Is life fair? This question heightened in echo as the news break, revealing where most of the world’s wealth go – the wealthiest. According to Oxfam, the gap between the rich and the poor has grown even further in 2017 as the world’s wealth continues to be owned by a small minority.
In the report, some 82% of the world’s riches went to the 1% richest people of the global population. While the poorest half had no increase at all.
However, critics queried Oxfam’s figures, and it showed a failing system. Factors like tax evasion, depletion of workers’ rights, firm’s influence on policy, and cost-cutting are to blame for the widening gap.
In the last five years, Oxfam has produced similar reports. In 2017, the org revealed calculations showing that the eight richest individuals in the world had as much wealth as half of the poorest people of the global population.
Oxfam revised last year’s figure to 61, and this year, it said 42 people had as much wealth as the poorest half. According to the org, the revision was due to the continuous trend of “widening inequality”.
According to Oxfam chief executive Mark Goldring, the constant change in the figures just reflects that the org offers reports that used “the best data available at the time”.
Despite the constant changes, Goldring said, “However you look at it, this is an unacceptable level of inequality.”
In the middle of the hype, Oxfam reports coincide with the beginning of the World Economic Forum in Davos, a Swiss ski resort. This annual conference typically focuses on inequality, which attracts top political and business leaders of the world.
Although inequality remains a top agenda in the conference, Mr Goldring said that commonly, “tough talk fades away at the first resistance”.
BBC Reality Check on the World’s Wealth
It isn’t an easy work to determine how much wealth does the rich and the poor really have. Rich people tend to not disclose the amount of wealth they own, while countries around the world keep substandard statistics of the poor.
Just the reports from Oxfam reflect the plight. Once, the reports claimed that the wealth of eight individuals was as much as the poorest half of the population. Then, it was revised to 61 last year, and then again to 42 this year. Those figures differ a lot.
Another problem is the data where those reports are based. For instance, not all people with the lowest wealth are literally poor, but could be individuals who are highly qualified professionals who have large amounts of debts or mortgages.
Still, whether it’s eight, 42 or 61 people who have the same wealth as half of the world’s poor, it clearly states that there’s a great inequality among individuals. This is the message that Oxfam is trying to deliver to Davos.
As a solution towards equality, Oxfam urges businesses to rethink their models; to maximize shareholder returns over a broader social impact. Anthony Reuben says, that’s wrong.
The org claims there was a “huge support” over their argument. Two thirds (72%) of 70,000 people surveyed in ten countries said they wanted their governments to “urgently address the income gap between rich and poor”.
However, director general at free market think tank The Institute of Economic Affairs, Mark Littlewood said Oxfam was becoming “obsessed with the rich rather than the poor”.
“Higher taxes and redistribution will do nothing to help the poor; wealth is not a fixed pie. Richer people are also highly taxed people – reducing their wealth won’t lead to redistribution, it will destroy it to the benefit of no one,” he added.
Sam Dumitriu, agreed. As the head of research at another free market think tank, the Adam Smith Institute, Dumitriu said Oxfam’s 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.”
Working out the figures
The question is, how does Oxfam get these figures? The organization’s reports are based on data from Forbes and the annual Credit Suisse Global Wealth databook, which have been distributing the global wealth since the year 2000.
To calculate what a person “owns”, the survey uses the individual’s assets, including property and lands, minus debts. The data also exclude wages or income of a person.
Due to this methodology, it has been criticized, as it means that when a student has a potential to earn high in the future, the individual would still be considered poor because of the criteria.
However, Oxfam said that if the wealth will be recalculated excluding people in net debt, their combined wealth will still be equal to that of just 128 billionaires.