The Left-wing Oxfam group has issued a report saying that the world’s wealthiest 1% will soon own 50% of the world’s wealth.
This press release has been nicely timed to match the meeting at Davos, Switzerland of the world’s wealthiest people. Oxfam pulled the same PR stunt last year at this time. It worked. So, they have done it again.
It’s time for a lesson in ancient economic history. (It will also be time again in a year.)
You have heard of Pareto’s law, I assume. It’s the 20-80 rule. About 20% of the members of any group provide about 80% of the group’s output. This general distribution applies in areas of life that we would not expect it.
This distribution pattern was first revealed in an 1897 book by Swiss-employed Italian economist Vilfredo Pareto. He found that 20% of the residents in every European nation he surveyed had 80% of the income.
This was big news in 1897. That it remains big news today is testimony to the fact that Left-wing alarmists have allies in the media — allies who are either incredibly ignorant of modern economic history (likely) or else willing conspirators in duping the public.
The Pareto curve applies as we go up the pyramid of wealth. It always has. So, 4% of the population (.2 x 20%) own 64% (.8 x 80%) of the wealth.
Let’s keep going. This means that 0.8% of the population (.2 x 4%) own 51% (.8 x 64%) of the wealth.
If this seems like the essence of unfairness, you had better re-define your idea of fairness. It applies in almost every area of life. It is not limited to wealth.
The information that the top 1% do not yet own 50% of the wealth indicates that the world remains somewhat over-equalized. It’s not normal. The world needs more inequality.
Leftists promote this “top 1%” story as something new, something insidious, and something conspiratorial. But they never mention this: the distribution has not changed since at least 1897. The modern welfare states of the world have yet to affect the statistical outcome. Welfare states can determine the rules by which the Pareto curve is attained. They therefore can influence which producers are at the top. But, ever since 1897, the distribution has not permanently changed. It merely fluctuates around a permanent pattern.
With this in mind, read this summary of Oxfam’s press release. Variations of it are all over the Web.
The wealthiest 1% will soon own more than the rest of the world’s population, according to a study by charity group Oxfam.
The charity’s research shows that the share of the world’s wealth owned by the richest 1% increased from 44% in 2009 to 48% last year.
On current trends, Oxfam says it expects the wealthiest 1% to own more than 50% of the world’s wealth by 2016.
The research coincides with the start of the World Economic Forum in Davos.
The annual gathering attracts top political and business leaders from around the world, and Oxfam’s executive director Winnie Byanyima, who will co-chair the Davos event, said she would use the charity’s high-profile role at the gathering to demand urgent action to narrow the gap between rich and poor.
In a statement ahead of the gathering, Ms Byanyima said the scale of global inequality was “simply staggering”.
“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,” she added.
The charity is calling on governments to adopt a seven point plan to tackle inequality, including a clampdown on tax evasion by companies and the move towards a living wage for all workers.
Oxfam made headlines at Davos last year with the revelation that the 85 richest people on the planet have the same wealth as the poorest 50% (3.5 billion people).
It said that that comparison had now become even more stark, with the 80 richest people having the same wealth as the poorest 50%.
We are now a century into the welfare state. The winners at the top are still winning, and the losers are still losing. What is Oxfam’s solution? More of the same. More government taxation of the rich. More welfare state action.
This is the rhetoric of envy. This is the politics of guilt and pity.
The rich do not respond. They prefer silence. And why not? They are on top. They have beaten the free market system for now. They are at the top because of the Keynesian system. They will be back at Davos next year. They have long since bought off the politicians.
Oxfam gets its 15 minutes of free publicity every year. But the folks at Davos are just as rich — maybe richer — a year later.
Oxfam is background noise. Davos is the symphony orchestra. It plays only the Keynesian score.
In short, the folks at Davos know the score. The folks at Oxfam don’t.
Oxfam is B’rer Fox. Davos is B’rer Rabbit. “Please don’t throw us in the briar patch.”
When the week is over at Davos, the participants will join hands and sing their signature song, just as they do every year.