This is how to tackle the poverty gap

Three reports released ahead of the annual World Economic Forum held in Davos, Switzerland, last week, are the latest demonstration that the trickle-down theory conceived by the Washington consensus has failed. This is after the theory was pushed down the throats of the rest of the world.

The Bretton Woods institutions, led by the World Bank and economic experts schooled in elite American and European business schools hold that wealth generated by owners of capital eventually trickles down to owners of labour and the rest of the citizenry. But Bloomberg analysts found out that fortunes of a dozen 2009 Davos attendees have soared even as medium US household wealth has stagnated.

It is credible to conclude from that the wealth of the lower rungs of the economic ladder have fallen during the same period. UBS and PwC Billionaires Insights reports tell a similar story. The global billionaire’s wealth has grown from Sh343.4 trillion in 2009 to Sh898.9 trillion in 2017.

A report from Oxfam, a British charity, painted the same picture but in even starker colours. It revealed that the poorest half of the world witnessed an 11 per cent fall by last year.

Fiercely opposed

It may be worth noting that the same trickle-down theory proponents are fiercely opposed to taxing of the wealthy to a level that would reduce the gap between the rich and the poor. This is despite clear evidence from the Scandinavian countries, led by Sweden and Norway, that it works.

The resource-rich but capital-poor developing countries are routinely brow-beaten to enter into lop-sided contracts with foreign direct investors that repatriate profits and bonuses.

What makes the plight of these countries even worse is that some of these so-called foreign investors source the bulk of their investment money from local and foreign banks domiciled in these developing countries.

Technology transfer is equally elusive because these investors demands and are allowed to bring in their own key staff. This explains why analysts are wary of the Kenya Revenue Authority’s plans to collect Sh6.1 trillion in the next three years.

The taxman can up collections even without imposing new taxes by zeroing in on Kenyans and foreigners who have turned tax-avoidance into an art.