Ahead of this week's World Economic Forum (WEF) in Davos, Oxfam is using its high-profile role to demand action on global inequality, says The Guardian. The charity's research, published on Monday, says that the wealthiest 1% now own 48% of the world's wealth, while the bottom 80% own just 5.5%.
Winnie Byanyima, executive director of Oxfam International and one of the six co-chairs at the WEF, said the increased concentration of wealth was "dangerous and needs to be reversed".
Oxfam has been "pushing this sort of meme for a while", says Ryan Bourne in The Spectator. Last year it made the "startling claim" that "the world's richest 85 people own the same wealth as the bottom 3.5 billion combined", a statistic that was shown to be "bogus".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This week's headline claim is just a "slight re-hashing of this factoid". It is based on Credit Suisse data on net wealth, "which throws up all sorts of weird findings" when you add it up across large populations, because it is calculated by adding up the value of assets and taking off debts.
One Credit Suisse graph suggests China has no people in the bottom 10% and most of its population in the top 50%, while North America supposedly has around 8% of the world's poorest population.
Why? Because according to this methodology, a Chinese person who has 50p but no assets or debts is richer than an American loaded up with a mortgage and other debts.
It's not just that the methodology is "absurd", says Allister Heath in The Daily Telegraph. Claiming that the top 1% could own more than 50% of the world's wealth by 2016 is "just an extrapolation of very temporary trends and exceptional circumstances".
The real story is the "collapse in genuine global poverty and the explosion in living standards in India, China and much of Africa", where poverty ("measured correctly") fell 38% between 1990 and 2011. "Any system that delivers such a wonderful improvement gets my vote."
Absolute poverty has never been lower, agrees The Times. But it's not just about that. Inequality matters because it is "a threat to economic growth in the developed world". Studies from the OECD, the IMF and the World Bank have shown that inequality is bad for growth because "in unequal nations people tend to receive a bad education and are thus less productive".
A shift in the tax burden from income to wealth "would be welcome", but there is no substitute for schools and training. "That is the source of better productivity and higher prosperity."
-
Review: The Bath Priory – a charming stay in an elegant cityMoneyWeek Travel Matthew Partridge visits the Roman ruins and takes the waters at The Bath Priory hotel’s luxurious spa
-
Will Labour change the rules on pension tax relief?Speculation is mounting that tax hikes could be announced in Rachel Reeves’s first Budget. Will pension tax relief rules be reformed?
