Cogito Ergo Non Serviam

Oxfam Claims Top 1% to Have 50% of Wealth by 2016

The charity Oxfam has just released a study that suggests the concentration of wealth into a few hands is continuing apace. If the current trend holds, the richest 1% of the human race will possess more than 50% of the wealth on the planet as of 2016. This has ramifications for political, economic and social policy. The report, however, cherry picks the data despite a clear and present danger to everyone if the wealth is not more widely distributed.

According to the press release issued along with the report, "the richest 1 per cent have seen their share of global wealth increase from 44 per cent in 2009 to 48 per cent in 2014 and at this rate will be more than 50 per cent in 2016. Members of this global elite had an average wealth of $2.7m per adult in 2014. Of the remaining 52 per cent of global wealth, almost all (46 per cent) is owned by the rest of the richest fifth of the world's population. The other 80 per cent share just 5.5 per cent and had an average wealth of $3,851 per adult - that's 1/700th of the average wealth of the 1 per cent."

In global terms, one doesn't have to own yachts and private jets to be in the top 1%. After all, a billion or so humans are getting by (or not) on just $1 a day. In fact, a net worth of $500,000 is sufficient to put one in the top percentile. Just about anyone in the developed world with a paid-off mortgage is in the running for this elite status.

The problem with the Oxfam study, though, is that the top 1% saw their overall share of global wealth decline from 2000-2009, and from 2010 to now, it has increased. The group merely took 2010 onwards and extrapolated to decide that the year 2016 would be the year the bottom 99% had a smaller share of the pie than the 1% at the top. Using data from 2000 to the present would have flattened the trend line, putting off the day the richest wind up with most of the wealth, and generating fewer headlines.

Despite that unfortunate glitch in methodology, the fact remains that wealth has been more tightly concentrated in the last few decades than in was in the before the neoliberal ideologues like President Reagan and Prime Minister Thatcher came to office. This is not only true within countries, it is true across national borders despite the development of many countries that were basket cases. When a poor nation grows into a rich one, the population goes from being almost universally poor to being divided between new rich and poor. China is a perfect example of this; the nation has 300 million living quite well, and 1 billion or so who have yet to experience much in the way of higher incomes.

This would not matter greatly if there were not side effects to the concentration of wealth. The simple fact is that rich people spend a smaller percentage of their incomes than the poor. Less money in the hands of the poor means less aggregate consumer demand, which translates into slower economic growth. In addition, when disparities in income and wealth become exaggerated, political divisions become greater. It is not a surprise that America's currently polarized political environment comes at a time of greater income and wealth inequality.

Ancient Rome offers a cautionary tale in this regard. The republic began with a relative uniformity in wealth. The patrician class was richer than the plebian to be sure, but as the wealthy gained more and more, they replaced the working class with slaves. The newly unemployed had nowhere to go and nothing to do until bread and circuses became state policy. Meanwhile, the very rich vied for power and control, leading to civil strife -- from Sulla and Marius to Julius Caesar and Mark Anthony. In the end, only the reign of Augustus could end the strife. It also extinguished the Republic.

The unpleasant truth is that freedom is in part a function of wealth, and when wealth is unevenly distributed, so is freedom. In a fair world, there would be an equality of opportunity with unequal outcomes owing only to the talents and work ethic of each individual. However, that is not the world of today. The child of an American or European has vastly more opportunity than the child of an African, for example.

Within a nation state, patriotism often suffices for redistributive programs that protect social cohesion. The modern welfare state takes many forms, from the miserly American model to the generous versions of Scandinavia, but each attempts to address the fact that below a certain level bad things happen. Globally, there is no mechanism beyond private charity and some foreign aid from governments. The trend, even if not as pronounced as Oxfam says, will continue.

© Copyright 2015 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.



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