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Wednesday, February 20, 2019
Bjorn Lomborg is director of the Copenhagen Consensus Center.
COPENHAGEN, Denmark, Feb 7 2018 (IPS) - Antipoverty group Oxfam International got a lot of attention for claiming that there’s a global “inequality crisis,” but a far more important point is entirely neglected: globally, income distribution is less unequal than it has been for 100 years.
The best data on this comes from Professor Branko Milanovic, formerly of the World Bank, now at City University of New York. His research shows that, mostly because of Asia’s incredible growth, global inequality has declined sharply for several decades, reducing so much that the world hasn’t been this equal for more than a century.
Moreover, the conversation on inequality sparked by Oxfam fails to acknowledge that equality is about much more than money. Look at education and health. In 1870, more than three-quarters of the world was illiterate. Today, more than four out of every five people can read.
Oxfam almost entirely glosses over this reality, and instead points to wealth levels within individual countries. It’s true inequality on this measure has increased. But Oxfam overstates the case when it claims that the wealth of the world’s 42 richest people is greater than the bottom 50 percent of the planet (3.7 billion).
A little less than one-fifth of the “bottom half” are actually people with a collective debt of $1.2 trillion: likely mostly rich world citizens, like students with loans or people with negative equity in their houses. It is quite a stretch to classify such people among the world’s poor.
It would be fairer, then, to say that the wealth of the poorest 40 percent of the planet (excluding those with negative wealth) is equal to the wealth of the top 128 billionaires. But this wouldn’t be as catchy as claiming that just 42 people own as much as half the planet.
Oxfam’s repeated claim that the top 1 percent own more than half the planet’s wealth lacks historical context. Thomas Piketty looked at wealth for select countries and found a dramatic decline in the wealth of the top 1 percent from 1900 to about 1970-80, and a smaller increase since then. Thus, it’s likely that the world is more equal today in terms of wealth than it has been historically, apart from over the past three or four decades.
Looking at the United Kingdom for example, the top 1 percent of wealth has increased, yet the data show that the country was still more unequal every year before 1977.
More relevant than wealth, though, is the measure of income inequality, since this determines our lives from one year to the next. Inequality has indeed risen recently. But what of the bigger picture? Perhaps unsurprisingly, most diagrams used by Oxfam start in around 1980, at the historic low-point for income inequality.
The data show that the top 1 percent of income in English-speaking countries has returned to levels akin to those in the early 1900s, while in non-English countries it has declined dramatically.
Oxfam’s core purpose is “to end the injustice of poverty,” so it’s unfortunate that its simplistic narrative points to a need for redistribution within countries while overlooking the many things — like global free trade lifting hundreds of millions out of poverty, and vaccination campaigns that have nearly eradicated diseases like polio — that need to be maintained to continue recent dramatic global progress.
Too much inequality can reduce growth and stifle social mobility, so it should be kept in check. But it is wrong to ignore the bigger story of humanity’s progress against poverty and inequality.
Focusing so narrowly on the topic does an injustice to the much more serious challenges affecting the world’s poorest, such as air pollution, tuberculosis, HIV, malaria, malnutrition and micronutrient deficiencies and barriers to equal and fairly distributed access to education.
All of these challenges have cheap and effective solutions. And it’s on these solutions that we need to focus.
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