Is extreme wealth quietly pushing democracies towards oligarchy?

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JEREMY MAGGS: Oxfam, the global organisation that fights inequality to end poverty and injustice, is out with a new warning that extreme wealth is no longer just an economic issue. It says it’s now becoming a political one as well.

The argument, as I understand it, is that billionaire wealth is surging while billions of people face hardship, and that this concentration of money can bend media policy and even elections.

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The provocative question, I guess, is can democracy survive that kind of imbalance? Or does everything quietly drift into oligarchy? I’m in conversation now with Pooven Moodley from Oxfam South Africa. Pooven, a very warm welcome to you.

Maybe without going into a political science lecture here, maybe quickly, the direct link between extreme wealth and weaker democracy. How does Oxfam see it?

POOVEN MOODLEY: Yeah, thanks, Jeremy, for having me on. I think in South Africa we have very clear examples. But what the report brings out is the fact that, for example, 74 of the 2027 billionaires held government positions in 2023, as an example.

What we’re starting to see, the US, with Trump’s election and his inauguration was quite clear about where the billionaires sit in terms of closeness in proximity.

But also, in spaces like the climate conference where governments come together to make decisions about how best to protect the planet and deal with the impacts of climate change.

What we’re seeing is in that in Brazil, there were 1600 oil and gas billionaires as part of a delegation, which was the biggest delegation, more than any government delegation.

So, as I was saying, in South Africa, we know how wealth, through the state capture years and so on, how wealth has such power and influence on government policies and decisions.

JEREMY MAGGS: So let me challenge you, if I can, without taking sides, billionaires will turn round and say they build companies, they create jobs, they fund innovation.

POOVEN MOODLEY: Yeah, and all of that’s true. But I think the key point being here that there are two sides of the coin, as people get wealthier and wealthier, there’s an impact on the other side.

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What you get is people living in poverty without food because there’s, let’s say a limited amount of resources, and every time those resources are extracted, and if only a few people are benefiting from that, then it has an impact on everyone else.

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The point of the report is showing both sides, as the billionaires are increasing their wealth, which has been 81% since 2020, and as more billionaires come on stream, it does mean that what’s at play is exploitation and extraction.

If you look at wages of the lowest income earner to CEOs, for example, those are increasing and increasing.

But also, a lot of this wealth that’s being generated isn’t going to universal public services or to look at the health of a nation. If you’re doing oil and gas extraction off the Wild Coast, as an example, it’s not people who are locally benefiting. It’s wealth extraction.

JEREMY MAGGS: As you’ve outlined to me, Pooven, your report points to mass hardship. I understand that one in four people are facing hunger, nearly half the world lives in poverty, and that is shameful. But is inequality the only cause of this, or is there a danger, maybe, that we mix inequality with poverty and also poor governance?

POOVEN MOODLEY: Yeah, I think there are a lot of correlations. In a sense, you could take each one of those separately. Poor governance on its own is a big issue.

But where you have big influence in terms of economics, finance and so on, as we’ve seen in South Africa, it muddies the waters because then it’s poor governance, sometimes incompetence, but often someone’s extracting and benefiting from that poor governance.

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It’s really important that each part, so government should strengthen itself and be independent to make decisions on behalf of the people of our country.

So with our local government elections coming up, for example, there’s been a clear correlation, and you can see it in the Auditor-General’s report about how municipalities are failing, and that’s got a direct correlation with money being extracted from the system.

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Or if you take issues like crime, there’s a clear correlation. If you look at Brazil or South Africa, why the crime rate is much higher than countries in Europe, for example, where there’s greater equality within the country. So those correlations are there, and a lot of research has been done around them.

JEREMY MAGGS: Do you have a sense then of what rule of the rich looks like in South Africa? Is it about tax avoidance? Is it cartel pricing, political funding? Maybe capture of procurement? What do you think it is?

POOVEN MOODLEY: Yeah, I think a big part of it is how money leaves the country. A lot of work has been done to look at illicit flows of funding, where not everything is declared, not everything is taxed so that money doesn’t go back into the pool that can be used for the country.

I think, for me, a starting point is ensuring at a very basic level that money isn’t illicitly leaving the country.

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I think, two, is that there’s obviously generational wealth, some of that wealth, based on apartheid, based on structural economics. A lot of other wealth is new wealth and so on.

But ultimately, it’s a question of, on the one hand, the extraction, and often on the backs of poor people based on labour.

For me, the appeal to billionaires, to people with wealth, is to look at how do we do this collectively because ultimately, we’re all going to face the same social ills based on the economics, and whether that’s failing healthcare or failing other systems, which will have an impact on the rich and the poor.

JEREMY MAGGS: I just need a quick answer to this. But many critics would say we’ve tried redistribution before. It doesn’t fix growth. What’s Oxfam’s answer to the fear that tougher rules or changed policy simply drive investment away?

POOVEN MOODLEY: Yeah, I think it’s very clear that in most situations, companies will try and go to places with the least amount of regulation. I do think ultimately, it’s going to be about resources. If you need platinum, you’re going to come to South Africa for platinum.

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For me, it’s more a question of ensuring, based on policy, based on all of the other social factors, that governments are in a position to have fair deals where companies will make whatever they need to do fairly.

But at the same time, there are plans to ensure some of that funding goes into basic infrastructure services and so on, which will benefit everyone.

JEREMY MAGGS: In conversation with Pooven Moodley from Oxfam South Africa. I appreciate your time today. Thank you.

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