Closing down markets will do nothing to diminish poverty
26 January 2021
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Society and Culture
21 January 2021
Labour Market
29 January 2021
Tax and Fiscal Policy
19 November 2024
Oxfam has published its annual analysis of world wealth inequality, “The Inequality Virus”, this time with added Covid.
Though its judgments and solutions are every bit as hackneyed as we’ve come to expect, this is also the most radical report we have seen from the charity, with its dramatic claims about the effect of the pandemic on inequality.
On the long list of those losing out, we learn, are:
“People living in poverty, women, racialized groups … Black people, Afro-descendants, Indigenous Peoples, and historically marginalized and oppressed communities, and … informal workers, migrants … LGBTQIA+ communities.”
To blame for this is an “exploitative economic system that is designed to benefit a wealthy and powerful few”. Or, if you prefer, “neoliberalism, patriarchy and structural racism… rooted in white supremacy”.
This “rigged economy” has enabled “a super-rich elite to amass wealth” even in the middle of a pandemic. This elite is “mostly white males”, the ten richest of whom could pay to vaccinate the whole planet out of the increased wealth they have accumulated over the past year.
What passes for the charity’s analysis is buttressed by reference to doubtful assertions about the alleged impact of the pandemic (for instance that women have suffered disproportionately from job losses, which is not the case in the UK at least) and to the supposed views of some 295 left-leaning economists.
It doesn’t have to be like this, of course. Oxfam offers an appealingly vague vision of “a world that is profoundly more equal and measures what matters … where human economies care for people…without exploitation and with income security… where the rich pay their fair share of tax… a world of climate safety”.
However the means to reach this nirvana seem decidedly unrealistic and it is not really clear who this polemic is aimed at. Probably the most eye-catching proposal is the demand for a temporary increased profit tax on 32 global corporations that have gained most in the pandemic. Quite how this would be done, and by whom, is unclear. Moreover the authors of the report seem unaware that taxes on profits rarely hit the fat cats where it hurts, and often end up meaning higher prices and lower wages for workers. As for preventing tax evasion, that is glossed over with platitudes about governments putting in extra efforts to block “loopholes”.
There is also a proposal for a maximum wage, which would probably have the side-effect of reducing the income tax take which the authors hope to increase. Alongside that, there should be a guaranteed income, presumably some variation on the Universal Basic Income, with all the problems that entails.
And the bromides don’t stop there. Business should be “redesigned to prioritise society” – though by whom and how is unclear. If history shows anything it’s that sustainable, overarching institutions evolve, rather than being “designed” by anybody. Attempts to impose new designs on economies and societies had an appalling record in the last century, but still hubristic radicals think they can do better.
Back to the pandemic, the authors insist there must be “open access to all relevant patents and technology” so that cheap vaccines can be produced. Quite what will replace Big Pharma, which cannot exist without patents which incentivise innovation, is not specified.
Governments “must also recognise, reduce and redistribute the underpaid and unpaid care work that is done predominantly by women, and racialized women in particular”. Again, the end sounds noble enough, but the means frustratingly opaque.
None of this is to minimise the seriousness of the problems Oxfam is highlighting. But a world-renowned charity, to which thousands of British citizens (many, no doubt, the despised white male patriarchs) continue to donate should offer a much more mature understanding of how wealth is generated through creating goods and services which meet people’s needs, and how the innovative skills of entrepreneurs need to be nourished and harnessed.
It is sad to see an organisation that has done much good in the past now anathematising the market economy, which has lifted countless millions out of poverty and indirectly supports all Oxfam’s efforts. Closing down markets will do nothing to diminish poverty – something we all surely want to see.
Finally, Oxfam offers no indication of how the revenue generated by increased taxes should be disbursed by governments. The experience of the last 50 years of international government aid suggests that much would be wasted or stolen, which is one reason our own government is rightly cutting back on the 0.7% spending target.
Oxfam has had its own scandals in recent years, but its record on providing famine aid and using development funds in modest projects to improve living standards is still rather better than that of most governments.
It would be better concentrating on raising charitable donations (which have been falling, leading to groups like Oxfam hectoring governments for extra taxpayer funding) rather than engaging in the kind of anti-capitalist rhetoric more suited to a student union debate than solving world poverty.
This article was originally published on CapX.
Though its judgments and solutions are every bit as hackneyed as we’ve come to expect, this is also the most radical report we have seen from the charity, with its dramatic claims about the effect of the pandemic on inequality.
On the long list of those losing out, we learn, are:
“People living in poverty, women, racialized groups … Black people, Afro-descendants, Indigenous Peoples, and historically marginalized and oppressed communities, and … informal workers, migrants … LGBTQIA+ communities.”
To blame for this is an “exploitative economic system that is designed to benefit a wealthy and powerful few”. Or, if you prefer, “neoliberalism, patriarchy and structural racism… rooted in white supremacy”.
This “rigged economy” has enabled “a super-rich elite to amass wealth” even in the middle of a pandemic. This elite is “mostly white males”, the ten richest of whom could pay to vaccinate the whole planet out of the increased wealth they have accumulated over the past year.
What passes for the charity’s analysis is buttressed by reference to doubtful assertions about the alleged impact of the pandemic (for instance that women have suffered disproportionately from job losses, which is not the case in the UK at least) and to the supposed views of some 295 left-leaning economists.
It doesn’t have to be like this, of course. Oxfam offers an appealingly vague vision of “a world that is profoundly more equal and measures what matters … where human economies care for people…without exploitation and with income security… where the rich pay their fair share of tax… a world of climate safety”.
However the means to reach this nirvana seem decidedly unrealistic and it is not really clear who this polemic is aimed at. Probably the most eye-catching proposal is the demand for a temporary increased profit tax on 32 global corporations that have gained most in the pandemic. Quite how this would be done, and by whom, is unclear. Moreover the authors of the report seem unaware that taxes on profits rarely hit the fat cats where it hurts, and often end up meaning higher prices and lower wages for workers. As for preventing tax evasion, that is glossed over with platitudes about governments putting in extra efforts to block “loopholes”.
There is also a proposal for a maximum wage, which would probably have the side-effect of reducing the income tax take which the authors hope to increase. Alongside that, there should be a guaranteed income, presumably some variation on the Universal Basic Income, with all the problems that entails.
And the bromides don’t stop there. Business should be “redesigned to prioritise society” – though by whom and how is unclear. If history shows anything it’s that sustainable, overarching institutions evolve, rather than being “designed” by anybody. Attempts to impose new designs on economies and societies had an appalling record in the last century, but still hubristic radicals think they can do better.
Back to the pandemic, the authors insist there must be “open access to all relevant patents and technology” so that cheap vaccines can be produced. Quite what will replace Big Pharma, which cannot exist without patents which incentivise innovation, is not specified.
Governments “must also recognise, reduce and redistribute the underpaid and unpaid care work that is done predominantly by women, and racialized women in particular”. Again, the end sounds noble enough, but the means frustratingly opaque.
None of this is to minimise the seriousness of the problems Oxfam is highlighting. But a world-renowned charity, to which thousands of British citizens (many, no doubt, the despised white male patriarchs) continue to donate should offer a much more mature understanding of how wealth is generated through creating goods and services which meet people’s needs, and how the innovative skills of entrepreneurs need to be nourished and harnessed.
It is sad to see an organisation that has done much good in the past now anathematising the market economy, which has lifted countless millions out of poverty and indirectly supports all Oxfam’s efforts. Closing down markets will do nothing to diminish poverty – something we all surely want to see.
Finally, Oxfam offers no indication of how the revenue generated by increased taxes should be disbursed by governments. The experience of the last 50 years of international government aid suggests that much would be wasted or stolen, which is one reason our own government is rightly cutting back on the 0.7% spending target.
Oxfam has had its own scandals in recent years, but its record on providing famine aid and using development funds in modest projects to improve living standards is still rather better than that of most governments.
It would be better concentrating on raising charitable donations (which have been falling, leading to groups like Oxfam hectoring governments for extra taxpayer funding) rather than engaging in the kind of anti-capitalist rhetoric more suited to a student union debate than solving world poverty.
This article was originally published on CapX.
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