About that annually misleading Oxfam poverty report

We are living through an unprecedented moment of multiple crises. Tens of millions more people are facing hunger. Hundreds of millions more face impossible rises in the cost of basic goods or heating their homes. Climate breakdown is crippling economies and seeing droughts, cyclones and floods force people from their homes. Millions are still reeling from the continuing impact of COVID-19, which has already killed over 20 million people. Poverty has increased for the first time in 25 years. At the same time, these multiple crises all have winners. The very richest have become dramatically richer and corporate profits have hit record highs, driving an explosion of inequality.”

Thus begins Oxfam’s “Survival of the Richest” report, which, rather than the one-off study that the name suggests it is, is in fact an annual offering from that charity. It is an annual report which reliably garners world-wide coverage, almost always of the most fawning and uncritical kind. As ever, in the arena of fawning and uncritical coverage, there are few to beat Ireland’s National Broadcaster. RTE’s licence-fee funded report on Oxfam’s findings yesterday included not one single word of caution or criticism and ended up as the broadcaster’s most-read story online by lunchtime. The average person could be forgiven for thinking that there were an armada of billionaires out there, swiping food from hungry children.

Alas, it is very misleading.

The story of the report is well summarised in the excerpt above: In layman’s terms, they claim that everything is, for want of a better word, shit. This is an “unprecedented moment”. Climate Change is laying waste to the world. More people are in hunger and poverty. The richest are richer than ever.

Except, none of that, really, is true. Here, for example, is the most recent estimate of global poverty from the World Bank:

The global poverty rate (at the US$1.90 poverty line) in 2018 is 8.6 percent, down from 9.1 in 2017, equivalent to a decline by 28 million poor people between the two years.  This confirms a continued reduction in extreme poverty at the global level, although at a slower pace in more recent years, as previously noted. In fact, global poverty fell by 2.8 percentage points between 2012 and 2015 (from 12.9 percent to 10.1 percent), and by 1.5 percentage points between 2015 and 2018

In fact, one of the greatest achievements of capitalism over the past one hundred years has been the almost total eradication of extreme poverty in much of the world. However bad things may be in Ireland (and we do not wish to pretend that there are not those who suffer) there are blessedly few cases of people dying in Ireland, or any other western country, from starvation. Food and staple resources are more plentiful than at any time in human history. Worldwide, despite understandable media focus on the hunger which remains, hunger is vastly less of a problem than it was even two or three decades ago.

The problem, of course, for charities and organisations like Oxfam, which rely on the existence of poverty for their existence, is that poverty declining is terrible news. And that, my friends, is where the three card trick comes in.

Much of the true poverty that once existed is now, thankfully, gone. That, in turn, requires the creation of a new kind of poverty – relative poverty. What is relative poverty?

Well, it is a moving target. Relative poverty, put simply, is when you are relatively poorer than the richest people in society. Habitat for Humanity, an Oxfam fellow traveller, for example, defines poverty in relative terms as being when a household has less than 50% of the average household income in a society. Though they do not specify a definition this year, this has also always been the definition Oxfam uses, and there’s no reason to doubt that it’s the definition they use in this report.

But the problem with that definition is obvious: Average incomes are easily distorted by a few outliers. Thus, if, for example, the super-rich get richer, and nobody else’s income really changes, then average income in a society will rise. And, because the average has increased, more people “fall” into “poverty”, even though their income has not changed at all. In fact, even if prices fall, and they are relatively better off than they were before, they may still be considered to have “fallen” into poverty purely as a function of the rich getting richer.

When Oxfam talks about “poverty”, then, it is not really talking about poverty at all. It is talking about absolute equality.

And the problem with this is simple: To fix the problem, you do not have to help anyone. Not a single person.

In fact, using the Oxfam definition of “poverty”, you could dramatically reduce poverty simply – and only – by taking huge wads of cash from the rich in tax, or hitting their incomes in some other way. Because if their incomes fall – and therefore average incomes fall – then tens of thousands of people may be “lifted” from poverty without receiving a single additional penny in income.

It will, therefore, come as no shock to you, dear reader, to learn that Oxfam’s proposed solution to the “poverty crisis” that they have identified is to “dramatically increase taxation of the wealthiest”.

What do they believe that money should be used for, I hear you ask? Well, they don’t say. The objective here is not to raise money, it appears, for any particular purpose. It is simply to reduce the incomes of the richest in order to create a more equal society. This, they say, is a “wildly popular idea”.

Popular, it almost certainly is. Productive? Probably less so.

Because the other side of the ledger is the one ignored by Oxfam, as ever: While there certainly exist many who have obtained their wealth corruptly (look no further than Russian Oligarchs) there are many more who have obtained great wealth by reducing poverty overall. Michael O’Leary, to cite a local example, is a fantastically wealthy man. But in the process of creating his wealth, he made travel vastly cheaper for millions of people, reforming an entire industry, and opening up new opportunities for business and quality of life. He has reduced poverty in absolute terms – but according to Oxfam, his personal wealth creates more poor people, because it raises the average income for everyone.

And this is the fundamental problem: You cannot solve poverty by making some people poorer and doing nothing for anyone else. Unless, that is, you are using Oxfam’s definition of poverty. Because under that definition, poverty can be reduced simply by destroying wealth for everyone else.

It’s a ridiculous nonsense, and an annual ridiculous nonsense. But RTE, apparently, don’t want you to know that. So we’ll see you again, for this same article, at the same time, next year.

Oh, one last thing, which also unsurprisingly didn’t make the RTE report: The Irish Government gave Oxfam €4.7m of your money last year. Talk about the rich getting richer, eh?

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