Oxfam, the global charity, has released its annual report on global wealth and the headline figures are shocking. According to the group, eight individuals own as much wealth as the poorest half of the world’s population. Such concentrations of money and the power that goes with it should ring alarm bells, but the Oxfam report does not tell the entire story. The poor will always be with us, and will always demand the attention of those with a conscience, but the number of absolute poor is shrinking and the lot of those with less is improving. There is a long way to go, but to ignore those gains is to ignore too much.
Oxfam reckons that eight individuals — Bill Gates, Amancio Ortega (founder of Inditex, a fashion group), Warren Buffett, Carlos Slim, Jeff Bezos, Mark Zuckerberg, Larry Ellison and Michael Bloomberg — own the same amount of wealth as the 3.6 billion people who make up the poorest half of humanity. (That is a stunning figure and one that seems even more impressive considering that last year’s report concluded that 62 people balanced the world’s bottom half; Oxfam now says its data was wrong and that only nine individuals held that wealth.) In 2010, the world’s 43 richest people had assets equivalent to that of the poorest 50 percent.
That concentration of wealth is part of a larger set of trends. According to Oxfam, during the last quarter century the world’s top 1 percent gained more income than the bottom 50 percent combined. Big business is enjoying boom years. The world’s 10 biggest corporations together have more revenue than that of the government revenue of 180 countries combined. To provide some scale, the report notes that the CEO of one of the 100 companies on the FTSE-100 earns as much in a year as 10,000 people working in garment factories in Bangladesh. Vietnam’s richest man earns more in a day than the poorest person earns in 10 years.
Such figures are jarring and they should be. Research increasingly shows that growing levels of inequality do extraordinary damage to societies. They increase crime, generate insecurity, depress productivity and undercut the social cohesion that binds countries together and allows them to function. A sense of unfairness, entitlement and a belief that the system is rigged is at the heart of the political upheavals that dot the globe. The election of Donald Trump, Brexit and the rise of populist, nationalist movements that reject elites are outgrowths of these trends.
While these concentrations of wealth are stunning, there is more to the story. The easiest way to undermine the study is to attack its methodology. While the numbers are accurate — the data comes from Credit Suisse and Forbes — the definition of wealth is misleading. Oxfam defines wealth as net assets, which means that individuals with loans are often considered “poor.” As a result, millions of individuals in the West with student debt have negative net wealth, and are thus in the bottom 50 percent.
More important, however, is the fact that hundreds of millions of people have been lifted out of poverty in recent decades. In 1977, nearly 1 in 5 children born would die before the age of 5; today infant mortality is 1 child in 40 — a number still too high — and falling. As recently as 1990, 40 percent of the world’s population lived on $1 a day or less; it is now 15 percent and continues to fall.
Still, 11 percent of the world’s population, 1 person in 9, goes to bed hungry. Economists estimate that policies that specifically targeted the poor — such as the Development Round of the World Trade Organization — would have raised 700 million people out of poverty from 1990 to 2010. Progressive policies that focused on poverty— increased taxation, reduction of military expenditures and similar spending — could eliminate 75 percent of extreme poverty.
To that end, Oxfam calls for an end to offshore tax dodges, raising the minimum wage to allow working families to earn a living wage, the end of discrimination and equal pay for equal work, a social safety net for all citizens, and access to affordable, high-quality health care and education. While that looks like a wish list for developed countries, the last two would go a long way to providing a foundation for better opportunities for the world’s poorest citizens.
Health care and education demand more than just resources, however. They require social and political infrastructure. And here the Oxfam report is most off the mark. Several people on that list of the world’s richest individuals are using their wealth to change the world in ways that Oxfam approves. The charity says that “big philanthropy” is no substitute for government policies that redistribute wealth to help the bottom 50 percent. But Bloomberg, Buffett, Gates and Zuckerberg are actively engaged in new forms of philanthropy that are intended to change social ecosystems, precisely because governments seem unable to reform themselves. There are ample examples of wealth used for ostentation and conspicuous consumption, but we should not dismiss the work of these individuals to solve these problems. Oxfam is right to ring alarm bells, but it needs partners in that effort, no matter where they are from. Some of the world’s wealthiest individuals are allies, not adversaries, in that fight.
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