out:
“Jersey has bet its future on finance, allowing its other industries to shrivel, in the belief that it could live well in perpetuity from moving other people’s money around.”
With global inequality once again at the centre of world attention, Jersey would do well to properly invest in the future.