Capitalism’s ultimate disruptor: Oxfam’s billionaire-shaming Winnie Byanyima

Spending a half hour with Oxfam’s executive director Winnie Byanyima was a definite Davos 2017 highlight. The feisty 58-year old Ugandan is a warrior. She goes into battle publicly and privately to promote the cause of the poor and was a huge draw this year after Oxfam’s latest research which claims 8 super-billionaires have the same wealth as half the world’s population. As you’ll hear in the interview, we sparred on that subject and on shareholder returns, but for the most part there was violent agreement. This was a peach of a chat. Well worth investing some time listening in. – Alec Hogg

Well, I’m here with one of the stars of Davos, Winnie Byanyima, the Head of Oxfam, a wonderful organisation. I live in the UK and I see the Oxfam shops everywhere, manned by volunteers doing fantastic work, but here in Davos you’re not exactly the billionaire’s friend after the report that you released earlier this week. Just go back, this comparison between the world’s richest and the bottom half of the world, when did this all start, where did you get the idea from?

Hello, first thank you for calling me a star, but I’m uncomfortable with that because I come here, not to be a star, but actually to be a disruptor to shock the leaders here into action. Oxfam’s mission is to fight the injustice of poverty and we’ve been concerned about rising inequality for a long time now, maybe ten years now because we’ve been analysing and seeing that extreme inequality actually doesn’t give us the opportunity to lift people out of poverty, so governments go and make commitments that the United Nations is going to eradicate poverty, sustainable development goals, but that can’t happen in the current environment of extreme inequality.

We’ve been publishing these reports every year and I come here to Davos because the people who are able to make the decisions to change this are here, political leaders and economical leads, because we have this wide inequality and it’s rising and it’s growing, it’s a result of choices made by, mostly men, by people and those different choices can lead us to different outcomes. Our report this year has shown this time, that only eight men who can sit around my dining room table have as much wealth as the bottom half of humanity, $3.6bn.

You’ve got to stop there. Well, I don’t know about the non-Americans, but I do know Bill Gates has given all his money away, Warren Buffett has given all of his money away, Zuckerberg has given 99 percent of his money away, so actually that’s not their wealth, that’s already the wealth that is owned by the bottom half. My question to you, my challenge to you is, surely if you target the bottom half of society, why are they so poor, why are they not getting the ability to unleash the human potential there?

I’ll tell you why, but’s it’s good that you say that because we are not sure if these eight men are evil men, actually some of the billionaires in this world are good men and indeed have given some of their money to society, to charity, to causes.

Well, it took Bill Gates to eradicate polio in Africa, if you think of it.

Yes, it’s not the issue. The issue is that these eight men symbolise a broken economy, an economic model that keeps channelling money out to the top and squeezing it out of the poor, or the rest of us, not even the poor, the rest of us. So we study and we can expose and we are exposing here, why this extreme inequality is bad. You see we have the super-rich, the billionaires; there are about 1,800 of them in the world today. These billionaires, the super-rich, and the big companies are in fact, dodging taxes; they don’t pay their fair share of taxes.

Not all of them.

In fact, the recent exposure by the Panama Papers does tell us that it’s almost the norm.

Warren Buffett has been agitating for higher taxes for years.

Absolutely, you see you have to take him as an exception and he has actually done a great job because he has shown to us that he, the bigger mayor has a tax rate that is lower than his secretary. Who would have known that, but actually we have an economic system where the rules have been written in such a way that if you are rich, you are able to negotiate yourself to pay very little tax, but if you are poor, you must pay your taxes, so the corner shop where I buy bread probably pays more tax than Apple, a big global company.

No, that can’t be true, surely.

It’s true; Apple last year paid only 0.005 percent of its profits in Europe. This was discovered by a European Union company and they are now asking them to pay back $13bn in arrears, but the whole point is that we have tax dodging at a huge rate and it comes from, not only tax dodging, also harmful tax competition where there is a risk to the bottom, and every country is putting its tax rate lower and lower to compete for these companies. We are reaching a point where we have many countries that have zero corporate tax rates, pay no tax.

Yes, but on the other hand, VAT, employee taxes, those are also contributions to society.

That is small, you see the whole…

VAT is not very small and neither is corporate tax.

That’s the point, VAT is an indirect Tax that we all pay and it puts a higher burden of taxation on poor people than on rich people, so when the rich don’t pay their taxes, when they buy politics and pay politicians to write the rules in their favour and they don’t pay tax or pay too little, then two things happen. Either they choose to pass the burden of taxation to poor people by charging indirect taxes, that’s VAT. The whole of Africa here, 75% of our revenue is coming from indirect taxation, VAT.

That’s a burden on the woman who is a cleaner and goes to buy a piece of soap and a little sugar for her kids, pays that tax, but the big corporations who have the broadest shoulders don’t pay theirs, so on the contrary, when those big people don’t pay their taxes, is to cut services, not to provide, so we don’t get the education, we don’t get the skills that our young people need to be part of this future economy of technology, we don’t have the health that our people need, we don’t have the jobs for our young people. Why, because we don’t collect the taxes from these rich people.

Yes, but you’re nailing the good guys. What about the drug lords, what about the corrupt politicians? We know that on our continent, Africa, we’ve produced so many bad people who have stolen money from the people. I know you’ve got to start somewhere, Winnie and you do so much great work, but it’s almost like the good guys can come and help us and we can put the bad guys behind bars.

Let us start here with what is legal. You see, what I’ve just been talking to you about, the tax dodging that allows big companies to stash their money, to take it out, and put it in tax havens is legal, they’re allowed. The rules have been written to allow them to dodge taxes. Wait a moment.

Aren’t they getting better though, aren’t we starting to squeeze those loopholes?

Wait a moment, it’s also legal to drive down wages, that’s another way that inequality is widening, that over the last 40 years the wages of workers have stagnated, but the reward at the top skyrocketed, so it’s quite legal for companies to pay poverty wages. That’s another source of inequality. Then you have the politicians being bought by the big business with their money and their connections so that they continue to write laws and policies that favour only the rich and sing the tune of the rich and do not work for the majority. In fact, I want to deal with a broken global, national, economical model. The corruption is also a big thing, but what I want to say is that we now have an economic model that allows people legally to do immoral things that are keeping poor people poor and breaking up our communities.

I love the example you used in your release of the company that has only a seven times difference between the lowest paid and the highest paid worker.

Absolutely.

What is that company?

Mondragon, it’s a Spanish company. This company is owned by its workers and this company is a big business, it’s a billion dollar business, it’s in textiles, it’s in manufacturing, it’s in many things, financial services, but in this company they have set a rule about the gap between the highest paid and the lowest paid, it can’t be more than one to nine. Do you know that today in some countries; say in India where you have many poor people, the top CEO earns 400 times more than the average worker. Now you tell me, what does he, or she do that is 400 times more work than a worker in the factory?

The problem is that society, take Manchester United, Wayne Rooney earns £13m a year, a groundsman earns £25,000 a year, but you can’t put the groundsman in front of the fans every week, so there are issues.

Yes, there you’re actually talking about talent, but here you’re talking mostly about hard work and skilled work, but even then…

You don’t think that a CEO is talented if he starts a company and builds it and gets thousands of people employment?

It is skill, but even if you call it talent, let’s not get into that debate. Why should somebody earn 400 times more than a worker who also puts in their day’s work? I can’t accept having a difference, I can accept having a ten times, even 20 times difference, but 400 times more is something else and the problem doesn’t stop there. It’s also about their shareholders. We now have these shareholders and companies who must give a quarterly report on the profits and who must give a return to their shareholders. In Britain, where I live, in 1970 shareholders were getting 10 percent of profits; today do you know how much it is? They take 70 percent of the profits, now what’s left for the others? That 70 percent they take doesn’t include doesn’t go to workers, doesn’t go to taxes.

Explain that, 70 percent of the profits; is that in dividends?

Yes, the total profit. You see we have come to a form of capitalism that is so extreme that is shareholder capitalism where you have people who own the company through their capital squeezing everything out of other people  and that’s what we are saying, we must change that model.

I agree with you, the model was wrong and it’s been going for too long and it’s an industrial age model that needs to change, but this thing about shareholders taking 70 percent of the profits? Dividend yields are no more than three percent, which would mean three in every hundred Pounds that is made by a UK company would be distributed to shareholders, where does the 70 percent come from?

No, I’m talking about of the total profits and shareholders are taking 70 percent. That is the case.

Okay, but most of that is reinvested in the business, so you can employ more people.

No, it’s actually not. This is their return on the investment and this is a problem that they are taking the money out, they are not returning it to invest in the business, it’s not going to work as wages, those are stagnating, it’s not going into taxes to build the community and the society and the infrastructure on which those companies make profits, that is the problem.

Dividend yields are three percent, that’s what is distributed into shareholders every year, where the rest of the money stays in the business.

No, who told you that?

I’m a financial journalist; I have been for 30 years, that’s my game.

So, 70 percent of the total profits are going to shareholders today, you know you care at least.

Anyway, the point is you’re doing an enormous amount of good work. How much progress are you making on things like squeezing out the tax havens and being able to stop this tax dodging?

You see we’ve been on this for quite a number of years and I have to say, a bit domestic on this front because when we started, everybody thought that this was something that is so important in the free market, that economic model that we must not, we shouldn’t waste our time, but by speaking about and exposing just how much tax dodging is ongoing, what we are losing nationally, but we have got somewhere. We’ve pointed out for example, that developing countries hurt the most. Every year developing countries lose what could have come to them as tax revenue, just through the loophole of tax havens. $100bn. That is money that could put all the children that are out of school in school and also save six million lives of children who die at childbirth.

That’s horrific.

It’s horrific; it’s a human rights abuse. So we, by insisting on this issue and then the financial crisis came, we got a process to start reform of the global corporate tax system. Through that reform some changes have been agreed, but unfortunately, that reform led by the OECD, a bunch of rich countries didn’t include developing countries, so our issues of where we hurt through tax dodging were not addressed, so we continued to advocate for another round of negotiations where all countries are at the table, the other round of the rich countries had a tax haven like Switzerland sitting on the table, while our African countries, which are cheated the most were not there, so now we want a table where all countries are, where all our issues are addressed and where we can finally start to close those loopholes through which we are losing a lot of money.

Just two last points. The one is a very sad one, Jo Cox, the MP in the UK who was murdered; she was very close to Oxfam.

Tributes for Labour Party MP Jo Cox, who was shot dead in the street in northern England, are displayed on Parliament Square in London, Britain, June 16, 2016. REUTERS/Neil Hall

She was, she was a leader, she was an inspiring woman who walked her talk, and she had a hurt for people trapped in conflict who need to be received and start their new lives. She spoke out forcefully against the British government for its fear of taking up its responsibility for refugees, she was strong on that when she came into the parliament, but she was killed and from what we learn from her killer, by somebody who was angry at this globalisation, which Jo her whole life fought against. This man was angry that for 20-25 years he had no job, he was alone, he said public service was failing, he has no future, no meaning to his life and he saw Jo as being concerned about other poor people from other countries, from conflict countries and not caring for him. That is what happens, so it has shocked at Oxfam.

We were deeply hurt by the loss of Jo, a social justice fighter, but we woke up to the fact that we need to go to ordinary people and explain why this model is wrong and how it is cheating the ordinary person and it’s benefiting just a few and what can be done to change that because this man is a victim of the populists, who have told him that the problem is a migrant scapegoating another victim of this globalisation instead of pointing to the real solution. So we’ve changed, we’ve returned to a strategy of public engagement, of talking to ordinary people and mobilising them to rise against a system that benefits a few.

Well, it’s nice to know that Jo’s passing certainly hasn’t gone unnoticed, but it wouldn’t have at Oxfam. How long was she with you before she went into politics?

Jo had been with us for a long time. She’d been with us for almost 12-13 years during which time she’d done many different roles. She had once headed our Brussels office, which is an office that handles our advocacy to the European Union, she had also headed our office in Washington, which is an office that challenges the World Bank and the IMF and holds it accountable to ordinary people, and she had also worked in, and her heart was in humanitarian work. She had also worked in our conflict zones on the frontlines working to save lives, she was an amazing woman.

On the other end of the spectrum perhaps, today Donald Trump will be inaugurated in the United States. Many people, including George Soros last night was saying that this is not a great thing. How do you feel about the Trump administration and the sounds that it’s been making?

You know we have to roll up our sleeves and really fight because he is walking into the White House and he is going to be the leader of the richest country in the world and he came, he was elected with promise, he was promising to tackle the rigged system, he used the words ‘rigged system’ and he made promises to ordinary people who were angry, but an economic system that is really rigged for the few and against the majority and he made promises to them and they believed him because they were anti-establishment, but he has formed a cabinet of billionaires. I’m told that the billionaires in his cabinet own about one third of the total wealth in America.

Now, this is really like the fox coming in to guard the henhouse, he’s promising to take down the health care programme that Obama had put down for ordinary people, he’s promising to cut taxes on the rich, he’s really promising the opposite of the expectations of the people who voted him in, so we have a job to do. He’s against the Paris Agreement, he’s questioning that climate change is real, he’s appointed somebody to head that who opposes it, who doesn’t believe that climate change is happening, so we have to fight, we have to organise ordinary people, make them understand where the solutions are and where the problem is coming from, so I have no doubt that Oxfam’s work is going to be more.

However, your support is growing and growing. Winnie Byanyima, it’s always lovely to see you and it’s been a privilege speaking with you today. Thank you.

Thank you so much Alec, it’s an honour and thank you for inviting me.

This special podcast is brought to you by BrightRock.

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