The 2018 Oxfam report on inequality has been released today with much fanfare, and, just like those before it, rather than discussing actual poverty it focuses on how the current wealth of the world is split between the top one per cent and the rest.
In order to solve this supposed crisis, their report also lays out solutions that call for the effective abolition of the modern capitalist economy.
There are broadly two different approaches to dealing with poverty in the world we live in, and though the approaches may not be contradictory, often the policies to support them are.
Some pursue “growing the pie” as their main goal, emphasising economic growth to lift the incomes of rich and poor alike rather than concern over the gap between them.
Others focus on how to “slice the pie”, assuming that the current wealth of the world is all we have and the solution to poverty is to redistribute from the “rich” to the “poor”.
It seems odd to me that a charity supposedly created to feed people does not focus on growing the size of the pie as quickly as possible.
Instead, Oxfam seems obsessed with pursuing policies that would slow down economic growth and leave us with a smaller pie than we all might otherwise have had.
It would promote a race to the bottom, where we would all indeed be more equal – equally miserable, equally poor, and equally condemned to the sort of non-existent economic growth that was the case before the Industrial Revolution.
I, on the other hand, prefer to focus on growing the pie.
Capitalism has been the greatest and most effective driver of prosperity and opportunity for the poor in our entire history.
As the Industrial Revolution and the first free market revolution got going in 1820, at least 84 per cent of the population of the entire world was below the modern definition of the poverty line (in real terms). They were condemned to powerless, nasty, brutish and short subsistence lives.
Even in 1990, more than a third of the world’s population subsisted on less than $1.90 a day.
Today, that number is estimated to be below 10 per cent, and more than 1.2bn people have been taken out of extreme poverty in just the past 30 years.
The biggest gains have come in China and India, which together account for close to a third of humanity. In the 1980s, half of all Indians lived in absolute poverty. That figure is now down to about 20 per cent. In China, the absolute poverty rate has fallen from 88 per cent to just two per cent.
Both countries, admittedly coming late to the free market party, succeeded after they embraced pro-capitalist reform policies, including cutting taxes, reducing tariffs, deregulation, privatising state assets, and welcoming foreign direct investment.
While neither China nor India are truly liberal, free market economies in quite the way we would understand the term, they have taken enormous strides in this direction – with impressive results.
Across the centuries since the Industrial Revolution and the introduction of the liberal economic policies that spurred it, governments all over the world which cut barriers to businesses, protected private property, and abolished tariffs on international trade succeeded, while those which got in the way failed.
In the success stories, freeing trade and business broke apart an old economic model which had seen slow or non-existent economic growth, and replaced it with a vibrant economy where, today, we consider the economy growing at “only” two per cent an annum as a poor result.
This does not mean, however, that we should rest on our laurels. Millions remain in grinding poverty, and for them two per cent growth is unacceptably unambitious.
More needs to be done to break down trade barriers and to encourage more countries to replicate the radical free market policies that led countries like South Korea, Japan, and more recently China from grinding poverty to great wealth in a single generation.
This means advancing property rights and ending corruption in countries like Zimbabwe, privatising state monopolies in Venezuela, and working to abolish trade barriers such as the EU’s Common Agricultural Policy.
Charities like Oxfam should be out leading the charge on these issues. But instead of focusing on those who have too little, this report again relentlessly targets those the charity believes have too much.
This article first appeared in City AM.