Oxfam’s Whining Again; The Top 1% Will Own 50% Of Everything – Forbes

We have a little report out from Oxfam today whining about the way that the global wealth distribution is so unfair. They've updated their number that the top 85 people own the same as the bottom 50% to the top 80 people owning the same as the bottom 50%. And they're predicting that, if current trends continue, then the top 1% will own 50% of everything in a couple of years. It does have to be said that their numbers are correct: but also that they're not very important. Also that we're doing something about it, the best that can actually be done. And finally that at least one of their proposed solutions is simply ridiculous. And we might even think that with the threat of famine around the world receding then the Oxford Committ ee on Famine Relief is looking around for something else to do as a form of indoor relief for the upper middle classes.

Here's one report on that report:

Billionaires and politicians gathering in Switzerland this week will come under pressure to tackle rising inequality after a study found that – on current trends – by next year, 1% of the world's population will own more wealth than the other 99%.

Ahead of this week's annual meeting of the World Economic Forum in the ski resort of Davos, the anti-poverty charity Oxfam said it would use its high-profile role at the gathering to demand urgent action to narrow the gap between rich and poor.

The charity's research, published today, shows that the share of the world's wealth owned by the best-off 1% has increased from 44% in 2009 to 48% in 2014, while the least well-off 80% currently own just 5.5%.

Oxfam added that on current trends the richest 1% would own more than 50% of the world's wealth by 2016.

Here is the home page of the report. And as Oxfam themselves say:

Winnie Byanyima, Executive Director of Oxfam International, said: "Do we really want to live in a world where the one per cent own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.

"In the past 12 months we have seen world leaders from President Obama to Christine Lagarde talk more about tackling extreme inequality but we are still waiting for many of them to walk the walk. It is time our leaders took on the powerful vested interests that stand in the way of a fairer and more prosperous world.

"Business as usual for the elite isn't a cost free option – failure to tackle inequality will set the fight against poverty back decades. The poor are hurt twice by rising inequality – they get a smaller share of the economic pie and because extreme inequality hurts growth, there is less pie to be shared around."

So, the argument is that economic growth is held back by this wealth inequality and thus we need to reduce the inequality to increase growth. Fine as an argument but then that makes this proposal simply ludicrous:

4 Share the tax burden fairly to level the playing field
Specific commitments must include: shifting the tax burden away from labour and consumption and towards wealth, capital and income from these assets; transparency on tax incentives; national wealth taxes and exploration of a global wealth tax.

Because we know something about taxation. That different forms of taxes have different deadweight costs. A deadweight cost being economic activity that doesn't happen simply because that tax is being collected. That is, different taxes influence the growth of that pie differently. Further, we even know what order to put taxes in, from low deadweight to high deadweight. And this is not controversial in the least, this is simply settled in theory and empirically. At the least deadweight cost (again, meaning that if we raise our money this way the pie will grow bigger, faster) are repeated taxes on real property, or land value taxation if you prefer. Then taxes on consumption like a VAT or sales tax. Then taxes upon incomes from labour. Higher deadweights (meaning that the pie will grow larger more slowly) come from taxes upon capital incomes, corporations and wealth.

So, to argue that because we want the pie to grow faster we must tax wealth and capital income is not only wrong, it's worse than that, it's ignorant.