The ar­gu­ment around

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­press.co.za

In­ter­na­tional ad­vo­cacy group Ox­fam this week pro­duced a re­port on global in­equal­ity to co­in­cide with the World Eco­nomic Fo­rum (WEF) in Davos, Switzer­land, trig­ger­ing a back­lash from a va­ri­ety of free mar­ket think-tanks and pro­fes­sional com­men­ta­tors world­wide.

Ox­fam’s ma­jor claim is that the 62 rich­est bil­lion­aires have as much wealth as the bot­tom 50% of the hu­man race com­bined: about $1.75 tril­lion (R28.8 tril­lion).

Apart from at­tack­ing that num­ber, de­trac­tors also claim that ris­ing global in­equal­ity is in fact ac­cept­able, as long as poverty rates are also fall­ing.

To ar­rive at the fig­ures in the re­port, Ox­fam com­pared the wealth of the top mem­bers of Forbes’ an­nual rich list, which out­lines the es­ti­mated wealth of the world’s bil­lion­aires, to the find­ings of Swiss bank Credit Suisse’s an­nual Global Wealth Data­book, which es­ti­mates the poorer half of the global pop­u­la­tion’s wealth.

Last year, when Ox­fam pro­duced the same mea­sure us­ing that year’s data, it took the top 80 bil­lion­aires to match the bot­tom 50% of the planet, lead­ing Ox­fam to con­clude that the “global in­equal­ity cri­sis is reach­ing new ex­tremes”.

Its fore­most so­lu­tion is that tax havens be dis­man­tled glob­ally to al­low for more re­dis­tri­bu­tion via tax­a­tion – along with a global push for higher min­i­mum wages.

“South Africa is em­blem­atic of the prob­lem,” said Ron­ald Wesso, re­search and pol­icy leader at Ox­fam South­ern Africa, while speak­ing at a me­dia briefing about the re­port in Jo­han­nes­burg.

Ayabonga Cawe, eco­nomic jus­tice man­ager at Ox­fam SA, ad­mit­ted that a bat­tle of ideas around in­equal­ity was some­times “not help­ful”, with peo­ple at op­po­site poles just ar­gu­ing past each other.

The at­tacks on the “proven in­ter­ven­tion” of a na­tional min­i­mum wage demon­strated the poor state of

The gain in global per capita in­come 1988-’08

Crit­ics of Ox­fam’s re­port ar­gue that even though there might have been an ex­plo­sive in­crease in in­equal­ity, what re­ally mat­ters is that the in­comes of the poor have also risen. In per­cent­age terms, it is ac­tu­ally the fifth decile that in­creased its in­come the most (72%), not the ‘1%’. This, how­ever, re­flects the low base off which the poor started. In money terms, prac­ti­cally all in­come growth has gone to the top. Ox­fam em­pha­sises the bars (money), while its crit­ics em­pha­sise the rel­a­tive im­prove­ment of the lower groups (the per­cent­ages) $ PER PER­SON, AD­JUSTED FOR PUR­CHAS­ING POWER IN 2005 TERMS

24.9%

70.6% 71.7% 57.9% 4.6%

16.6% in­fancy”. Even if the num­bers were true, they rep­re­sented “net” wealth af­ter debt, ar­gued Ox­fam crit­ics.

This makes it ap­pear that a hy­po­thet­i­cal middle class per­son in the de­vel­oped world with a mort­gage equal to their pen­sion is ex­actly as poor as, for ex­am­ple, a smallscale farmer who just lost a crop to drought and has noth­ing to fall back on.

The bot­tom 50% of the world has al­most no wealth on this “net wealth” ba­sis, with the bot­tom 10% in­stead hav­ing “neg­a­tive wealth” of $750 mil­lion due to debt, ac­cord­ing to Credit Suisse.

The fact that a few bil­lion­aires have as much wealth as 50% of the hu­man race is mean­ing­less be­cause both groups in re­al­ity pos­sess lit­tle of the world’s wealth, ar­gue crit­ics.

Ox­fam, how­ever, replied to crit­ics this year by re­leas­ing a tech­ni­cal note. In it, the group ad­mit­ted that the prob­lem with “net wealth” ex­isted, but in­sisted that its “main find­ing is not in ques­tion”.

If you cut out the bot­tom 10% and its “neg­a­tive wealth” al­to­gether, you still end up with the next-poor­est 40% hav­ing 49.8% of the wealth of the top 1%, it pointed out.

“It is clear that, at the ag­gre­gate level, the neg­a­tive wealth at the bot­tom of the dis­tri­bu­tion is com­pletely dwarfed by the wealth at the top of the dis­tri­bu­tion,” said Ox­fam.

A global Gini

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