by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Oxfam released a report this week finding that 1 percent of the world owns half of all the world’s wealth. At first, that may sound like a statistic showing there is terrible economic inequality—until you pause to note that Oxfam is talking about wealth, not income. As Tim Worstall explains, wealth distribution is a misleading indicator of people’s economic circumstances:
For it’s possible to have negative wealth: more debt than the value of whatever it is that you own. Like just about every student who graduates from college with a bit of tuition debt for example. And this means that the bottom part of any wealth distribution simply don’t have very much, if anything. […] If you’ve no debts and have $10 in your pocket you have more wealth than 25% of Americans. More than that 25% of Americans have collectively that is. […]
The actual number you need to be in that 1% is just under $800,000. And that’s the value of any equity you might have in a home, any savings and also your pension pot. So, anyone that owns a home in England (without a mortgage that is) and has a reasonable pension will be in that 1%. And anyone who owns a flat in London will almost certainly be in it. A house in Oxford, where Oxfam is based, would also qualify you. There’s only a bit over 5,000 people who work for Oxfam UK and I certainly don’t insist that all of them own their own homes free and clear. But if we add in the people at the other Oxfam organisations, those in other rich world countries like Canada, the US, France and Australia, then yes, I think we probably would find a couple of thousand people who made it into that global 1% by wealth. …
… Ben Southwood makes the same point this way: “Oxfam’s figures look at net wealth, implying that Societe Generale rogue investment banker Jerome Kerviel is the world’s poorest person, and Michael Jackson was afflicted by the direst poverty before he died.” Looking at how much more people have to live on today than they did three decades ago tells a different and more positive story, explains Southwood:
Global poverty has actually fallen enormously with the rise of global capitalism. The fraction of the world’s population living on less than $2 a day (measured in constant dollars) has crashed from 69.6 per cent in 1981 to 43 per cent today.