We’ve Already Solved Oxfam’s Little Inequality Problem

Tim Worstall:

The World Economic Forum at Davos is fast approaching so Oxfam has decided to re-release their report screaming that we’re all going to hell in a handcart because of increasing inequality. About which we can say two things. The first thing being that they’re complaining about the wrong thing. Wealth is an interesting concept and we might well want to pay it some attention. But I’m afraid that the way Oxfam is doing it is simply wrong. Precisely because it is a net concept, as they agree it is (that is, it’s assets minus debts) then by their very definition there’s more poor people in either the US or Europe than there are in China. Just not something which passes the basic smell test and not something that should spark our concern in any great manner. Because this is a side effect of the fact that we have efficient financial markets in the rich countries. That is, it’s possible to borrow money when you don’t own anything: as students do to go to college for example. In a net wealth measurement, those students have negative wealth. And thus are classified as poor as they head out the door with their newly minted Harvard degrees.

The real joy of Oxfam’s complaint is that this is made very clear in the Credit Suisse report they take their own data from. As I pointed out here in fact:

It’s that left hand side we want to look at.