January 18, 2017


For any non-software geeks that read these pages ( a small set), the title means "not equal."

Oxfam has released a new report which is generating much buzz. Sit down and have a drink of water before reading the intro:

New estimates show that just eight men own the same wealth as the poorest half of the world. As growth benefits the richest, the rest of society -- especially the poorest -- suffers. The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point. Our economy must stop excessively rewarding those at the top and start working for all people. Accountable and visionary governments, businesses that work in the interests of workers and producers, a valued environment, women's rights and a strong system of fair taxation, are central to this more human economy.

Or, as it is being reported: "EIGHT PEOPLE AS RICH AS HALF THE WORLD! "

The Internet taketh away, but ith giveth thoo. There are two superb rebuttals today. First is ThreeSources fave Bjorn Lomborg's USA Editorial: Oxfam's Upside Down Inequality Study.

Oxfam measures net wealth, not income. Crucially, it includes 'negative' wealth, meaning the 5% of Americans with student loans or negative equity in their houses are considered among the world's poorest -- poorer than three-quarters of all Africans. This means that even the most impoverished soul you could imagine -- a day laborer from Zimbabwe with nothing but a comb to his name -- in Oxfam's eyes is richer than the poorest 45% of the world's population. Oxfam's data also leaves out any entitlements to pensions and entirely ignores the huge assets owned by the state.

The real story on inequality is a much more optimistic one than Oxfam's narrative.

"Real stories," however always are far less supportive of grand solutions like Oxfam's "let's divide up all the wealth equally and everybody will have $8,000." Take that, Warren Buffet! Take that, Bill Gates!

That is how Tim Worstall sees it in his piece in FEE (well, not the "Take that" parts -- those are mine).

As it's Davos time, Oxfam has issued its traditional demand for a handout. Their wealth report this year informs us that a mere eight people have more wealth than the bottom 50 per cent of the world's population. This is entirely true of course. But Oxfam's solution is that we should take it from the rich and give it to the poor. Which is entirely wrong.

Our essential economic problem is that there are not enough rich people. Nor is their extreme wealth a problem. Our problem is poverty, not inequality.

Again, not supporting Oxfam's designs...

Economics and Markets Posted by John Kranz at January 18, 2017 12:39 PM

Okay scarecrow, let's suppose we give everyone their $8000 right now. Set aside for the moment what this does to job growth and economic investment - what about those student loans? Those jokers are still broke.

Wipe that out first, you say? Make the "everyone is equally wealthy [poor]" calculation from a clean slate? Sorry, that debt is what is in the plus column of all those you aim to loot.

Posted by: johngalt at January 18, 2017 1:55 PM

Forbes' Tim Worstall explains the situation thusly:

Fully 30% of the world's poorest people when measured by wealth are actually in the rich countries of Europe and North America. This is because these are the parts of the world where it is possible for people with no assets to borrow money.

In other words, they have leveraged their own future wealth. Maybe the answer is to just, stop allowing that. No more student loans. No more cars on credit. No more "nothing down" mortgages. Problem solved!

Posted by: johngalt at January 18, 2017 2:08 PM

I dunno sounds like the kind of thinking which does not represent "Accountable and visionary governments, businesses that work in the interests of workers and producers, a valued environment, women's rights and a strong system of fair taxation."

You'll never get a job at Oxfam thing like that.

Posted by: jk at January 18, 2017 3:18 PM | What do you think? [3]