The annual meeting of the World Economic Forum at Davos begins tomorrow, which must mean that it’s time for Oxfam to release another scathing report on the state of global wealth and income inequality.
And it came out right on time this morning: “Reward Work, Not Wealth“.
Last year, the tagline was “Just 8 men own the same wealth as half the world.”
A Rhetorical Revision
Here’s something from their methodology section:
Which seems to be saying two things:
- Last year’s figure of 8 billionaires owning more wealth than the bottom 50% was not wrong; but
- This year’s figure of 42 billionaires doing the same thing should not be compared to that number of 8, but instead compared to another number of 61 billionaires last year. Because inequality is always getting worse, not better.
I mean, it sure does look a lot like trying to both refute your tagline and keep it – all at the same time.
But perhaps that’s just me.
The main points
I’m not going to bore you by rewriting the full summary here. You should read it at: “Reward Work, not Wealth: The Summary Document“.
But the main points are as expected:
- Inequality is getting worse.
- The rich are men.
- The working classes are both abused and underpaid.
- Tax evasion is rife.
The main problem
It’s almost impossible to parse the rhetoric from the facts. And many of the ‘big’ conclusions are flawed banalities.
Here’s an example of an obvious one:
- Almost all of the rich live in developed countries.
- The vast majority of the really poor living in developing countries.
- How exactly is calling on higher taxes for the rich going to solve that?
- If Oxfam got its way, the US would impose higher taxes on the American rich, and this would somehow transform the lives and incomes of the bottom 50% living in Africa and Asia.
- And that is simply (and unquestionably) not how it works.
Which is worse than naive, really. It’s bigoted – because it seems to be a blind faith in a “The world just needs more taxation of the wealthy – if you tax them, the wealth will simply redistribute itself!” tenet.
Of course, the other problem is that Oxfam is not wrong (at least in principle). Inequality, and the perception of it, are real problems – and we do need to do something about them. Otherwise, you get things like Russian and French revolutions.
So as a call to attention, perhaps things like the Oxfam report are necessary.
But that’s doesn’t make them good, well-written or factually accurate. Which is a pity.
Rolling Alpha posts opinions on finance, economics, and sometimes things that are only loosely related. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha. Also, check out the RA podcast on iTunes: The Story of Money.
Gene January 23, 2018 at 13:00
“Inequality, and the perception of it, are real problems – and we do need to do something about them. Otherwise, you get things like Russian and French revolutions.”
This certainly isn’t self-evident. I’m not even sure it’s true.Reply
RA January 23, 2018 at 15:10
I’m always surprised whenever anyone says that the inequality doesn’t risk civil unrest. I mean, you can get exceptions (there are always exceptions) – but uprisings are the result of grievance. And inequality is a self-evident grievance, surely?Reply
Gene January 24, 2018 at 19:12
I don’t think wealth inequality is a grievance any more than height or weight inequality is, but even if it were, isn’t it quite a leap to suppose it should cause mass unrest? (Isn’t it also a little cynical to take the consequentialist view? Is inequality not wrong in itself? Why not? And if not, then is inequality not a problem in the same category as, say, women wearing revealing clothing?)
It seems to me unrest is crucially dependent on means, not ends. As rife as the fixed-pie fallacy is, I think people perceive the normative difference between Silicon Valley venture capitalists on the one hand and plundering princelings on the other. And so they should.Reply
RA January 25, 2018 at 07:54
So I have also used this argument before – check out the Oxfam/inequality posts from this time last year (I used beauty amd fame inequality to illustrate it). But just because a concept is philosophically questionable does not mean that it lacks real world impact. The Communist revolutions in Russia, China, Cuba, etc were heavily invested in their own inequality rhetoric – and whether they were right or not about their ideology, it still drove those takeovers.
Also, that kind of populism doesn’t really differentiate between sources of wealth. For example, when Zimbabwe undertook its land reform program to complete the liberation struggle for land, it paid no attention to whether the farm was a legacy inheritance, or purchased post independence by agricultural entrepreneurs.
It would be great if fallacies had no significant influence on real world politics – but the historical record suggests otherwise. And my feeling is, because inequality is so readily convertible into popular rage, addressing it is unavoidable – regardless of whether you believe it to be real, or a problem, or either or neither of those two things.
But perhaps that’s just me!Reply