The World Could Soon Have Its First Trillionaire. Good!
A new report brings remarkable economic illiteracy to its focus on poverty and inequality.
The world could soon have its first trillionaire, according to a prominent anti-poverty organization. That's pretty cool. But Oxfam—which started as a famine relief group before mission creep set in—portrays the achievement of a new nominal benchmark in wealth as a bad thing that contributes to the misery of the masses. Through impressive economic illiteracy, the organization's recent report on inequality and poverty manages to misdiagnose the world's ills and prescribe dangerous and counterproductive remedies.
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Unequal Wealth
"Since 2020, the richest five men in the world have doubled their fortunes," huffs Oxfam's Inequality Inc. "During the same period, almost five billion people globally have become poorer. Hardship and hunger are a daily reality for many people worldwide. At current rates, it will take 230 years to end poverty, but we could have our first trillionaire in 10 years."
Let's parse that a bit.
A trillion dollars (Oxfam is UK-based, but the report is framed in U.S. dollars) is impressive. But it doesn't represent a fixed measure of wealth, since governments constantly succumb to the temptation to devalue money. Greenbacks stashed under a bed in 1990, the year Bernie Sanders, Vermont's democratic socialist U.S. senator and author of one of the two forewords to this report, was first elected to Congress, would have lost more than half their buying power if left untouched until modern times.
That's not to say wealthy people haven't become more so in recent years—many certainly have. While Oxfam names somewhat different alleged villains in its report and in a hate video on its website, Jeff Bezos is called out by name 10 times in Inequality Inc.
"Through squeezing workers, dodging tax, privatizing the state and spurring climate breakdown, corporations are driving inequality and acting in the service of delivering ever-greater wealth to their rich owners," insists Oxfam.
That seems an unlikely business plan. Did Bezos do anything else—perhaps found an online book store that grew into a global retail giant? And then, during the post-2020 timeframe that Oxfam emphasizes, did governments respond to the appearance of the COVID-19 virus by locking down populations, driving economic activity into online spaces to the benefit of people like Bezos? Yes, on both counts.
Bad Years Following Good Decades
That timeframe is important for another reason; up until world trade was kneecapped by a pandemic and public-health policy (a consequence all too apparent from the beginning), poverty had been dramatically declining for many years.
"After several decades of continuous global poverty reduction, a period of significant crises and shocks resulted in around three years of lost progress between 2020-2022," the World Bank notes in its roundup on global poverty. "Low-income countries, which saw poverty increase during this period, have not yet recovered and are not closing the gap."
The reduction in poverty was nothing short of miraculous. Even as populations increased, the number of people living below the poverty line, adjusted for inflation, plummeted from 2.01 billion in 1990 to 701 million in 2019.
Writing in 2016, the economist Deirdre N. McCloskey attributed improving prospects for so many of the world's people to "liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic."
Oxfam complains that "the power and influence of the super-rich has enabled them to drive down the share of the economy that goes to the many," as if it were a pie to be sliced so many ways. Instead, the world's people took advantage of freedom, protected property rights, and limited state power to bake their own pies. They then sold those pies and used the proceeds to improve their lives. Well, they did up until economies were shuttered by panicked public-health officials.
Empower the State? Uh Oh.
"If you're a public health person and you're trying to make a decision, you have this very narrow view of what the right decision is and that is something that will save a life," former National Institutes of Health director Francis Collins admitted of COVID-19 policy. "So, you attach infinite value to stopping the disease and saving a life. You attach zero value to whether this actually totally disrupts people's lives, ruins the economy, and has many kids kept out of school in a way that they never quite recovered."
If you're wondering why regular people grew poorer when they were forced to stay at home while a guy who sells things on the internet grew richer at the same time, there's an explanation right here in terms of bad government policy.
So, it's more than a bit rich (yes, that was a pun) when Oxfam's proposed solutions to the (supposed) problem of wealthy people and the (real) problem of poverty is to "revitalize the state." The organization insists that "governments need to take a proactive role in shaping their economies for the common good." It also says that "governments can use their power to reinvent and repurpose the private sector." Giving the state more power will, we're told, somehow reduce poverty and (more important to Oxfam) address inequality by closing the gap between the poorest and the richest.
Fix Poverty, Not Inequality
Never mind that some of the most provocative the data on inequality is sketchy (economist Thomas Piketty's work suffers from close scrutiny) and inequality, at least in the U.S., appears to be declining. In fact, people's well-being doesn't depend on the gap between their income and that of the wealthy; it depends on their purchasing power.
"Poverty and inequality are different things, but they are often conflated in political discussions," point out the Cato Institute's Chris Edwards and Ryan Bourne. "High poverty levels, which are clearly undesirable, are often caused by bad policies, such as a lack of open markets and equal treatment. Wealth inequality is different—it cannot be judged good or bad by itself because it may reflect either a growing economy that is lifting all boats or a shrinking economy caused by corruption."
To focus on what's really important—reducing poverty—we need to emphasize the "liberalism, in the free-market European sense" that brought hundreds of millions of people a measure of prosperity in a very short period of time. That means rejecting Oxfam's toxic prescription for an empowered state that's more likely to increase suffering by meddling in the lives of people who really should be left alone to do their best for themselves. And if some people become trillionaires along the way, good for them.
