A Tale of Two Reports: Global Inequality According to Bill Gates and Oxfam

Two reports on global inequality made headlines recently, putting a spotlight on an oft-neglected topic. As the world's movers and shakers flock to Davos for the World Economic Forum, these reports describe two different situations, in essence "the best of times" and the "worst of times."

One is from none other than the world's second-richest man, Bill Gates. His 2014 Annual Letter, co-written with his wife Melinda to dispel common myths about the fight against extreme poverty, paints a positive picture. "By 2035, there will be almost no poor countries left in the world," he argues, thanks to economic growth, new technologies and better health care.

For Bill Gates, the proof is in the impressive gains made in the last decades:

So the easiest way to respond to the myth that poor countries are doomed to stay poor is to point to one fact: They haven't stayed poor. Many -- though by no means all -- of the countries we used to call poor now have thriving economies. And the percentage of very poor people has dropped by more than half since 1990.

The poverty-fighting charity Oxfam came out with their own report this week. The report's main message: The 85 richest people own the same wealth as the 3.5 billion poorest people.

According to Oxfam:

This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems. Instead of moving forward together, people are increasingly separated by economic and political power, inevitably heightening social tensions and increasing the risk of societal breakdown.

This is not a view pushed solely by activists. The World Economic Forum, considered by some to be an aloof elite club, made a similar call. In its Global Risk Report 2014, released just before the conference, the Forum calls "severe income disparity" one of the top ten global risks of highest concern.

So who is painting the right picture here? The answer is nuanced. No one can refute the progress, much of it since the Millennium Development Goals were adopted by the United Nations in September 2000. Millions lifted out of extreme poverty in Asia; child mortality halved in two decades; economic growth of almost 5% on the African continent - the list goes on. Bill Gates is correct that the progress we've made needs to be better acknowledged, in order to inspire leaders to move on to the next level in the fight against global poverty.

Yet Oxfam's call rings true in today's worrying climate. Ethnic and internecine conflict in Africa and the Middle East; a deadly human flow from South to North that sees thousands of migrants perish in the Mediterranean; millions of children still die every year from easily preventable and treatable illnesses. There is much work to be done.

We can harness the innovation mentioned by Bill Gates and achieve his vision by 2035. At the same time we can meet the redistributive goals so dear to Oxfam and avoid their disaster scenario. What is known as "Innovative financing for development" is the 21st Century's answer: taxing the activities that benefit the most from globalization in a manner that has zero effect on the economy.

We've done it with airline tickets at UNITAID, the global health initiative I chair hosted by the World Health Organization. Since 2006 we've raised over two billion dollars through a tiny fee on air tickets in a number of countries to purchase medicines for HIV/AIDS, tuberculosis and malaria. This was done with no effect to air travel in countries like France and Chile that implement this small tax.

In addition to saving lives, UNITAID is also a laboratory of innovative financing, showing the world that novel ways to fight global poverty do in fact work. We've shown it by creating the Medicines Patent Pool, which aims to increase access to HIV medicines through the sharing of key HIV medicines patents (I recently blogged about the Patent Pool here). But as a laboratory, we've proven that innovation can work in raising money as well.

We need to move forward with a proposed Financial Transaction Tax in Europe and ensure that a good portion goes to the fight against global poverty. Furthermore, we need to start taxing activities that generate huge resources but little human benefit for the billions of have-nots: natural resource extraction in Africa, international shipping, telecommunications.

The billions we could raise from these activities could make a huge dent in inequality by increasing access to the global public goods mentioned by Bill Gates: medicines, nutrition, and sanitation. And they would have no effect on the economic growth that can help bring more countries out of poverty.

We are at a key moment in the fight against global poverty with a huge opportunity to act. Let's hope that innovative financing stays on the global agenda at Davos... and beyond.