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National politics

Oxfam’s “research” doesn’t help the poor

Guardian front page 19-1-2015This morning the left-leaning media (which includes the BBC Radio 4 Today programme unfortunately) are all over Oxfam’s “research” into inequality. It is tosh of course.

The fact is that the poor’s wealth is not measured very well (by Credit Suisse from where Oxfam got its base data) and if you owe money – for instance you have just bought a house, you have some personal debt and have a good job and are paying your mortgage – your net worth is small or negative although you might be doing great. You can be poor but on track to accumulate wealth in later life. In fact most people go through a cycle of being poor when young, they accumulate wealth in homes and pensions and then they shed it again in old age. Mixing this data on a global basis is meaningless.

The numbers, which Oxfam clearly does not understand, are dominated at the top end by the price of stocks and shares (equities), which are volatile and cyclical like the prices of most financial assets. You can search Oxfam’s report in vain for any reference to these underlying forces which drive their spurious conclusions.

Oxfam's wealth chart

This picture from Oxfam’s report shows relative wealth of the Top 80 on the Forbes list compared to the bottom 50%.

worldstock

Not surprisingly perhaps the global equities graph precisely tracks Oxfam’s graph showing the wealth of the world’s 80 richest people whose wealth is typically dominated by equities holdings in companies that they have created themselves.

Going back to Oxfam’s chart it would be nice if a poverty “charity” would explain why the bottom half has got poorer recently (even if they are richer than they were before the earlier part of this century according to the chart). Is it due to appreciation of the Dollar against poorer countries’ currencies? Is it due to poorer people taking on more debt? Does it mean some particular groups have gone backwards? Which ones? Does this research accurately measure poor people’s wealth?

It is one thing Oxfam not understanding what drives extreme wealth but it is inexcusable that Oxfam cannot explain poverty. Oxfam seems to be uninterested. Meanwhile does anyone really believe that Bill Gates and his fellow top 80 are the problem?