PROLOGUE: The biggest risk of all is that the sheer scale of global inequality is almost too staggering to comprehend: The richest 1% capture $19 trillion in income each year. That's more than the GDP of the "poorest" 169 countries *combined* - a list which includes Norway, Switzerland, Argentina and Saudi Arabia. Just 162 Billionaires Have The Same Wealth As Half Of Humanity ... “Extreme wealth is a sign of a failing economic system,” says a new Oxfam report on global inequality (read downunder).
Global Risks Report 2020
By Insights - January 2020
Economic and political polarization will intensify, as collaboration is needed more than ever to respond to severe threats to climate, public health, and technology systems
The Global Risks Report, published by the World Economic Forum with support from Marsh & McLennan, provides a rich perspective on the major threats that may impact global prosperity in 2020 and over the next decade. The 15th edition of the report draws on feedback from nearly 800 global experts and decision-makers who were asked to rank their concerns in terms of likelihood and impact.
This year’s report highlights important threads across the global risk landscape. Intensifying confrontations, both between and within countries, as well as a heightened sense of urgency and emergency around some critical global problems.
John Drzik, Chairman, Marsh & McLennan Insights
Risk outlook: the world in 2020
The Global Risks Report forecasts a year of increased domestic and international divisions with the added risk of economic slowdown. 78% of survey respondents said they expect “economic confrontations” and “domestic political polarization” to rise in 2020. Global experts also see the risk of extreme heatwaves and destruction of natural ecosystems increasing, as well as a rise in cyber-attacks targeting operations and infrastructure and data/money theft.
Risk outlook: a sharper focus on environmental threats over the next 10 years
Concerns about environmental risks have been rising over the last decade. For the first time in the history of the survey’s 10-year outlook, environmental threats dominate the top five long term risks by likelihood and occupy three of the top five spots by impact.
Continued vigilance is critical
Learn how your organization can use the Global Risks Report as a reference point to identify critical risk issues.
Global Risks Report 2020
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Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy
Look out: Nature Risks on the Rise
Nature loss is a planetary emergency. Humanity has already wiped out 83% of wild mammals and half of all plants and severely altered three-quarters of ice-free land and two-thirds of marine environments. One million species are at risk of extinction in the coming decades – a rate tens to hundreds of times higher than the average over the past 10 million years.
The World Economic Forum’s 2020 Global Risks Report ranks biodiversity loss and ecosystem collapse as one of the top five threats humanity will face in the next ten years. Human societies and economies rely on biodiversity in fundamental ways. Our research shows that $44 trillion of economic value generation – over half the world’s total GDP – is moderately or highly dependent on nature and its services. Nature loss matters for most businesses – through impacts on operations, supply chains, and markets.
We have the power to change this. Humanity urgently needs to rethink its relationship with nature, in order to halt and reverse the alarming degradation of the natural world. Business leaders have a crucial role to play, by putting nature at the core of their processes and decision-making and systematically identifying, assessing, mitigating and disclosing nature-related risks to avoid severe consequences. Businesses can be part of the global movement to protect and restore nature.
Despite an increasing focus on nature loss, there is still a limited understanding of why it matters to businesses and what the private sector can practically do about it. The World Economic Forum is launching a series of New Nature Economy (NNE) reports in 2020, making the business and economic case for safeguarding nature. The series aims to catalyse public-private momentum in 2020, with a focus on the UN Convention on Biological Diversity’s milestone summit (COP15) in Kunming, China, and the related Business for Nature mobilization.
Nature Risk Rising, produced in collaboration with PwC and the first report in the NNE series, explains how nature-related risks matter to business, why they must be urgently mainstreamed into risk management strategies and why it is vital to prioritize the protection of nature’s assets and services within the broader global economic growth agenda.
Rising civil unrest adds to mining risks in 2020
By Cecilia Jamasmie - 15. January 2020
A 3% hike in metro fares in Chile sparked what has become a far broader rebellion against inequality. (Image courtesy of Hugo Morales | Wikimedia Commons.)
Global miners will have to get ready to deal with the increasing threat from civil unrest, following last year’s succession of dramatic — and in several cases unforeseen — social explosions in almost 50 countries, including highly popular mining jurisdictions such as Chile, Mali, Guinea, Congo and Zimbabwe.
According to risk consultancy Verisk Maplecroft’s quarterly civil unrest index, released on Thursday, turmoil will linger in 2020, as most nations experiencing ongoing bursts of public discontent lack the tools and ability to handle them.
The experts foresee as many as 75 countries having to deal with soaring public rage over a variety of topics, including economic inequality and political roguery during the next six months.
Other jurisdictions, such as Hong Kong and Chile, which saw the greatest increases in risk over the last year, are unlikely to improve over the next two years, Verisk Maplecroft’s predicts.
As a result, the number of extremely risky countries in the Civil Unrest Index jumped by 66.7%; from 12 in 2019 to 20 by early 2020.
An ‘extreme risk’ rating in the index, which measures the risks to business, reflects the highest possible threat of transport disruption, damage to company assets and physical risks to employees from violent unrest. Most sectors, ranging across mining, energy, tourism, retail and financial services, have felt the impacts over the past year.
The resulting disruption to business, national economies and investment worldwide has totalled in the billions of US dollars, the consultancy says, citing Chile as an example. The first month of unrest in the copper-rich country caused an estimated $4.6 billion worth of infrastructure damage, and cost the Chilean economy around $3 billion, or 1.1% of its GDP, Verisk Maplecroft notes.
The consultancy detected that a deterioration in some risk factors could serve as an early warning sign in certain jurisdictions. Out of the 11 elements considered in the Civil Unrest Index, subsidy cuts were the single biggest indicator that the risk of civil unrest was growing in Chile, Lebanon and Zimbabwe.
Inflation and the weakening of mechanisms that allow the channelling of discontent before it erupts into unrest also played a role, Verisk Maplecroft says, particularly in Chile, Hong Kong and Zimbabwe.
With protests continuing to rage across the globe, the consultancy expects both the intensity of civil unrest, as well as the total number of countries experiencing disruption, to rise over the coming year.
In a stark reminder of gaping global inequality, a report published Sunday reveals that 162 billionaires, including Facebook’s Mark Zuckerberg and Amazon’s Jeff Bezos, have the same wealth as the poorest half of the world.
There are 2,153 billionaires globally, and, in 2019, they held more wealth combined than 4.6 billion people, according to the report, which uses data from the Credit Suisse Global Wealth Report and Forbes’ billionaire rankings.
The report uses a striking analogy to put these amounts of wealth in context. If everyone sat on their wealth piled up in $100 bills, most people would be sitting on the floor, a middle-class person from a rich country would be the height of a chair, and the world’s two richest men would be sitting in space.
Oxfam’s report is published annually to coincide with the start of the World Economic Forum gathering in Davos, where high-profile policymakers, business leaders and the wealthy take their private jets to a Swiss ski town to discuss how to “improve the state of the world.”
Once someone is very wealthy, the report points out, it’s easy to just watch the money accumulate because the rich can afford the best investment advice. Billionaire wealth has increased by an average of 7.4% a year since 2009, according to the report published by Oxfam, an international development nongovernmental organization. And 2019 was a good year for the ultrarich. Despite their wealth levels dipping at the start of the year, they quickly rebounded, and the world’s 500 richest people managed to add $1.2 trillion to their wealth over the course of the year, according to a Bloomberg analysis.
For some, the ability of individuals to accumulate vast levels of wealth, more than some countries’ entire gross domestic product, is a sign of the American Dream in action. The U.S. has the highest concentration of billionaires (705 individuals) and last year was the only country to see an increase in its billionaire population.
But for others it’s a sign that something’s gone wrong. Economist Stephanie Kelton last year tweeted, “No one makes a billion dollars. You TAKE a billion dollars.” And Rep. Alexandria Ocasio-Cortez (D-N.Y.) said in July that “a system that allows billionaires to exist when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health is wrong.”
“Extreme wealth is a sign of a failing economic system,” according to the report, which calculates that about a third of billionaire wealth exists because of inheritance. President Donald Trump’s fortune, for example, was built off the hundreds of millions of dollars he was given or inherited from his father.
No one makes a billion dollars. You TAKE a billion dollars. You take it from your workers (Hi, Jeff, Jim, and Alice!). You plunder it from the environment (What up, Charles & David?). You strip it using patents/protections (Lookin' at you, Bill.) https://www.forbes.com/forbes-400/#37fe1aa7e2ff …forbes.com
The gap between the world’s richest and poorest remains stark. Research by French economist Thomas Piketty found that the benefits of global growth have not been shared equally. From 1980 to 2016, the poorest 50% of people received 12 cents of every dollar of global income growth, while the richest 1% got more than double that, with 27 cents of every dollar.
Even though estimates of the wealth of the world’s poorest have been revised upward this year, the rate at which we are reducing global poverty has fallen by half since 2013, according to the World Bank.
And while huge numbers of people have been pulled from extreme poverty over the last few decades, 735 million people still live in extreme poverty ― meaning they survive on $1.90 or less a day ― and nearly half of the world (3.4 billion people) live on less than $5.50 a day.
“Global inequality is at crisis levels,” Rebecca Gowland, head of inequality at Oxfam, told HuffPost.
Women put in billions of hours of unpaid, undervalued care work
This report, called “Time to Care,” puts a spotlight on those who care for the young, the sick and the elderly, the vast majority of whom are women and girls working long hours for little or no pay.
Globally, women provide 12.5 billion hours a day of care work without pay, which the Oxfam report calculates adds at least $10.8 trillion of value to the economy every year.
This work is undervalued socially and economically, but, the report says, “It also lays the foundations in society that make possible enormous economic wealth accrued by others and helps to generate enormous economic wealth.”
Gowland gave the example of a woman in rural Zimbabwe who has to walk four hours a day to fetch water for her family. “The consequences of that are really obvious,” she said. “Girls are pulled out of school to do this unpaid care work, women can’t access fair, decent jobs and wages, and the biggest thing is the fact that they just don’t have time to contribute to societies, to any kind of political discourse or engagement with how their societies are run.”
This care crisis is not just affecting developing countries. The U.S. child care system, for example, is costing the country hundreds of billions of dollars a year in lost wages and lost opportunities, according to a report published Wednesday by the Economic Policy Institute (EPI). Child care providers in America are overwhelmed and underpaid, with a median wage of $12 an hour, according to the report’s findings. Meanwhile, parents, most often women, are being forced to give up work or turn down better-paying jobs because of the expense of child care.
The burden of caregiving looks set to increase. The International Labor Organization estimates, for example, there will be 100 million more older people needing care by 2050. Then there are the effects of the climate crisis, which are causing myriad health problems, forcing people to leave their homes and depriving them of water and food.
“These factors threaten to further exacerbate gender and economic inequalities and fuel a spiraling crisis for care and carers,” says the report.
At the same time, most countries have no plan to deal with this, says the report, and are instead reducing public spending, increasingly privatizing health and education, and raising taxes on the poor.
“If world leaders meeting this week [at Davos] are serious about reducing poverty and inequality,” said Danny Sriskandarajah, the chief executive of Oxfam Great Britain, “they urgently need to invest in care and other public services that make life easier for those with care responsibilities, and tackle discrimination holding back women and girls.”
We know the solutions. There’s just not the will to implement them.
The report calls for a swath of policy changes, such as free and universal public services ― like education, child care and health care ― and policies to limit the influence of companies and the superrich.
Oxfam suggests a progressive taxation system, which closes the loopholes that allow companies and wealthy individuals to avoid tax. Amazon, for example, paid $0 in corporate income tax in 2018 despite making $11 billion in profits.
“The entire economy, and many corporations within it, exist solely to the benefit of its of their wealthiest stakeholders,” Marshall Steinbaum, an assistant economics professor at the University of Utah, told HuffPost. Where before we had companies whose workers were collectively represented and a society in which businesses and the wealthiest were taxed proportionately more than the less wealthy, he said, now companies’ only purpose is to benefit shareholders and we have low marginal income tax rates that allow huge fortunes to be amassed.
Increasing taxes on the wealth of the 1% by 0.5% could raise enough over the next decade to create 117 million jobs in education, health and elder care, and close the care deficits, the report says.
Though these kind of policy changes may feel remote in countries like the U.S., Gowland said, “we are slowly seeing some governments decide to take on more progressive policies.”
Uruguay, for example, implemented legislation in 2017 that enshrines in law a right to care for all children, older people and people with disabilities, meaning the state is obliged to provide good-quality care services.
And New Zealand is trying to tackle inequality with its new well-being budget. The country has pledged to prioritize citizen well-being over economic growth in its spending and in the way it measures its success.
“It is sobering that this is the first time we have had a national budget that explicitly focuses on well-being,” Anna Matheson, senior lecturer in health policy at Victoria University of Wellington, New Zealand, told HuffPost last year. “Governments worldwide are missing the crucial and pivotal role they play in stewardship, and in creating and maintaining collective well-being.”
Chances of bold policies aimed at inequality passing under the Trump administration appear incredibly slight, but the Democratic presidential candidates are raising the issue. Sen. Elizabeth Warren (D-Mass.) sent billionaires into a panic with a proposed 2% wealth tax on those earning over $50 million.
And even the International Monetary Fund, which traditionally supported lower taxes, has called for taxes to be raised on the rich to tackle inequality.
“It’s not changing yet,” Growland admitted of inequality, “and that is a question of political will. But now, more than ever, we need to keep telling this story. We can’t afford to let this divide continue.”
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