Oxfam applauds World Bank’s rejection of trickle-down economics, and recognition of huge inequality challenge

Oxfam is encouraged by World Bank President Dr. Jim Yong Kim’s rejection of trickle-down economics and his clear stance on the enormous challenge inequality poses across the world. Jim Kim’s speech at the US Institute of Peace today comes just as Oxfam is warning of 200 million people in Latin America and the Caribbean being at risk of falling back into poverty over the next eight years due to worsening inequality in the region (1). 

Nicolas Mombrial, Head of Oxfam’s Washington D.C. office, said the following in response to the World Bank President’s speech: “Jim Kim rightly points out that the very wealthiest are capturing an excessive share of the proceeds from growth and too often this enriches only those at the top and does not benefit the poorest.

“Time and again wealthy political and economic elites not only capture growth, but rig rules to be in their favor. Just a few months ago, the IMF said making the rich richer is bad for growth. The World Bank is finishing off the job the IMF started here by debunking the myth of trickle-down economics - the spoils of the extremely wealthy do not benefit the rest of us.

“The World Bank’s focus on the bottom 40%, and recognition that drivers of inequality need to be addressed, is good news. But by refusing to look at the richest 10%, a distorted picture may be created that fails to reflect the problem Jim Kim identifies: an elite is frequently capturing growth at the expense of the poorest. 

“To tackle the growing challenge of inequality, concrete measures are needed. Jim Kim is right to point to investment in universal free and public health and education, and social protection programs. There is a huge need for countries to collect more taxes in a fairer manner to finance public services and social welfare. Unfortunately, as Jim Kim details, in too many countries the rich and the multinationals are not paying their fair tax share and many are doing everything they can to dodge their duty to pay tax. 

“Jim Kim is correct to refer to tax dodging by multinational companies as a form of corruption that hurts the poor and that’s why we need global tax reforms addressing this. The current OECD BEPS process ignores these pivotal issues, which are especially important for developing countries.  

“At the upcoming Annuals in Lima, Jim  Kim needs to support a process that ensures all countries are on an equal footing so an international corporate tax system is created that works in the interest of the majority – not the vested interests of the few.”