The delusions of Oxfam

Buried in Oxfam's latest report about how disastrously unequal the world is we've got an assumption which is so breathtakingly foolish as to kill off any belief in the sense or sensibility of the organisation's mindset. They're trying to insist that the minimum wage in a place should be very much higher than GDP per capita in that same place. Something which simply cannot be done.

Oxfam has shown that minimum wages in countries like Morocco, Kenya, Indonesia and Vietnam are not enough for people to escape poverty.246 The Asia Floor Wage Alliance has found that legal minimum wages in the garment sectors in various Asian countries fall far short of providing a living wage (see Figure 8).

That's on page 39 of that report, figure 8 is on page 40. An introduction to the report is here.

The specific part that we know about from personal experience is the garment trade in Bangladesh. This produces some 80% of exports, is the major reason for the country's growth and employs some 4 million people. The minimum wage there is, close enough, 5,000 taka a month, or £50.

That's the minimum wage in the garment factories, not for the economy as a whole. That, the more general one, is whatever can be scraped together by doing whatever, a rather lower sum. That garment trade minimum is also straight in off the fields, no training, no experience, before any benefits (which do indeed exist) and before overtime or anything else.

Yes, a low sum and most assuredly we'd all like it to be much higher. But Oxfam's claim is that this should be a living wage of more like £250 a month (perhaps $250). Something which simply cannot happen.

GDP per capita in Bangladesh is some $1,500 a year or so. We cannot have a minimum wage twice that. This would be the same claim as insisting that the UK minimum wage should be $80,000 a year (say, £60,000). Worse, that this should only apply in one industry.

Imagine the dislocation if, to make up a British comparison, the minimum wage in sandwich making was £60k, all other wages staying as they are today? This would do what to the supply of doctors (maybe not so much) nurses and teachers (quite a lot) and so on? 

It's a demand based upon the most aggressively stupid misunderstanding of what ails Bangladesh, isn't it? The actual problem being that the place is too poor to be providing the incomes we'd all be delighted for everyone there to enjoy.

You know, that poverty which is being alleviated by this very neoliberal globalisation, that growth of the garment trade, which has seen the place growing at 6% and more for a couple of decades now.

Bangladesh's problem is not global inequality, the thing Oxfam is whining about, it's Bangladesh's poverty. That the recipients of hundreds of millions of our tax money manage to get this so wrong seriously calls into doubt Oxfam's right to anything more than a contemptuous sneer. The cure for poverty is economic growth, the very thing which has reduced that global absolute poverty from 40% of all humans to under 10% in just these past three decades of that very neoliberal globalisation.

This is just the one example from that report, we could pick out many more. Sorry folks, but Oxfam is deluded here.