The claim from Oxfam is a shocking one. “Just eight people,” they say, “have more wealth than the poorest 3.6 billion.”
Oxfam has prepared a report, which was released at the annual Davos meeting, documenting this claim. Of course you can guess their agenda even without looking at their website. Soak the rich with punitive taxes? Of course. High minimum wages? Sure. Obamacare? Well, they can’t call it Obamacare, but that’s what they want.
There’s just one problem. As Felix Salmon notes in this post on Fusion, the claim Oxfam makes is based on bad statistics.
I’ve written about Salmon’s work once before, when he had a piece in Wired in 2014 about how people like to quantify things that can’t really be quantified. I also noted in 2015 Oxfam’s use of flashy, but dodgy, statistics in summarizing Washington Post fact-checker Glenn Kessler’s dissection of Oxfam’s claim that women provide 66 percent of the work in Third World agriculture but only own one percent of the property and have 10 percent of the income of men.
Kessler showed that the Oxfam statistics about women and agriculture were ultimately based on questionable surveys from the 1970s that had never been updated. Salmon shows that when Oxfam discusses global wealth statistics, they are fudging both the number and the definitions of what they are talking about.
What Oxfam is formally claiming , based on statistics collected by Credit Suisse, is that both eight plutocrats and the poorest half of the world both have 0.16 percent of the world’s wealth. But these same statistics show the poorest ten percent (or lowest decile) has 0.32 percent of the world’s wealth and the poorest twenty percent (or second decile) actually has 0.17 percent.
“So what?” you might ask. “Less than half of one percent of the world’s wealth isn’t very much.” Well, what these numbers mean is that Oxfam’s numbers aren’t true. They’ve produced a soundbite that isn’t accurate.
It gets worse. What Oxfam is measuring is the amount of wealth a person has, which they define as the amount of assets you have minus the debts you possess. Do you have $75,000 in assets? Congratulations—Oxfam says you are among the top ten percent of the world’s wealthy. But if you have $75,000 in debt—say, from student loans? Well, Oxfam declares that you are in the bottom ten percent.
But isn’t all debt bad? No. It may take a while, but someone with a college degree and all that student loan debt will ultimately make more money than someone with $75,000 and no degree. Moreover, if someone in the Third World gets a substantial amount of money, Salmon believes, there are lots of useful things they can do with it, such as a down payment on a car or a home, that might accumulate more debt.
Finally, Salmon notes that Oxfam’s implicit advice to save rather than spend is a poor policy for “countries where saving money is difficult, expensive, and risky. The implications of the report—that it would be better were these people to have saved extra money, rather than spending it on things they desperately need—is both unrealistic and distasteful.”
Salmon linked to an earlier story he did in 2015 on an Oxfam report that had as its soundbite “the 85 richest people own the same wealth as the 3.5 billion poorest people.” In that article, Salmon called attention to a chart that showed that 7.5 percent of Americans had wealth in the lowest decile—more than any region except for India. The Chinese, by contrast, have no one in the lowest decile and most Chinese are in the top half.
Why is this? Because a lot of Americans are struggling with debts, while the Chinese tend to have no debt—and very few assets, which in Oxfam’s eyes makes them “wealthier” than Americans with lots of debt.
The bottom 30 percent of the world, notes Salmon, have so much debt that he proposes this accurate, but meaningless statement: “My niece, who just got her first 50 cents in pocket money, has more money than the poorest 2 billion people in the world combined.”
Once again Oxfam has issued scary and misleading statistics in order to promote a statist agenda. But if their soundbites aren’t true, why should we believe anything Oxfam says?