Oxfam’s lie that richest 85 people as “wealthy” as the bottom 3.5 billion
We have all heard it or read it in some version or another. We have all seen some version of the sensationalist statistic that 85 people at the top own the same amount of wealth as the bottom 3.5 billion. The statistic recently made it into numerous mainstream papers when Oxfam, the anti-poverty charity, affirmed the statistic in a 2014 report. It is a statistic often used by people to attempt to refute Leading Light Communism. They say “if 85 people own the same as the bottom 3.5 billion” then the First World middle strata can’t be siphoning off as much, consuming as much, as the Leading Light claims. They say Leading Light must be wrong when Leading Light says we have to not only reduce the standard of living for the very top, but we have to lower the standard of living for most of the First World too, including the First World working class. They say that if 85 individuals are really the main problem, then just overthrowing the very top percentage richest people ought be enough to dramatically even out the standard of living for the whole planet. Thus, the First Worldists say, Leading Light is wrong when it says that the middle strata of the First World will not gain materially from socialism. Thus, they say, the Leading Light is wrong when it says First World workers and ordinary people are not a proletariat, but an enemy of the proletariat. Who is right?
The original sensationalist statistic comes from Oxfam. Oxfam has done decent work compiling data on global poverty, but the statistic is a joke. In addition, the joke has wings. All kinds of other people and organizations have modified it to suit their needs. The statistic has a life of its own. No doubt, we will be hearing about it 10 years from now. There are numerous versions of the statistic floating around, but they all share the same flaw as the original Oxfam statistic. The statistic is so misleading that it is not an exaggeration to call it a lie. Felix Salmon, who has written elegantly on this topic, discusses the history of the statistic:
“The meme is older than the 2014 report. It started, back in 2011, with the Waltons: six members of the family, we were repeatedly told, were worth as much as the bottom 30% of all Americans combined. In the Oxfam version, the world’s top 80, or top 67, or top 85 richest people have the same wealth as the bottom half of the global population. The latest report has a new twist: it adds up the total wealth of the top 1%, and tries to work out how that compares to the wealth of the bottom 99%.
How does Oxfam arrive at its conclusions? When it’s just adding up a few dozen people at the very top, it’s easy: they just start at the top of the Forbes billionaires list, and start counting. As for the rest of the data, it comes from Credit Suisse, which puts out an annual Global Wealth Databook. Oxfam then uses the Credit Suisse data to derive all the rest of its numbers: it does no real empirical work of its own.”
One of the flaws is that the Credit Suisse data is too vague to reliably extrapolate as Oxfam does. That’s one error, but there is a more fundamental error. The more fundamental error stems from the problem that people do not know what the word “wealth” means when used by bourgeois economists. People do not understand that “wealth” is not the same thing as standard of living. “Wealth” simply means assets minus debts. For example, someone in the United States might have a tremendous amount of debt, perhaps they owe money on a house, a car, credit cards, student loans, and so on. Even though this person has negative wealth, they enjoy a happy, comfortable life as a member of the American, First World “middle class.” Another person, let’s a say a subsistence farmer in Bangladesh might have little or no debt. They may be on the verge of starvation. Their children might have to do child labor just to earn enough for food or medicine to get by. They might end up as a sex slave in order to avoid starvation. They might just survive on little more than handfuls of rice each day. This Bengali person who barely survives, because they have no or little debt, is technically counted as more wealthy than the American in the first example. Here’s a more famous example: Donald Trump had tremendous debt in the 1980s and 1990s. He had to declare bankruptcy. He had very little wealth, even though he was living in a huge mansion, owned numerous luxury cars, and was flying around in a helicopter around New York. Technically speaking, Donald Trump was not as “wealthy” as the peasant or sex slave in Bangladesh.
If the Credit Suisse data is examined closely, we see just how flawed Oxfam’s extrapolations are. The following graphic visually represents the distribution of wealth between the various geographic-economic entities, which are represented in different colors. The 1 to 10 are deciles. “1” on the chart represents the distribution of wealth across the bottom 10 percent. “2” represents the bottom 20 percent, and so on. Look at the left side of the graph, the bottom deciles. What immediately jumps out? Felix Salmon answers in an excellent article debunking Oxfam:
“The weird thing is that triangle in the top left hand corner. If you look at the tables in the Credit Suisse datebook, China has zero people in the bottom 10% of the world population: everybody in China is in the top 90% of global wealth, and the vast majority of Chinese are in the top half of global wealth. India is on the list, though: if you’re looking for the poorest 10% of the world’s population, you’ll find 16.4% of them in India, and another 4.4% in Bangladesh. Pakistan has 2.6% of the world’s bottom 10%, while Nigeria has 3.9%. But there’s one unlikely country which has a whopping 7.5% of the poorest of the poor — second only to India. That country? The United States.”
Felix Salmon’s work is worth quoting in full:
“How is it that the US can have 7.5% of the bottom decile, when it has only 0.21% of the second decile and 0.16% of the third? The answer: we’re talking about net worth, here: assets minus debts. And if you add up the net worth of the world’s bottom decile, it comes to minus a trillion dollars. The poorest people in the world, using the Credit Suisse methodology, aren’t in India or Pakistan or Bangladesh: they’re people like Jérôme Kerviel, who has a negative net worth of something in the region of $6 billion.
America, of course, is the spiritual home of the over indebted — people underwater on their mortgages, recent graduates with massive student loans, renters carrying five-figure car loans and credit-card obligations, uninsured people who just got out of hospital, you name it. If you’re looking for people with significant negative net worth, in a way it’s surprising that only 7.5% of the world’s bottom 10% are in the US.
And as you start adding all those people up — the people who dominate the bottom 10% of the wealth rankings — their negative wealth only grows in magnitude: you get further and further away from zero.
The result is that if you take the bottom 30% of the world’s population — the poorest 2 billion people in the world — their total aggregate net worth is not low, it’s not zero, it’s negative. To the tune of roughly half a trillion dollars. My niece, who just got her first 50 cents in pocket money, has more money than the poorest 2 billion people in the world combined.
Or at least she does if you really consider Jérôme Kerviel to be the poorest person in the world, and much poorer than anybody trying to get by on less than a dollar a day. All of whom would happily change places with, say, Eike Batista, even if the latter, thanks to his debts, has a negative net worth in the hundreds of millions of dollars.
There’s no doubt that the trillions of dollars owned by the world’s top 1% constitute an enormous amount of money: there is an astonishing amount of wealth inequality in the world, and it’s shocking that just 80 people are all it takes to get to $1.9 trillion. You could spread that money around the ‘bottom billion’ and give them $1,900 each: enough to put them squarely in the fourth global wealth decile.
Oxfam claims that the $1.9 trillion owned by the world’s top 80 people is equal to the amount of wealth held by the bottom 50% of the world’s population. But look at just the top two-fifths of the 3.5 billion people referred to in the Oxfam stat. That’s 1.4 billion people; between them, they are worth some $2.2 trillion. And they’re a subset of the 3.5 billion people who between them are worth $1.9 trillion. As you add more people at the bottom of the wealth distribution, the Oxfam aggregate doesn’t go up, it goes down.
The first lesson of this story, then, is that it’s very easy, and rather misleading, to construct any statistic along the lines of ‘the top X people have the same amount of wealth as the bottom Y people’.
The second lesson of this story is broader: that when you’re talking about poor people, aggregating wealth is a silly and ultimately pointless exercise. Some poor people have modest savings; some poor people are deeply in debt; some poor people have nothing at all. (Also, some rich people are deeply in debt, which helps to throw off the statistics.) By lumping them all together and aggregating all those positive and negative ledger balances, you arrive at a number which is inevitably going to be low, but which is also largely meaningless.
The Chinese tend to have large personal savings as a percentage of household income, but that doesn’t make them richer than Americans who have negative household savings — not in the way that we commonly understand the terms ‘rich’ and ‘poor’. Wealth, and net worth, are useful metrics when you’re talking about the rich. But they tend to conceal more than they reveal when you’re talking about the poor.”
Far from being a sign of poverty, tremendous debt, hence, negative wealth, can be a sign of access to capital. First World people with debt are able to lose more money than most Third World people ever see in their entire lives. It can be a sign that you have privilege to be able to accrue so much debt. Debt means something far different to people who survive at or near subsistence level. For most people in the Third World, debt is not access to capital, debt is dangerous. In the Third World, debt can lead to their starvation, pauperization, enslavement. It can commonly lead to death, literally. Even though they may have more wealth than rich Americans, ordinary people in the Third World have a much lower standard of living. This is why wealth is not the best way to measure global poverty. Income is a far more reliable measure.
First Worldists always think themselves very clever. They see the sensationalist Oxfam statistic and think “ah ha! Now I can silence those Leading Lights!” They don’t realize they are out of their league when they debate the Leading Light. Their epic battle is our swatting flies. To be fair though, most First Worldists who use the Oxfam statistic probably don’t understand what it means. Their First Worldist readers don’t know what it means either. Most First Worldists are simply ignorant, but the Oxfam economists who put the statistics together almost certainly knew they were misleading, lying to people.
To state the obvious, the Oxfam statistic does not refute Leading Light Communism. Leading Light Communism is about redistributing global standards of living so there are no rich and no poor, so everyone has a just distribution, so everyone prospers, so everyone has a happy life, to everyone can be their best selves. It should be obvious by now that wealth does not correspond to standard of living. People with very little wealth, even negative wealth like a bankrupt Donald Trump or Jérôme Kerviel, can have some of the highest standards of living. Those who say we only have to redistribute the top few percentiles of the economic pyramid in order to reach a just, socialist distribution of the standard of living, those who try to refute Leading Light Communism, are engaged in a big non-sequitur. On the contrary, once the wealth statistics are broken down, the data confirms the Global Class Analysis of the Leading Light. The data gives us insight into the interesting role of debt in American life. Debt is not only a means of access to capital, it is a form by which the American population have a kind of collective ownership of or tie to their parasitic society. To have debt is one way that you acquire a stake in the United States, the First World, its banks, its businesses, its economy. Debt is one of the ways that ownership of society, the value that flows into the borders, privilege, the means of production and distribution become collectivized, democratized across American society. Maoists in China wrote of a new bourgeoisie that had arisen there. This new bourgeoisie did not privately own capital as the old bourgeoisie did. Yet the new bourgeoisie still had collective influence over and profited from the economy. The rise of the First World working bourgeoisie is similar in some ways to new bourgeoisie. The point is that class has changed dramatically since the days of Karl Marx. In any case, once examined under a microscope, once the statistics are understood, the Oxfam data confirms the class analysis of Leading Light Communism.
Socialism is not about re-distribution of “wealth” from those individuals with positive wealth to those with great negative wealth. In fact, it is capitalism that regularly takes value from poor and working people in the Third World to bail out those with great negative wealth, who are disproportionately in the First World. When the rich go bankrupt, when banks fail, when their wealth drops into the negative, ordinary people in the Third World end up footing the bill. In fact, it is ordinary people in the Third World who are the ones who, on a daily basis, invisibility bailout the debt-ridden, “middle class” and working populations of the First World that often have big negative wealth. The whole imperial system is based on an upward flow of value from poor and ordinary people in the Third World to the First World. To really change the system, we have to have a scientific understanding of economics, not one based on internet memes. Socialism is about changing the global flow of value. It is about redistributing the standard of living globally in order to end all oppression, to bring freedom and happiness to all, to reach Leading Light Communism.