Oxfam is right to highlight global economic inequality despite the brickbats thrown by its critics

The Institute of Economic Affairs says the charity would make us all poorer by dismantling the current system  

Davos is the venue for the World Economic Forum
Davos is the venue for the World Economic Forum

The backlash against Oxfam’s annual attack on global inequality ahead of the opening of the World Economic Forum in Davos was underway almost as soon as the charity’s press release had landed.

Oxfam’s claim this year is that the gap between the world’s super rich and its huddled masses widened last year, with some 82 per cent of the world’s money going to just 1 per cent of its population, and just 42 people boasting as much wealth as the entire poorest half of the planet. Its fortunes, Oxfam said, remained static.

“Yet again Oxfam gets it wrong on inequality and poverty,” growled the Institute for Economic Affairs (IEA), in response to the charity’s call for, among other things, a fairer taxation system and a capitalism that recognises the interests of societies as much as those of shareholders.

The IEA, by contrast, beat the drum for “free” markets as the way to haul people out of the rubbish tip of human development and into something better.

Its contention, intended as a riposte to Oxfam, is that the economic growth they fuel is what takes people out of poverty, 1.2 billion of them, according to its director general, Mark Littlewood, in an article for City AM.

It’s interesting to note how Mr Littlewood pointed to China and India as particularly successful examples of this. Neither of them operate anything like what could be described as free market economies in the way that is understood here in the West.

That is, however, a side issue, and to be fair Mr Littlewood noted that.

The central issue is that hundreds of millions of people lack sufficient food to eat, or have clean water to drink, a roof over their heads, access to medical treatment, schooling for their children. In other words, the basics, that should be theirs as of right.

At the same time, a very small number of very wealthy people hoard vast reservoirs of money that they could never hope to spend in three or four lifetimes let alone one. There is scant sign of any of it trickling down.

In highlighting the immorality of this situation, Oxfam isn’t trying to dismantle the capitalist system and make us all poorer as a result. It just wants more of the wealth the latter generates to find its way into the hands of the majority of the world’s population.

What stymies that is the way the current system has been gamed. The sort of free market capitalism the IEA advocates for doesn’t exist in the West any more than it does in India or China because of that. What we have would be better described as cronyism, or crony capitalism. It is dominated by giant, ownerless transnational corporations with the power to crush competition, or to buy it up, thus operating as thinly disguised monopolies or cartels.

Those corporations, alongside the 42 who typically part-own and run them, deploy their wealth to ensure the system is fixed in their favour, as Oxfam points out, subverting democracy in the process.

Through the use of offshore havens, and with the help of clever accountants, they also pay a fraction of the tax that they should, depriving nation states of money to fund healthcare, education and other services that enhance human development.

Occasionally, one or another member of the 1 per cent will highlight the sheer perversity inherent in the current system.

Warren Buffett noting that he paid a lower rate of marginal taxation than his cleaners a few years ago was a particularly good example.

But when they are made, statements like that rarely elicit much more than a shrug of the shoulders.

In the speeches they will make at Davos, during the debates and seminars they attend and in their pow wows over champagne on the evening cocktail circuit, those in attendance at the World Economic Forum might pretend to see that Oxfam has a point, and mutter about maybe thinking about doing something about it.

Some of them might even recognise that unequal societies are profoundly unstable societies and an unequal world is an unstable world. Mass immigration, the backlash against it, refugee crises, the rise of an ugly populism in parts of the West are all of the problems created by that.

You can poke holes in Oxfam’s stats if you want. You can always poke holes in stats and the way they are collected, including the ones used by the IEA to hit back. But those developments point to the truth of Oxfam’s arguments.

Perhaps they might concentrate minds at the top people’s talking shop, but I’m not holding my breath.

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