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The 5 biggest problems with Oxfam’s 2018 income inequality report

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Oxfam has just released its annual report, and the media have dutifully covered its conclusion that “82% of all growth in global wealth in the last year went to the top 1%, while the bottom half of humanity saw no increase at all.” Here are five significant concerns every Christian should have with it:

Inequality is not the same as poverty

The report admits, “Between 1990 and 2010, the number of people living in extreme poverty (i.e. on less than $1.90 a day) halved, and has continued to decline since then.” That decline has caused Oxfam to focus instead on economic inequality.

“The poverty industry has successfully reoriented the storyline from the relief of poverty to the reduction of inequality,” said Rev. Richard Turnbull of the Centre of Enterprise, Markets, and Ethics (CEME), at Acton’s “Reclaiming the West” conference last December 6. “The churches have entirely bought in to this narrative. … It is remarkable that so many evangelicals fell for” it. Measuring the wrong metric leads to unusual outcomes, such as….

Donald Trump: Oxfam pauper?

Today’s report chides President Donald Trump for appointing “a cabinet of billionaires,” presumably like Betsy DeVos. Yet many of the people cheering its release may be surprised to learn that, under Oxfam’s formula, The Donald may have qualified as one of the downtrodden.

Oxfam evaluates “the wealthy” by subtracting a person’s net liabilities from net assets. Thus, a lawyer with substantial student loans who was just hired by a prestigious Wall Street firm is considered “poor.” Fortune magazine surveyed Donald Trump’s least successful years and asked, “Wouldn’t it be remarkable if the tycoon, who was claiming even in his darkest days in the 1990s to be worth over $1 billion … was really not just dead broke, but hugely under water?” If he were in debt, Trump would be among Oxfam’s poorest, worse off than someone earning two dollars a day with no net liabilities.

End extreme wealth

The report states, “To end extreme poverty, we must also end extreme wealth.” This is rather like advising, “To end extreme disease, we must also end extreme health.” The section reads in full:

End extreme wealth. To end extreme poverty, we must also end extreme wealth. Today’s gilded age is undermining our future. Governments should use regulation and taxation to radically reduce levels of extreme wealth, as well as limit the influence of wealthy individuals and groups over policy making.

The recent period of tremendous wealth generation coincides with the unprecedented fall in extreme poverty. Global GDP per capita has more than doubled since 1994. Despite coinciding with a rise in “inequality,” rates of global happiness enjoyed an unbroken rise since 1995, according to the World Values Survey.

Far from a pox, Rev. Turnbull said that “wealth creation, for the Christian, is actually a spiritual imperative,” part of the “creation mandate.” God created mankind in His image, endowed us with unmatched rational faculties, provided ample natural resources, and commanded us to get to work adding value. “We would do well to honor, rather than disparage, those who create wealth and take entrepreneurial risk,” he said.

Minimum wages maximize unemployment

The report advises every nation to adopt a “living wage” in the same section that laments youth unemployment:

Almost 43% of the global youth labour force is still either unemployed, or working but living in poverty. … Sadly, many countries still have no minimum wage or collective bargaining and most minimum wages are significantly lower than what is needed to survive or what could be described as a living wage.

A growing body of data demonstrates that higher minimum wages increase joblessness among the less educated, young people, minorities, and those living in the most economically struggling communities. A UK think tank found that its rising National Living Wage will shed countless new low-wage jobs through increased automation. In the U.S., minimum wage laws increased unemployment among high school dropouts aged 16 to 30 by 5.6 percent. California’s $15-an-hour minimum wage will cost an estimated 400,000 jobs, according to the Employment Policy Institute (EPI). And Canada’s Fraser Institute found that Ontario’s $15 minimum wage would have the most “severe effects” on people who already live in “economically weaker regions.”

The myth of omniscient government

Oxfam bases its calculations on data from Forbes and the Credit Suisse Global Wealth databook. Last year’s report confidently asserted that “eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity.” This year’s report quietly notes that its estimate changed from eight people to 61.

A revision of 763 percent is no small inaccuracy.

Despite its own mistake, Oxfam expects every government to accurately calculate and enforce a single “living wage” appropriate to all its citizens. Every corporation must undertake the same task for every single employee, as well as every worker in every segment of its global supply chain. If such micro-measuring is beyond Oxfam’s competence, perhaps it is beyond the competence (not to mention the purpose) of any corporation – let alone every corporation.

Creating absolute economic equality is also beyond Oxfam’s ability. No two people have the same circumstances, skill-set, and opportunities as one another – nor to themselves at different points in their own lives. The average person will see a much different economic picture at 22 years old graduating from college as a 65-year-old about to retire at the end of peak-earning years. This diversity brings glory to God in a multitude of unique ways.

Instead of lamenting wealth inequality – and the wealth creation that decimated global extreme want – people of faith should focus on alleviating true poverty, expanding economic opportunity, and carrying out the creation mandate to improve the world God has temporarily entrusted to us.

(Photo credit: Kabai Ken. CC BY-SA 4.0.)

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Rev. Ben Johnson Rev. Ben Johnson is Senior Editor at the Acton Institute.

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