It’s the first day of the World Economic Forum, in Davos, which means that Oxfam is releasing its annual shame-the-rich report. I’ve been rude about this report in the past, because I don’t believe that statistics of the form “the top X has as much wealth as the bottom Y” are particularly enlightening or helpful. After all, according to the standard methodology, my niece, who just got her first 50 cents in pocket money, has more money than the poorest 2 billion people in the world combined.
I give them a lot of credit for this, because outrage does sell. The annual Oxfam inequality report is one of the organization’s most significant global fundraisers, and by making it more serious and less virally punchy, they’re potentially leaving many millions of dollars on the table.
Maybe Oxfam is realizing that substance beats sound bites. This annual briefing has never been anything like 76 pages long before: as recently as 2015, it was just 12 pages long. Most people won’t read the whole report, of course, but they should, because it’s a powerful indictment of the forces exacerbating global inequality, backed up with real on-the-ground reporting.
Oxfam has also changed the main frame of the report: rather than concentrating on the total amount of wealth being held by the rich and the poor, they’re looking at the increase in the total amount of wealth held by the rich. I’ve always been OK with adding up the wealth of the rich, and looking at an annual increase is a great way of demonstrating just how enormous the returns to capital were in 2017. Of course, if stocks had gone down instead of up, those returns would have been negative, and Oxfam would have concentrated on something else. But at the end of this crazy bull market, it’s always worth remembering just how enormous the big winners’ gains have been.
Specifically, the world’s billionaires – the richest 2,000 people on the planet – saw their wealth increase by a staggering $762 billion in just one year. That’s an average of $381 million apiece. If those billionaires had simply been content with staying at their 2016 wealth, and had given their one-year gains to the world’s poorest people instead, then extreme poverty would have been eradicated. Hell, they could have eradicated extreme poverty, at least in theory, by giving up just one seventh of their annual gains.
Oxfam is absolutely right, then, to shine a light on the extreme inequality of the world in 2017. Wealth creation is all well and good, but giving new wealth primarily to the world’s billionaires is literally the worst possible way to distribute it. Oxfam’s longstanding proposal for a wealth tax on billionaires makes perfect sense. They don’t need the money; the world’s poorest do. What’s more, as the Oxfam report details, the top 1% too often make their money by exploiting the very poor. Nothing about this is just, especially when a good 35% of billionaire wealth was simply inherited.
It’s also good to see Oxfam looking at various measures of income inequality, rather than concentrating overwhelmingly on the more problematic wealth inequality figures. (Wealth, after all, is basically deferred consumption; there’s no good reason why anybody would want most of the world to be deferring significant amounts of consumption, especially if they’re poor.) I’m also heartened to see the organization being very open about the fact that global inequality is going down, even as national inequality, in the overwhelming majority of the world’s countries, is going up.
So, well done Oxfam for getting it right this year. Still, there is one thing I would have liked to see more explicitly. Oxfam’s wealth statistics come from Credit Suisse, and this year Credit Suisse found an extra $8 trillion of wealth, mostly in India, China, and Russia, that it hadn’t previously counted. A lot of that wealth, it turns out, is owned by people in the bottom 50%.
The result is that the net wealth of the bottom 50% of the world’s population, which was estimated at $4o9 billion this time last year, has now been revised up to an estimated $1.581 trillion. That’s a huge increase. Divided between 3.7 billion people, average net wealth for the bottom 50% is no longer $110 per person, as we thought last year, but rather $427 per person. That’s a really big difference, and it means that last year’s statistic of 8 men having the same amount of wealth as the bottom 50% of the world’s population is clearly not true.
Let’s pause for a minute, then, to celebrate the fact that the poorer half of the planet turns out to be not nearly as poor as we thought it was. But then, let’s keep on fighting inequality. Which remains one of the defining fights of our era.