equality poverty

Extreme inequality is getting worse

With the World Economic Forum starting this week, Oxfam are back with their now annual update on global inequality.

Last year the charity warned that the world’s richest 1% owned 48% of the world’s wealth, and that they would likely own a whole half by this year. And so it has proved. Despite the attention, including at the Forum itself, the problem is getting worse rather than better.

Share of Wealth - Radial

For many people, inequality is irrelevant as long as growth is lifting people out of poverty. Oxfam has little time for that. Yes, many people have been lifted out of extreme poverty in the last 20 years, they say. But many more would have benefited if growth had been shared:

Oxfam is unequivocal in welcoming the fantastic progress that has helped to halve the number of people living below the extreme poverty line between 1990 and 2010. Yet had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty. That could have risen to 700 million had poor people benefited more than the rich from economic growth.

Creating wealth and ending poverty are not synonymous, and since they continue to be talked about as if they are, Oxfam’s work remains important.

19 comments

  1. While creating wealth and reducing poverty are not synonymous creating wealth is a prerequisite for reducing poverty. You can not reduce poverty without wealth creation.

    The problem with assertions that more people could have been raised out of poverty if the world was more equal is that if growth damaging policies are followed to reduce inequality, then you actually reduce poverty more slowly. Many of Oxfam’s policy suggestions would slow the growth that is raising the poor. Insisting on living wages prices the less productive out of the labour market and there is no evidence other than dogma that public service should be provided by the public sector rather than private but lots of evidence of graft and sloth in protected public sectors.

    This is all before the fact Oxfam think there are more poor people in the USA than China.

    1. that’s what you always say, but there are dozens of policy ideas in the Oxfam briefings, including things like equal inheritance rights for women, or registries of lobbying interests. I don’t agree with all of them, but a snap dismissal is a bit lazy.

      1. Nuance is all. I said many of their suggestions would slow growth and harm the poor, not all. But is someone comes to you with 5 good ideas and 20 bad ones you don’t endorse the whole thing.

        Now in this report they have 6 areas of recommendations with 3 to 6 suggestions under each. Well over half of all their suggestions would harm the economy and so harm those they say they want to help.

        A poor grasp of economics is demonstrated in the report. They treat Google as an example of a textbook monopoly when it is just a successful player in a contested market. It fails in many definitions of a monopoly so is a terrible example. Why YKK is ‘good’ and Google is ‘bad’ is, I think, either ignorance or just comes down to them wanting to find an example their economically unknowledged readers might have heard of.

        For me the main point is that they don’t ever see government as the problem, even when it is government policies that create problems (most harmful monopolies are the result of government regulations and favouring insiders). They attack the symptoms (Mexican telecom billionaires) not the cause (lack of a liberalised telecoms market).

        In the 1990s and 2000s Oxfam promoted trade as well as aid. They had ideas from the left and right. They have forgotten that and are now just promoting failed statist ideas.

        1. That’s how it goes with anyone’s list of policy ideas, whoever they are. It’s all fed in to a broader discussion, and each one has to be taken on its own merits. If there’s one good idea in there, let’s do that. If it turns out there nothing at all that’s useful, then the constructive question is why is that? what are Oxfam missing?

          Saying nothing can be done about inequality just guarantees that nothing is done – which is often what people actually want but won’t say.

          1. It could be said this report was both original and good. Sadly that which is original is not good. That which is good isn’t not original.

            This report is deeply flawed. It is misleading as doesn’t show what Oxfam say it does and most of the solutions would do more harm than good. That you can pull a couple of fairly common good ideas out of it doesn’t redeem it.

            Yet year after year they bring it out and year after year you reported this tosh positively.

          2. Yes, I heard that programme. I’m well aware of the limits of Oxfam’s stat, and wrote about the strengths and weaknesses of this kind of campaigning in some detail last year:
            https://makewealthhistory.org/2015/01/28/the-strengths-and-weaknesses-of-the-killer-fact/

            I agree that you shouldn’t lean too hard on an eye-catching number, but it’s not one you should ignore either. I’m with Charles Kenny, a guest on More or Less, who I’ve just gone back to and listened again so I can quote him:

            “I share some of the concerns about the number of 62 people controlling the same wealth as half the planet. That said, if you look at the Oxfam numbers it is still a stunning statistic that 1% of the planet owns 40% of the global financial wealth. I think that really does reflect not only a wasted opportunity to distribute money in a way that would create far more good worldwide, but also a massive ill-distribution of global political power.”

          3. Yes, the killer fact. Its seems important to quote them full and not cut out what is unhelpful. The statement Oxfam put out that you quoted that if growth had been more equal 200 million fewer people would be in poverty doesn’t cover the rest of the paragraph from the ODI report it comes from that in most low income countries growth is on average pro-poor. Or when Oxfam say if growth of the bottom 40% had equalled the national average in all countries there would be zero poverty by 2030, they failed to finish the sentence that some countries would have higher poverty.

            These are from the ODI’s reports bullet points so don’t take much finding.

          4. There’s no point in pretending you’re here to defend the correct use of statistics. Where were you last week when I repeated the killer fact that there will be more plastic in the sea than fish by 2050?

            That’s a projection that can be unpacked too, but you let that one go sailing past unchallenged. You can be relied upon to object to any and every post about inequality however. The whole issue gets under your skin for reasons I can’t fathom.

            So be it. We’ve been over it enough times. But let’s not play the statistical purity game when your comments are politically motivated.

          5. I’m confused. Are you saying you knowing used a dodgy killer fact over plastic in the sea and you are surprised I didn’t pick you up? I made no comment as I have no idea if it is correct or not. I try to only comment on areas where I have some knowledge. Perhaps you should try it.

            Tackling this inequality in ways that harms the poor is why I object to this nonsense, hardly hard to fathom.

            Passive aggressively questioning my morals reflects badly on you. But then I forgot, you are a better person because you care so much.

  2. Sad but very true! What gets me if that Oxfam make out their actually care and are trying to do something about it, when their CEO gets over 100,000 a year umm…

      1. Maybe but thats just greed, nobody needs that much money. I have to disagre that anyone running a charity and using peoples dontated money to pay themselves that kind of salary is despicable!

        1. That’s very harsh. The CEO of a major charity is responsible for thousands of people’s jobs and hundreds of millions of pounds. It’s not easy and not many people can do it well. If you want someone suitably qualified, you need a pay scale commensurate with experience.

          100k is not an unreasonable amount – you could command that as a senior army officer or experienced head teacher. And it’s not greed – nobody goes into charity work for the money!

          The going rate of senior staff is a matter of being practical if nothing else. Remember that in appointing an experienced person to a charity you may well be bringing someone in with business experience or from the public sector. It may well be a step down in salary, so what are you going to say to them? Sell their house? Downsize, take your kids out of school and move somewhere cheaper? There’s only so much you can ask someone to forego for the job.

          1. I guess my point is nobody should get that amount! Charity should concentrate their money on helping. Recently in my opinion chartiy has become big business and yes I know they do amazing work but are they charities or business that help people, thats my concern.

            I give money to small charites and ones like Oxfam I belive have lost sight and have become a bussines make profit, no charity should do that. I have a friend who runs a ngo in India and Nepal he only takes enough money for food and a cheap room (different in india I know but you get the point).

            I guess your right but I feel the whole indstry (and that the point it should not an industry) has lost sight a bit. Mainly due economics but still to me it seem hypercritical to me 🙂

  3. There’s always a balance to be struck with inequality. We don’t want absolute inequality – or at least I don’t. The communist ideal of everyone getting an equal share regardless of talent or work ethic is thoroughly unfair in its own right. So we need to be able to reward hard work and excellence, while not allowing elites at the top to take more than a fair reward.

    £100,000 for a charity CEO is well within the boundaries of fair reward for an important and highly skilled job, in my opinion. But then these things are subjective and I understand that you might set that bar lower.

    Incidentally, I agree that there’s a lot of rot in the charity sector and I tend to support smaller charities too, often with people I know doing great stuff on a local scale. I admire that work, but those sorts of initiatives don’t get to lobby governments or shape international discussions, so we need bigger charities too.

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