Why are we rowing about the Oxfam statistics?

On Monday, Oxfam published a report entitled ‘An Economy for the 1%: how privilege and power in the economy drive extreme inequality and how this can be stopped.’ And, as you’ll know, the statistical foundation of that report was rather roughly handled by a number of commentators, often those on the right of the political spectrum.

I don’t write to throw my Casio calculator into that ring. But to make the point I want to I need to start with a few short observations about what those criticisms identified and ignored.

They focused on the green line in the Oxfam chart below. And often on the number of high consuming but indebted individuals in the West who you might not readily identify as poor. As Tim Harford put it:

here’s a surreal image of my own: my toddler controls more wealth than the poorest one and a half billion people on the planet.

Does he have a rich uncle?

No, but he has no debts. That puts his wealth at zero.

But why should an increase in the number of net indebted individuals contributing to the shrinking wealth of the bottom 50% not be a cause for concern?


Little or no exception was taken by commentators to Oxfam’s purple line – which shows a more than doubling of the wealth of the world’s 62 richest people in the last six years. And most of us will shift uneasily in our chairs at this, too.

So the rough handling – although usually accurate in its own terms – often obscured, and sometimes seemed wilfully to obscure, matters that on any view we should be concerned about.

But perhaps hostility to the Report was rather predictable?

Many appear to have read it as an attack on capitalism. And the belief that capitalism possesses a unique ability to rescue people from poverty is a sacred tenet for many. Sacred – and not without evidential support as Fraser Nelson has pointed out here.

(A short aside. There important limitations to Fraser’s charts too: a steep decline in the number of people with an income of less than $1.90 a day certainly tells us something about poverty – but the ‘what’ is rather context specific. Do you live in Malawi or Monaco? Certainly the suggestion made by the graph that the “Share of the world’s population living in poverty” has declined is not made out by the data given. And, similarly, an increase in resource flows tell us nothing about who receives them. You might well expect the ‘Private’ flows that Fraser champions to fill different pockets to those of the ‘Official Development Assistance’ flows.)

Even so. Let’s make an assumption I readily make: that capitalism is a powerful force for good. And look at where it should and shouldn’t lead us.

It should lead us to protect capitalism – and celebrate its successes. But it shouldn’t lead us to conclude that capitalism cannot function better. If any of us are sanguine about environmental change, or inequality, or abuses of the tax system, or poverty, or air pollution – if any of us are, we shouldn’t be.

In fact, Oxfam’s report doesn’t attack capitalism. What it does do is call for changes to the way capitalism functions. A good defence of capitalism involves championing the successes but also searching out the ways that will cause it to succeed better at the only metric that matters: the health of our society. A bad defence focuses exclusively on the successes; ignores the failures; and attacks those who point them out.

That bad defence does not seek to persuade the undecideds. It has no broader ambition than preaching to those already in the choir seats. But it needs to do more. Because capitalism’s friends – amongst whose number I count myself – mustn’t be complacent.

There is hunger for political and economic change. In the US a fight for the Presidency between Donald Trump and Bernie Sanders is now a live possibility. And in the UK, today’s complacency might quickly fall away were Labour to choose a more adept leader from its Left – especially if the public were to be exposed to another 2008 style market failure. By failing to agitate for its better functioning, capitalism’s champions jeopardise that which they seek to protect.

And, perhaps even more importantly, they eschew the opportunity to advance the better world we would all like to see.

3 thoughts on “Why are we rowing about the Oxfam statistics?

  1. I’m not sure I understand how the data cited by Fraser Nelson does not show that the share of the world’s population living in poverty has declined substantially. The poverty line, of $1.90 a day, is set in international dollars, so the relative purchasing power of someone living in Malawi vs someone living in Monaco is already taken into account. Needless to say, the number of people in Europe living below this definition of the poverty line is de minimis.

    Following the link through to Max Roser’s fuller discussion of the data (http://ourworldindata.org/data/growth-and-distribution-of-prosperity/world-poverty) shows that not only is the share of the world’s population living in poverty declining rapidly, but the *absolute* number of people living in poverty is also declining – it is now around 1820s levels. This is despite the total population continuing to rise.

    As for why we should not be concerned by an increase in net indebtedness, one possible answer from Ben Southwood at the Adam Smith Institution is cited by Nelson as an addendum to his blog: “Having negative wealth may actually be a sign of prosperity, since only people with prospects can secure loans.” In other words, the reason people may appear to be getting poorer by Oxfam’s measure may in fact be a result of growing prosperity!

  2. Hi Jolyon,

    Here is my two pennies worth on the Oxfam statistics http://www.cgdev.org/blog/davos-dreaming-development-without-development

    Why (should we be) rowing about it? (or at least discussing it critically in a cordial and civilised manner….). I’d say because it matters. There is a tendency to give charities a free pass when it comes to robustness and evidence; to rely on the inherent morality of good intentions, and view scrutiny and criticism as unnecessary and hostile. This is not good for the accountability and effectiveness of the sector (….see Kids Company etc…).

    And, as you say, we end up with an incoherent debate between those saying everything is just fine with global capitalism those who have jumped to the conclusion that it is the cause of all that is wrong in the world (Adam Lent also nails this: https://medium.com/keeping-stock/the-incoherence-of-the-inequality-debate-7e177a90058a#.5m3wv768s).

    Of course everything is not fine with global capitalism, but the temptation with getting tied to the ‘look, billionaires!’ approach as Oxfam has for three years in a row, is that you end up fixating on proposals to punish and constrain the apparent villains of the story (the ultra rich and the multinationals) rather than to effectively solve the problem of how to enable more people to benefit from capitalism (with the danger that you end up with policies that make the situation worse).

  3. If you think Oxfam’s had a free pass, you can’t have had your eyes open this last week. You should have a crack at someone other than a Charity for a change. Try Fraser’s piece for instance?

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