Why don’t people in power do the right thing – supply, demand or collective action problem? And what do we do about it?

January 21, 2013

The political implications of evidence-based approaches (aka start of this week’s wonkwar on the results agenda)

January 21, 2013

Should we (and everyone in Davos) worry about extreme wealth? New Oxfam briefing

January 21, 2013
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Good to see Oxfam highlighting inequality in its media briefing ahead of this week’s annual gathering of power & plutocrats in Davos.inequality cartoon Because inequality is about the relationship between different social groups, it is inherently more political and more controversial than poverty. As our head of campaigns Ben Phillips, who packs a mean sound bite, said in his Al Jazeera interview, ‘’We sometimes talk about the ‘have-nots’ and the ‘haves’ – well, we’re talking about the ‘have-lots’.’ (I misheard it as ‘have yachts’, which would have been even better….)

An extreme concentration of wealth not only misallocates resources, it undermines political processes, as those who control wealth pay for increased lobbying, which in turn leads to decisions that further skew wealth (Joe Stiglitz has highlighted this kind of destructive feedback loop in relation to the finance industry).

The briefing calls for an end to ‘extreme wealth’. I helped out with our first killer fact of 2013:

The top 100 billionaires added $240 billion to their wealth in 2012 – enough to end world poverty four times over.’

I suspect this one could be around for a while, so here are the sources for the calculation:

First, Bloomberg for the increase in income of the richest 100 people:

‘The world’s 100 richest people added $241 billion to their combined wealth in 2012, according to the Bloomberg Billionaires Index. The top 100 controlled an aggregate $1.9 trillion as calculated by the prices on world stock markets December 31, for an average of nearly $20 billion apiece.’

Then the Brookings Institution calculated the money required to lift everyone in the world over the $1.25 a day line

‘Providing every person in the world with a minimum income of $1.25/day in 2010 would [cost] just $66 billion.’

Divide Bloomberg by Brookings and you get the figure of (roughly) four.

The more I think about it, the more astonishing this number is. A quarter of the additional wealth accumulated in 2012 by 100 people could end extreme poverty for 1.4 billion people – that’s a ratio of 1 to 14 million. So if each of the world’s top 100 billionaires gave up 25% of their income (we could call it a ‘tax’ or ‘extreme wealth surcharge’…), they could each take 14 million people out of extreme poverty. OK I know it’s not that simple, you can’t just get money directly to poor people (though it’s getting easier with mobile banking etc), but still, the disparity in scale is breathtaking.


  1. Shocking – but perhaps not surprising – statistics.
    Well done for flagging it up and ensuring it is being focussed on. Worth looking also at the recent Monbiot piece on the failure of the neo-liberal model:


    I am not sure if Oxfam (and others) have been engaged with the Equality Trust who are currently in the process of supporting a documentary film about inequality’s corrosive effects? Whilst there is plenty to say about this topic from a developed-country perspective, if we don’t make the argument relevant for less developed countries we are just storing up problems for the future.

  2. “The have lots” – Sounds like Oxfam jumping on Occupy’s back to me. As a stalwart of the status quo (despite the sound bites to the contrary) it’s really dishearteneing to see Oxfam trying to coopt the ideology of
    a movement that genuinely disregards vested interests, the protection of funding streams and any PR machines.

    The way I read it, Oxfam is becoming adept at sniffing the zeitgeist, hoovering up any authentic anti-establishment movements borrowing their clothes and presenting their heads on a platter to the World Bank (apologies for the mixed metaphors).

  3. Duncan

    Thanks for the details of the calculation.

    I’m interested that you are saying that if there were an income transfer which took everyone in the world just over the $1.25 a day line, this would constitute an ‘end to world poverty’.

    Is that really what you think?


    1. Obviously not in the broader understanding of either income or more holistic poverty, Owen. But in the narrower sense, an end to extreme income poverty as defined by loads of institutions, yes.

  4. Thanks Owen, you’ve made a good point and highlighted Oxfam’s unspoken ethos – ‘work to maintain the system’.

    This ensures Oxfam’s survival and growth as it doesn’t upset it’s senior partners in the status quo (WB,IMF,DfID etc). It also requires that Oxfam come up with innovative ways to create the (completely misleading) impression that they are radical and effective at the macro level.

    Hats off to Oxfam, you are very good at what you do.

  5. Hi Duncan – it has been good to see the coverage on Oxfam’s inequality campaign ahead of Davos. As a complement to this, the Education for All Global Monitoring Report team have prepared a new policy paper urging the private sector to spend more on education – they are the first to benefit from a skilled workforce, after all: http://unesdoc.unesco.org/images/0021/002192/219221E.pdf

    Despite all the noise at Busan, the private sector only contributes the equivalent of 5% of ODA to education in poor countries.

    And their annual spending is equivalent to the cost of 2 airbuses, transporting all the world business leaders to Davos (I’m not sure how many yachts it is equivalent to, we should perhaps try and work out…).

    A shorter version is on our blog: http://efareport.wordpress.com/2013/01/18/business-leaders-at-the-world-economic-forum-must-boost-finance-for-education/

    Note that our argument is that they should support country-led processes and public education systems through, for example, existing frameworks like the Global Partnership for Education – ie it is important not to conflate private sector funding with private sector provision.

  6. I suspect that neither Occupy nor Oxfam have the necessary sophistication to re-imagine an alternative economic system (that might work). In the meantime, it seems perfectly legitimate to point out how within the prevailing system, it might be adjusted (as it has before) to yield better outcomes both in reduced inequality and poverty reduction – imperfectly but helpfully. Not quite the barricades I know…

  7. Hello Duncan,

    Thank you for this.

    Out of interest, is there a statistic that tells us the cost of supporting community development initiatives [which will potentially raise income levels for people in poverty] vs the profits of the most lucrative/powerful individuals and companies?

    To me, as a novice community development worker, a stat about raising income levels [unless you’re referring to global trade and (fair) prices paid for goods] is somehow devoid of meaning without reference to the costs of supporting individuals/groups to sustain their livelihoods in the future.

    Just my thoughts, I appreciate this a HUGE area! Thanks for any insight you can offer.

  8. The report just looks at the income of the parasites. Isn’t it time to take a shovel to their capital as well?

  9. Duncan –

    This is one of those arresting figures that illustrates the stark inequality in the world. That is useful, and good for making headlines, but it seems to have been stretched too far.

    Increase in billionaires’ net worth on paper (i.e. the value that their stock portfolio etc.. has risen as calculated by the Bloomberg Index) does not equate to ‘net income’, (as the Oxfam Blog puts it).

    And the amount that would need to be distributed to bring everyone up to $1.25 for one year does not equate to “ending global poverty”.

    Does it matter, if it highlights that a few people have tonnes of money and a lot of people have very little money, and it gets the issue into the papers?

    I think yes. It contributes to the prevailing impression that when it comes to talking about poor people (and numbers?) being accurate doesn’t really matter if you get to make a point.

    And it undermines messages about governance, investment, capacity building, fragile states etc.. by claiming that ending global poverty is easy and ‘just takes’ $66bn.

  10. How apt this blog was posted on Martin Luther King Day. What a great pity Dr King died before he could benefit from the internet. For example just imagine how much better his most famous speech would have been if he had the policy and communication insights and advice that are so generously shared in the comments of this blog:

    Literal Interpreter Says:
    I would be interested to see the data this campaign is based upon. To my knowledge there is little empirical evidence to suggest that dreams are any basis for developing policy on voters’ rights, equitable seating arrangements on public transport or equal access to the judicial system. Though it may be a catchy headline phrase it is unscrupulously and dangerously misleading as it implies that the way to tackle gross levels of racial discrimination is via some fanciful narcoleptic strategy.

    Instead of sleep walking into sound bite populism it would be much more honest and accurate, and avoid the typical self-aggrandisement, to state that: “I have consulted widely with numerous stake holders and we have agreed through a participatory processes to propose a modest and fully costed evidence based randomized controlled trial with appropriate monitoring, evaluation and learning elements factored in, that will study a suitably isolated element of this complex problem to establish what further research is needed.”

  11. @ Calvin,

    Thank you for perhaps the most intelligent comment I have yet read on a commentary section. As an individual who never posts on these things (precisely for the reasons to which you are alluding), I am thankful to see that someone shares my disillusionment at the cynical farce which ‘educated’ opinion in the field of development has made of itself. Cheers.

  12. There’s one thing and one thing only that creates wealth: work.

    Who did all the work to generate this extra $240,000,000,000?

    Or perhaps the question is – whose work will be stolen to give value to this notional sum? Whose welfare states, health services, education systems cut down like so many ripe crops?

    This is a new form of slavery. Make no mistake.

  13. Okay, let’s assume that these figures are correct. Furthermore, let’s assume that relieving poverty is a motherhood issue to all of us reading this post.

    Practically speaking there are two courses of action to follow in attempting to get these 100 individuals’ money applied to this problem.

    1) Taking it from the 100; or
    2) Convincing the 100 to donate the money to this cause;

    The first method requires lobbying every single government on earth to pass legislation to either tax this money or outright seize it. If you don’t convince every government to do this, then the 100 will simply move themselves and their money to the non-taxing/seizing jurisdiction. Of course, the 100 people will react and organize their affairs to avoid this taxation or seizure.

    If this herculean task is accomplished and the monies are collected, then you need to pool this money and use it efficiently and effectively to deal with this problem. Governments have had, from other sources more than this amount of money every year of their existence but have failed to eliminate poverty. What makes you think that just because the money comes from a new source (i.e. the fabled 100), that they will suddenly be able to eliminate poverty.

    The second method of using the money from the 100 to alleviate poverty is to convince them to do it themselves. It is a much more manageable task to convince 100 people of the motherhood of this issue than to convince every government on earth (which involves convincing the voters who elect those governments) to tax or seize. Also with the power of strategic philanthropy, the effective and efficient use of this money to tackle the problem will more likely result in some real progress being made.

    If you follow my logic but still feel that the 100’s money should be taxed or seized, then I think you need to ask yourself if you are really interested in eliminating poverty or are you just envious of wealth.

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