Thursday, 19 January 2017

Irony lost on Oxfam


"8 people are richer than 3.6 billion, says Oxfam. So? My daughter, who has $20, is richer than 2 billion. So the problem is poverty, not inequality." ~ Johan Norberg


Guest post by Peter Kermode

Right up until last Monday I was a supporter of the charity organisation Oxfam.

I supported them right up until Monday when they sent me an email entitled "8 men have the same wealth as half the planet."
The email, which seemed to go out to half the planet and has since gone viral, went on to express outrage at the inequality in wealth distribution that this represents, and the obligation they say that these few have to helping the poorest and least fortunate.
The irony that seems lost on Oxfam is that, outside the riches garnered by what we might call the various members of the dictator class -- who quite literally take their wealth from others, and frequently and quite literally at the point of a gun -- the vast majority of those who have become wealthy have done so by creating businesses that make our lives better. They have used their enormous productive ability to identify and bring new value into the world, value which would not have existed without them and which has made other lives vastly better - made lives better as measured by the enormous wealth they have created, and which Oxfam so undeservedly disparaged.
They've been able to create this enormous wealth because of their own entrepreneurial talent, and because they have put their wealth-producing ability to work in countries where the rights of the individual and private property are generally enshrined in law, and so all individuals can (if they wish) invest in building businesses and creating new value, reassured that the fruits of their labour will be protected.
In most third world countries however, when most of those poor folk live who are poorer even than Johan Norberg's daughter, individuals lack these protections and are therefore subject to exploitation and oppression by the tyrant class.
Rather than directing their outrage at those who are busy creating a better world, Oxfam's time would be better spent understanding how wealth is created and protected, and directing their outrage instead at the tyrants that keep others in poverty.
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4 comments:

  1. My view is that much of the wealth inequality today is a consequence of the nature of our monetary system ...and the debasement of money, which is the result of largely unfettered credit growth.
    In NZ... 1985 M3 money was $85 billion ...today it is 280 billion

    CPI inflation does not measure the effect of this tidal wave of money .
    Does not measure how it might manifest in and flow thru an economy and does not measure how it might result in a transfer of wealth and the division of wealth..

    eg.. Imagine that a counterfeiter might print money and spend into a local village economy and appropriate assets... there is a seemingly real wealth effect thru the whole village early on and then over time...an increasing division of wealth
    ie. in money debasement there are winners and losers.
    ie.. As a general principle every new dollar created devalues every existing dollar already in existence.. ( I say this to make the point that expanding the money supply is essentially a wealth transfer mechanism )

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  2. To expand on this: money is a tool of trade. Regardless kof its form, the value of money must be equal to the value of goods available, because money as such derives its value from the existence of unconsumed goods. Thus, producing more money necessarily must devalue existing money. This is not a huge issue with real money, such as precious metals, since the discovery of such metals inherently produces more goods (the metals)--the metal is valuable in itself, and therefore mitigates the inflation. There still is some (see CA in 1849), but it is relatively short-lived. Fiat currency, not being inherently valuable, does not contribute to the available pool of unconsumed goods, and therefore does not recover.

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  3. The above makes the point that the wealthy generally deserve their wealth (which is certainly true), but I think the major flaw in Oxfam's thinking is not processing the fact that the vast majority of the wealth described is productive assets, not objects of personal consumption. Even if one accepted the morality of wealth redistribution, how could it possibly benefit the poor to take control of productive assets out of the hands of those who can run them the best, and put them in the hands of those less able?

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    Replies
    1. Except the world is not a meritocracy Mark. There are no doubt millions of poor Chinese and Indians, for example, who would have done a far better job managing Fred Trump's empire than Donald.

      Delete

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