The Wealth Chasm

Richest One Percent

A new report (pdf) from Oxfam, issued just in time for Davos, reveals that the richest 85 people in the world own as much wealth as the poorest 3.5 billion. Will Oremus comments:

If there’s one kernel of hope—not mentioned in the Oxfam report, as far as I can tell—it’s that inequality between countries may be easing slightly (though it’s hard to tell for sure). On a country-by-country basis, though, the filthy rich have only been getting richer. Between 1980 and 2012, the wealthiest 1 percent increased their share of the spoils in 24 of the 26 countries Oxfam surveyed. This includes the United States, where the wealthiest 1 percent have captured 95 percent of all economic growth since the financial crisis of 2009, while the bottom 90 percent have gotten poorer.

Oxfam’s concern is not just that half the world’s population could be bought and sold by a group of individuals who could fit in a single large boardroom. It’s that this staggering disparity creates a vicious cycle.

Pethokoukis calls the report misleading:

Oxfam’s analysis is problematic.

First, does Oxfam’s simplistic narrative of crony capitalism tell the economic story of the past three decades better than the 80% decline in extreme poverty? And why exactly are there 250 million fewer extremely poor people in the world today? As economist Deirdre McCloskey puts it, “The Big Economic Story of our own times is that the Chinese in 1978 and then the Indians in 1991 adopted liberal ideas in the economy … And then China and India exploded in economic growth.”

Derek Thompson adds:

The rise in wealth inequality isn’t a measure of the poor getting poorer. It’s a measure of the rich getting fantastically richer thanks to the cascading benefits of privilege and the tremendous growth in stock wealth in the last decade. (Even in the U.S., 75 percent of household wealth is held by the richest 5 percent.)

Brian Merchant links rising inequality to automation:

Two hugely important statistics concerning the future of employment as we know it made waves recently:

1. 85 people alone command as much wealth as the poorest half of the world.

2. 47 percent of the world’s currently existing jobs are likely to be automated over the next two decades.

Combined, those two stats portend a quickly-exacerbating dystopia. As more and more automated machinery (robots, if you like) are brought in to generate efficiency gains for companies, more and more jobs will be displaced, and more and more income will accumulate higher up the corporate ladder. The inequality gulf will widen as jobs grow permanently scarce—there are only so many service sector jobs to replace manufacturing ones as it is—and the latest wave of automation will hijack not just factory workers but accountants, telemarketers, and real estate agents.

Kevin D. Williamson claims that liberals don’t actually want to do anything about global inequality:

What can we do about the situation of the global poor? We could seize all of the wealth of those 85 super-rich people whose portfolios so fascinate the Los Angeles Times, which would have the effect of raising the average wealth of the world’s poor from about $485 to about $970 — not exactly a solution.

The only way to help the world’s poor to a position of relative prosperity and economic independence is to help them to participate in the global economy, and here our progressive friends take a damned-if-you-do/damned-if-you-don’t approach. They’re scandalized by the scanty assets of the world’s poor, and they’re even more scandalized when rich countries open their markets to the global poor, or when companies from rich countries invest in poor countries and employ the poor people residing therein. The Democrats refer to Americans who do business with the global poor as “economic traitors,” and their most recent national convention was an energetic pageant of xenophobia, replete with ritualistic denunciations of the Yellow Peril come to steal our jobs.

Casey N. Cep points out that chances are, “if you read the report, then you are part of the problem”:

It will always be easier to rage against the one percent than to scrutinize our own wealth. Last week, I shook my fist at the Oxfam report while drinking a chai latte with the other, then emailed a friend from my iPhone to rant about those 85 moguls who own half the world. Trouble is, I’m a mogul in my own life: the iPhone is newer than it needs to be, I ate out twice last week, and I saw a movie the other day because it’s Oscar season. Yes, I have debts and I can’t even see the super-rich from my rung of America’s income brackets, but there are still more than a few luxuries in my life. I like to think they’re essentials, but like almost everyone, I have a talent for rationalizing my spending.

When Peter Singer writes that 19,000 children die every single day because of preventable, poverty-related causes, he’s not blaming their deaths on 85 individuals or a single percent of the world’s population: he’s blaming the rest of us, too. The rich might be able to do more, but we can all do something. Mammon isn’t just a mistress for the rich, but a companion for us all, whatever our percent.