Oxfam, capitalism, and poverty

After Thomas Piketty's Capital in the 21st Century told us about rising inequality, it's perhaps unsurprising that a new report from Oxfam tells us the global 1% will soon own half of all the world's wealth. But things are not quite as they seem. Oxfam's figures look at net wealth, implying that Societe Generale rogue investment banker Jerome Kerviel is the world's poorest person, and Michael Jackson was afflicted by the direst poverty before he died.

Ivy League graduates about to start a job as an investment banker at Goldman Sachs are judged far poorer than rural Indian farmers with the tiniest amount of capital.

Seven point five per cent of the poorest tenth of the world live in the USA, the figures say, almost as many as live in India.

And the claim that 85 own as much as 3.5bn is even more misleading, since the bottom 2bn don't have nothing, but negative wealth—something like $500bn of it.

What's more the global 1% probably contains more Times readers than CEOs or oil sheikhs—you need own a house worth around £530,000 to enter it.

All these facts skew Oxfam’s figures to make them astonishingly misleading.

Better figures tell a completely different and far more optimistic story.

Global poverty has actually fallen enormously with the rise of global capitalism. The fraction of the world's population living on less than $2 a day (measured in constant dollars) has crashed from 69.6 per cent in 1981 to 43 per cent today.

Even if you take out India and China, where the most spectacular improvements have been made, and look only at Sub-Saharan Africa, the worst-off region, there have been improvements. From 1981-2006 8.6 percentage points fewer were living on under $1 a day and 4.9 percentage points fewer were living on under $2 a day.

In virtually every respect global poverty is falling and poor people are living longer, better lives. That is less sexy than Oxfam’s claims, but at least it is true.

The amusement of Oxfam's wealth report

Oxfam is one of those groups jetting off to Davos this week to talk about how to set the world to rights. And they're doing so by going to sit among the plutocrats and telling everyone that it's the very plutocrats that are the problem. The top 80 people have more wealth than the bottom 50%, this is appalling and so on. You can see the report here.

Wealth: Having it all and wanting more, a research paper published today by Oxfam, shows that the richest 1 per cent have seen their share of global wealth increase from 44 per cent in 2009 to 48 per cent in 2014 and at this rate will be more than 50 per cent in 2016. Members of this global elite had an average wealth of $2.7m per adult in 2014.

Of the remaining 52 per cent of global wealth, almost all (46 per cent) is owned by the rest of the richest fifth of the world's population. The other 80 per cent share just 5.5 per cent and had an average wealth of $3,851 per adult - that's 1/700th of the average wealth of the 1 per cent.

Winnie Byanyima, Executive Director of Oxfam International, said: "Do we really want to live in a world where the one per cent own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.

Winnie needs to get out more. As Saez, Zucman and Piketty have been explaining to us all this is just how wealth distributions work. The bottom 50% always have less than 10%.

Fraser Nelson is very good here. This global capitalism stuff has been reducing poverty like billyo these past few decades. And for a charity like Oxfam, nominally focused upon poverty, we might think that's a good thing. But they seem to have changed their minds a bit.

But for one elegant point about this brouhaha have a look at Figure 1 on page 2 of that very Oxfam report. Their actual complaint is that global wealth inequality is climbing back to, but is still under, the level reached in 2000 and 2001. This isn't unprecedented, it's not staggering and it's not even unusual. Wealth inequality is actually lower than it was 15 years ago.

How not to read a report, brought to you by Geoffrey Lean

A lovely example of how to propagandise rather than actually report from our Geoffrey Lean over at the Telegraph. Things are terrible and only going to get worse, of course:

Ours is the first generation than can largely take plentiful, cheap food for granted. Now, report after report is suggesting it may also be the last.

Two days ago, a Ministry of Defence study of “global strategic trends” raised the spectre of global demand outstripping supply over the next 30 years. And two days earlier, a Commons committee warned that Britain’s own food security is imperilled.

Prices have been rising twice as fast as general inflation and appear to be accelerating. The MoD report suggests that they could eventually settle at twice their present level.

That's not, quite, what the report actually says. What it does say is this:

By 2045, food production is predicted to have increased by nearly 70%, to feed a larger and more demanding population13 – and it is possible that demand could outstrip supply. Some types of consumption are likely to grow particularly strongly. As affluence grows in the developing world, the demand for more protein-rich diets is also likely to increase. China, for example, has seen meat consumption increase by 63% between 1985 and 2009, and this trend seems likely to continue.14 Pollution and soil erosion are likely to adversely affect agricultural land – some estimates assess that, globally, as much as 25% of agricultural land is already degraded.15 Climate change will almost certainly have adverse effects on some agriculture, but may open up new areas for cultivation, with positive impacts on particular crops in certain regions. On balance, even though the quality of some areas is likely to have been degraded by 2045, the global arable land area is projected to remain relatively constant (estimates range from a 10% decrease to a 25% increase),16 with some potential increases in crop productivity in the high latitudes, and decreases across the tropical regions.17 Furthermore, warming, acidification and overfishing also threaten to reduce the amount of food that can be harvested from the oceans. Estimates of future food prices are highly varied and may be more volatile, although most projections indicate a general increase.18 Analysis by the International Food Policy Research Institute suggests that average prices of many staple grains could rise by 30% even in the most optimistic scenario.19 Disruption, and possibly congestion, of global trade routes may lead to sharp increases in food prices – particularly in those countries dependent on food imports. When the effects of climate change are taken into account, the price increase above present levels could be as much as 100%.

And when we go and look at that source report we find something very interesting.

If climate change is bad and population growth is high then the price of maize "might" rise by 100% in real terms (ie, after the effects of general inflation). Note, not "food" but "maize". The price, even in this worst scenario, of wheat might move by 30%.

However, note also one of the drivers of that food price rise: that people are getting richer and thus are able to have (ie, there is effective demand for) a richer and more varied diet. And whether food is "cheap" or not rather depends upon both the price of food and also the incomes of those trying to purchase said food. And even in that worst case scenario the incomes of the poor of the world (obviously, the people we're actually concerned about here, the change in the price of maize is going to make near no difference at all to rich world people like ourselves. Tuppence on a pack of cornflakes is too trivial to worry about for us.) rise faster than the price even of maize over the 2000 to 2050 time period being studied.

That is, yes, food rises in price but it also becomes cheaper, more affordable.

It makes sense that the MoD found this, that the original report found this, for it is also the same result Oxfam has found. Precisely because it is not a "shortage" of food, nor climate change, that is the major driver of future food price increases. Rather, it's that the poor will be getting rich and be gaining access to that petit bourgeois pleasure of three squares a day, some of them even with a little meat in them.

This is a problem, if you want to describe it as a problem, of the great success of the neoliberal, globalised, world economic order. Finally, for the first time since the invention of agriculture, the poor are able to eat well. This pushes up food prices, sure, but only and exactly because food is becoming more affordable for all.

We find it very difficult indeed to describe this as something we ought to worry about. More an occasion to get out the bunting and the flags really, time perhaps for Breughel-like scenes of the yeomanry feasting and drinking as we celebrate the good fortune of billions of our fellows.