IN­EQUAL­ITY

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the de­bate, he added. Ac­cord­ing to him, one ma­jor chal­lenge that did not get the at­ten­tion it de­served was the lack of in­vest­ment in the real pro­duc­tive sec­tors of the econ­omy.

“The as­sump­tion is that more profit means more in­vest­ment. The prob­lem is that the in­cen­tive is to in­vest in fi­nan­cial as­sets, not in pro­duc­tion,” he said.

South Africa was sit­ting with a so­phis­ti­cated fi­nan­cial sec­tor, but a strug­gling real sec­tor, he said.

An­other is­sue that needed at­ten­tion was the prob­a­bil­ity that the ex­pan­sion of the so­cial se­cu­rity sys­tem since democ­racy was “hit­ting a wall”.

Ox­fam SA would cam­paign in sup­port of the na­tional min­i­mum wage in South Africa, added Cawe and Wesso.

64.8%

Crit­ics

The Ox­fam re­port was im­me­di­ately crit­i­cised as “bo­gus”, “mis­lead­ing” and “mean­ing­less” by some of the old­est free mar­ket think-tanks in the world, in­clud­ing the UK’s In­sti­tute of Eco­nomic Affairs, the UK’s Adam Smith In­sti­tute, the Cato In­sti­tute in the US and the Mon­treal Eco­nomic In­sti­tute in Canada.

The ba­sis for th­ese at­tacks was that Ox­fam was al­legedly mis­rep­re­sent­ing the Credit Suisse re­port it used.

Credit Suisse’s re­port was based on ex­treme ex­trap­o­la­tion from most coun­tries’ very lim­ited wealth data, and the bank it­self ad­mit­ted that global wealth es­ti­mates were “in their

While pub­lic­ity and crit­i­cism re­volved around the 62ver­sus-50% de­bate, Ox­fam’s new re­port ac­tu­ally in­cludes a new and more telling set of sta­tis­tics based on re­cent work done by the World Bank’s Christoph Lakner and City Univer­sity of New York’s Branko Mi­lanovic.

This is an am­bi­tious at­tempt to cal­cu­late global in­come in­equal­ity, in­stead of wealth, from 1988 to 2008.

The nub is that global in­come dou­bled to $26 tril­lion in those 20 years, but 44% of that ac­crued to the top 5% of the global pop­u­la­tion.

Lakner and Mi­lanovic com­bined na­tional in­come sur­veys from all over the world to try to cal­cu­late a Gini co­ef­fi­cient for the whole planet. The Gini co­ef­fi­cient is a pop­u­lar mea­sure of in­equal­ity, where 100% rep­re­sents one per­son own­ing ev­ery­thing and 0% means ev­ery­one has ex­actly the same share.

They came up with a global Gini of around 70% for 1988 and 2008, with lit­tle ev­i­dence that it had changed at all. That is com­pa­ra­ble to South Africa’s Gini, which is rou­tinely de­scribed as the high­est (most un­equal) in the world.

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