The truth behind that Oxfam statistic about inequality and the world's eight richest people

The charity's latest stunning stat doesn't tell us as much as it ought to, says Sean O'Grady

Sean O'Grady
Monday 16 January 2017 18:54 GMT
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Oxfam activists stage a protest at a G7 summit. The charity said eight men own as much money as half the world's population
Oxfam activists stage a protest at a G7 summit. The charity said eight men own as much money as half the world's population (Getty Images)

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Louise Thomas

Louise Thomas

Editor

Oxfam tells us that eight men own the same wealth as the poorest half of the world.

The charity produces an admittedly stunning statistic such as this every year to highlight their work and to embarrass the nabobs gathering for the World Economic Forum in Davos, a sort of party conference for the rich. I have no doubt it is true, just as it was last year when they told us that a double-decker bus load of the richest 62 people on the planet are worth more than half the world’s population put together.

Yet, eye-catching as it is, it doesn’t tell us quite as much as it ought to.

These eight men have more money than 50% of the world's population

First, the wealth of a handful of billionaires is fairly irrelevant to most people’s lives. If the implication in the Oxfam stat is that it is high time all that dough was shared around, then it might not go that far. If the richest people in the world had all their assets appropriated by some international Corbynite agency of fairness, then it would yield a lump sum, one-off payment of a few hundred pounds when it is redistributed among the entire world’s population (ie the rest of us).

Even if it reached, say, £1,000 each it wouldn’t mean much to the many, although I concede it would be an unimaginably vast fortune for millions of people with only a small plot of land, a hut or a few possession to their name.

Or take Diego Costa.

It’s rumoured he will be off to China to play football and will get – who knows? – an annual salary of £20million or £30million a year. The minute he touches down in Shanghai he will automatically be worth more and have a higher income than 1.3 billion Chinese.

Income inequality will thus rise.

The minute he gets the return flight to his next club on the next continent, he will automatically deliver a dramatic-looking improvement in the economic equality of Chinese society.

But, of course, nothing will have changed for the average Chinese toiling away in a shirt factory, though they might be pleased that Costa is playing for their team. Economists use measures such as the Gini co-efficient and the Pareto curve to illustrate the broader picture in a society, rather than focusing on a few exotic examples that will yield a dramatic headline. They normally show a more nuanced picture, and one that changes only very slowly over time.

In other words, the existence of billionaires in our midst matters relatively little. Even if it did – and there is some evidence that their activities have inflated London property prices, for example – taxing them is problematic, as they can easily relocate abroad (indeed have more often than not chosen to locate themselves in London).

Until a global tax authority emerges, there is very little that can be done about the statistics around the mega-rich. Frustrating, but true. By the way, when Britain last had something like Jeremy Corbyn’s maximum wage, with punitive marginal tax rates in the 1970s, inequality actually rose during the Labour government’s tenure from 1974 to 1979.

The poor simply got relatively poorer as the effects of slow growth and industrial decline outweighed the redistributive efforts of the welfare state, the education system and the NHS. Maybe I oughtn’t mention that even in apparently equal societies such as North Korea or Cuba, the elites see to things so that they enjoy a much higher standard of living – palaces, government cars plus drivers, security details, servants, imported wines and luxuries, absolute political power – than everyone else, even though nominally they may own very little and draw a meagre official salary.

Also, what is wealth? When a rogue banker or businessman runs up huge debts they are unable to pay, then they are, theoretically, the very poorest people in the world, because they have a hugely negative net worth.

Or take someone in their twenties who is lucky/unlucky enough to have a heavy new mortgage on their flat, an overdraft and a credit card balance. Or a student at a western university, with a big loan, no savings and little income. Chances are that their net worth is also negative. Yet in all these cases they are visibly wealthier than someone “debt free” begging in Rio or scraping a living in an African township.

Last, you’d never think from reading this Oxfam report, ‘An economy for the 99%’, that the world has become a more equal place in recent decades. Many millions, maybe billions, have been lifted out of poverty – absolute, real, grinding poverty – in India, China and the other developing economies. Incomes and consumption levels have become more equal as a result, notwithstanding the conspicuous consumption of the billionaires, and notwithstanding the fact that they too have seen their incomes rise. A Bangladeshi going from subsistence farming to $1 a day working in a sweatshop is a revolution. A large proportion of the population of the globe have never had it so good. Can someone please tell Oxfam?

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