Adam Smith Inst - Oxfam's inequality mistake
Every year Oxfam releases a report criticising the wealth of the richest in the world while ignoring the growth in welfare of the poor. This is a mistake. Sam Dumitriu, Head of Research at the Adam Smith Institute said this means the report is, as ever, exceptionally misleading and misses the point:
"Oxfam’s annual eye-catching wealth inequality stats always paint the wrong picture. In reality, global inequality has fallen massively over the past few decades. As China, India and Vietnam embraced neoliberal reforms that enforce property rights, reduce regulations and increase competition, the world’s poorest have received a massive pay rise leading to a more equal global income distribution.
"Oxfam’s mistake is to see wealth as a fixed pie. More wealth for Zuckerberg and Bezos does not mean less wealth for you or me. In fact it’s the opposite, in a free market individuals can only amass wealth by fulfilling the wants and needs of others. Work and trade does pay out for everyone involved.
"But we don’t really care about inequality, we care about poverty. Every day for the past 25 years 138,000 people have been lifted out of extreme poverty. It's the countries that rejected free markets that have bucked the trend. In Venezuela, the move to socialism under Chavez and Maduro has meant that more than 75% of the population now live in poverty with many unable to afford basic necessities like food and medicine, despite having the world's largest proven oil reserves.
"What we should care about is the welfare of the poor, not the wealth of the rich."
But if it is inequality that we're really concerned with then we have to understand how the figures have come about.
"There is one aspect of the recent rise in wealth inequality that we should be concerned about. Matthew Rognlie, Assistant Prof at Northwestern University, found that recent rises in wealth inequality were driven by housing. As land-use regulations have prevented construction of new homes creating artificial scarcity, housing has become increasingly unaffordable. Reforming planning and zoning law would likely be an effective way of reducing wealth inequality."
For further comment please get in contact with Matt Kilcoyne, Head of Communications at the Adam Smith Institute, via phone (office: 02072224995; mobile: 07584778207) or email (email@example.com)
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