Oxfam, capitalism, and poverty

After Thomas Piketty's Capital in the 21st Century told us about rising inequality, it's perhaps unsurprising that a new report from Oxfam tells us the global 1% will soon own half of all the world's wealth. But things are not quite as they seem. Oxfam's figures look at net wealth, implying that Societe Generale rogue investment banker Jerome Kerviel is the world's poorest person, and Michael Jackson was afflicted by the direst poverty before he died.

Ivy League graduates about to start a job as an investment banker at Goldman Sachs are judged far poorer than rural Indian farmers with the tiniest amount of capital.

Seven point five per cent of the poorest tenth of the world live in the USA, the figures say, almost as many as live in India.

And the claim that 85 own as much as 3.5bn is even more misleading, since the bottom 2bn don't have nothing, but negative wealth—something like $500bn of it.

What's more the global 1% probably contains more Times readers than CEOs or oil sheikhs—you need own a house worth around £530,000 to enter it.

All these facts skew Oxfam’s figures to make them astonishingly misleading.

Better figures tell a completely different and far more optimistic story.

Global poverty has actually fallen enormously with the rise of global capitalism. The fraction of the world's population living on less than $2 a day (measured in constant dollars) has crashed from 69.6 per cent in 1981 to 43 per cent today.

Even if you take out India and China, where the most spectacular improvements have been made, and look only at Sub-Saharan Africa, the worst-off region, there have been improvements. From 1981-2006 8.6 percentage points fewer were living on under $1 a day and 4.9 percentage points fewer were living on under $2 a day.

In virtually every respect global poverty is falling and poor people are living longer, better lives. That is less sexy than Oxfam’s claims, but at least it is true.

George Monbiot doesn't quite get this competition thing

We've George Monbiot telling us all that this market thing, this rampant individualism, means that we all no longer cooperate with each other. Sadly, this shows a terrible misunderstanding of what markets actually are. They are, of course, a method by which humans cooperate with other humans. Competition is simply the method by which we decide who to cooperate with:

Yes, factories have closed, people travel by car instead of buses, use YouTube rather than the cinema. But these shifts alone fail to explain the speed of our social collapse. These structural changes have been accompanied by a life-denying ideology, which enforces and celebrates our social isolation. The war of every man against every man – competition and individualism, in other words – is the religion of our time, justified by a mythology of lone rangers, sole traders, self-starters, self-made men and women, going it alone. For the most social of creatures, who cannot prosper without love, there is no such thing as society, only heroic individualism. What counts is to win. The rest is collateral damage.

If I grow the pears, you grow the apples, then Bob and Jim make the cider and perry from them, then we sell some and drink the rest, are we competing against each other here? Or are we cooperating over the specialisation and division of labour and then trading in the resultant production? It is the latter of course: competition only comes in when we're deciding whether it's you growing the apples for this enterprise or Charlie in the next orchard over. The same with Bob and Jim: there might be competition to see whether it should be Bill and Johnny making that alcoholic nectar, but the end result is still that competition is how we decide who to cooperate with, the actual activities in the market, in the production cycle, being cooperation.

This same is true if it's Danny in Taiwan making the chips, Yue in China assembling them and Rupert in Cambridge writing the operating system that makes the smartphone work. The market is still the method by which we coordinate cooperation among human beings.

Over and above that misunderstanding there is also this from George:

This is the Age of Loneliness.

Well, yes, intellectual who lives in the depths of rural Wales thinks loneliness is an important phenomenon. There is a reason why the intelligentsia of every society tends to cluster in the cities. We might even identify a little bit of excessive projection from the personal to the general in this screed.

Seumas Milne's dodgy statistics on African poverty

Seumas Milne's column last week blamed globalisation for migrant deaths in the Mediterranean. The column isn't that important, but this bit jumped out at me:

As the catechism of “free market” deregulation has been imposed across the world under “free trade” and “partnership” agreements and the destructive discipline of the IMF, World Bank and WTO, capital and resources have been sucked out of the developing world and tens of millions of people have been driven into urban poverty by corporate land grabs.

That is why the number living on less than $2 a day in sub-Saharan Africa has doubled since 1981 under the sway of rich world globalisation. Africa’s boom has been in resource exploitation, not in most people’s living standards. So it is hardly surprising that migration from the global south to high and middle-income countries has more or less tripled over the past half century.

Actually, the percentage of people living on less than $2 a day in sub-Saharan African has fallen from 72.2 percent to 69.2 percent since 1981. The total number of people on $2 a day has doubled because sub-Saharan Africa’s population has doubled (p. 96). "Free market deregulation" has nothing to do with it, except for the fact that infant mortality has fallen substantially.

I know this because it is in the same paper that Mr Milne's figure comes from, on the same page, in the same table. It's a pity that he did not think to mention the data that directly disproves his claim.

I wrote a letter to the Guardian pointing this out but they didn't print it. It's also worth pointing out that African poverty fell by 38% between 1990 and 2011. (h/t Anonymous Mugwump.)

Globalization drives cultural diversity

Donald Boudreaux recently reposted this 2010 essay on the impact of globalization on culture. Globalization is not about 'just stuff', he says, it's about increasing diversity by allowing different parts of different cultures to mix:

A century ago, there were no internationally franchised restaurants in Paris, France or, for that matter, in Paris, Texas. A century ago, residents of neither Omaha, Nebraska nor Birmingham, England could find sushi restaurants near their homes; today, sushi restaurants are all over the Western world. A century ago, blue jeans were not the international fashion that they are today. A century ago, the typical man's business suit worn by New York lawyers and London bankers was not widely worn in Africa and Asia, as it is today. In many ways, global commerce has indeed made the world more homogeneous.

But look more closely. While the differences between Paris, France and Paris, Texas are fewer than they were in the past, the cultural richness of each of these places today is far greater than it was just a few years ago. For a resident of Paris, Texas, circa 2010, the richness of the cultural smorgasbord available to him or her right at home is vast. A Texan can stay in town and dine on Vietnamese, Italian, or Greek food—or on barbeque. A Texan can listen to German symphonic music or medieval chants or Irish dance music or Edith Piaf—or country and western. A Texan can buy French neckties, English raincoats, and Italian scarves—and cowboy boots. Likewise a Parisian can choose croissants or New-York-style bagels. A mere century ago—even thirty years ago—the cultural diversity of both places was much less than it is today.

It's easy to be annoyed at the 'touristification' of a place like Thailand, but what that really means is more people get to experience somewhere they would only be able to imagine visiting fifty years ago. Perhaps it's no coincidence that this complaint usually comes from the people who can most easily afford foreign holidays and expensive exotic meals in their home cities. I'm tempted to say that they should check their privilege.

Boudreaux's piece is worth reading in full.