Acton Institute Powerblog

How to make a bad argument about wealth and poverty

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When it comes to the morality of wealth and economics, bad arguments are so pervasive that no one needs to teach people how to make them. Yet sometimes it’s useful to examine logical errors in order to avoid making them in the future.

One example occurred in today’s issue of The Observer, the student-run newspaper of the University of Notre Dame. The author, Mary Szromba, clearly felt passionate about her argument that “you cannot call yourself a Christian if you are consistently amassing an inordinate amount of wealth.” However, a few steps were missing. Specifically, the argument uses incomplete information.

The oversight comes in the opening paragraph:

In 1989, there were 198 billionaires in the world. Ten years later in 1999, that number increased to 465 – that’s about 2.3 times more. Today, there are 2,153 billionaires. That’s 4.6 times more billionaires in the same number of years. Meanwhile, almost 600 million people live in extreme poverty around the world.

Notice what’s missing from this argument: It lists the number of billionaires three times but the number of global poor only once. There is no way to compare trends.

The clear implication is that the existence of billionaires somehow correlates with global poverty. Therefore, “it is at the very least problematic that more and more wealthy people achieve billionaire-status each year while millions of people struggle to put food on the table.”

The article tracks the growth of billionaires since 1989. The World Poverty Clock, which Szromba links, estimates that 592,372,667 people live in extreme poverty today, defined by the World Bank as living on less than $1.90 a year. In 1990, that number was 1.8 billion – more than a two-thirds reduction in less than three decades. In fact, every few seconds the World Poverty Clock illustrates the number of global poor ticking down by showing a few, young people running away from poverty – as though they escaped their fate.

It is true that the number of billionaires has exploded over the last 30 years, indicating that the top rungs of society are getting wealthier. But so are the global poor. And these trends are not unrelated.

Economic freedom – represented by relatively low taxes, modest regulations, and fewer restrictions on trade – lifts the poorest citizens along with the richest. The Fraser Institute reports that in  the nations with the greatest economic freedom, only 1.8 percent of the population experience extreme poverty, “compared to 27.2% in the lowest quartile.”

People in economically unfree countries are 2,142 percent more likely to live in extreme poverty, and 1,200 percent more likely to live in moderate poverty ($3.20 a day), as recorded by the “World Development Indicators.” At each 20 percent increment in economic freedom, poverty rates fall by more than half.

Economically free countries allow everyone to climb as high as their talents will take them. Since free markets generate the most wealth, they are able to channel the greatest resources to combating poverty.

“High-income households provide an outsized share of all philanthropic giving,” according to the Philanthropy Roundtable. “Those in the top 1 percent of the income distribution (any family making $394,000 or more in 2015) provide about a third of all charitable dollars given in the U.S.”

Households that make earn $2 million or more give 14 percent of their income – and 14 percent of $2 million (at least $280,000) is significantly more than the $3,296 (or three percent of their income) given by Americans who make between $50,000 and $99,999 a year.

This is by no means to slight the Notre Dame student. She charitably notes that all her readers, conservative or leftist, want to reduce poverty, “we just disagree on how to do it.” This kind of irenic spirit – which best captures the Acton Institute’s approach to discussing economic issues – is missing in too much of our nation’s click-hungry, rage-driven debate.

But Catholic universities develop the next generation of Catholic philosophical and intellectual leaders, so they must be engaged. The data show that those of us who care about eradicating the worst poverty can best do so by adopting policies that limit government and unleash the potential of each and every child of God.

(Photo credit: Jonathan McIntosh. This photo has been cropped. CC BY 2.0.)

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

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