Ridiculous: “Why Oxfam is getting it wrong about poverty” – CapX

Bilge from a right-wing pseudo-intellectual. I’ve never heard of this guy before, but he seems to be an expert in deception rather than analysis.

As it’s Davos time, Oxfam has issued its traditional demand for a handout.  Their wealth report this year informs us that a mere eight people have more wealth than the bottom 50 percent of the world’s population. This is entirely true of course. But Oxfam’s solution is that we should take it from the rich and […]Source: Why Oxfam is getting it wrong about poverty – CapX

This is an example of deceptive reasoning. Here’s my quick analysis:

Worstall writes:

>The result is that entrepreneurs get to keep some 3 per cent of the value of their creations. The other 97 per cent of the value flows to us consumers out here.
….
>Poverty exists and obviously we’d prefer that it didn’t. That’s why we need more rich people not fewer: because we need someone to create value for the rest of us to consume.

So he is equating “rich people” to “entrepreneurs” to “creators of value.” If only that were true. Although a small number of tech entrepreneurs get most of the publicity (Steve Jobs, Bill Gates, etc), most of the giant corporate profits are coming from increasing market power/decreasing competition in many markets. For example, few outside the industry think that the “financial services” industry (e.g. investment banking) creates value comparable to the huge profits it makes.

He is also using misdirection to imply that Sam Walton’s heirs were the entrepreneurs who created Walmart’s economic value!

Finally, he keeps using a “3 percent” number to imply that “the masses” get 97 percent of increasing economic value, and the ultra-rich get only 3 percent. In fact median income has not grown for several decades. While the overall GDP has doubled in the last 30 years, the extra income has gone entirely to the upper ten percent. (Median household income rose by 8% in the last 30 years.)
Sources: http://www.multpl.com/us-gdp-inflation-adjusted/table
https://fred.stlouisfed.org/series/MEHOINUSA672N

A slightly different way of measuring. Compare black and red lines.

figure-9-e1455724425470

So the blog post is a dishonest piece of fallacious reasoning. Is this typical of the Adam Smith Institute, where he is apparently based? Is this the average reasoning level of right-wing intellectuals today?

By the way, I’m sure there are problems with Oxfam’s report – just not the ones he claims.

Invented by a data scientist: the first anti-scam – AnalyticBridge

Invented by a data scientist: the first anti-scam – AnalyticBridge.

An interesting concept: create a lottery which is really a disguised form of savings. That’s not quite what this proposal does, but it could be modified very easily.

From what I read, accumulating savings is a big problem for many poor people. Some nonetheless play the lottery. Create a lottery-squared, which takes in tickets from participants, accumulates most of it in an account for the payer, and puts a fraction in a true lottery. Then the ticket-buyer can “win” a small amount according to some rule. The rule  may be hidden from them, as in the original proposal, or could be partially under their control.

Lots of legal problems with this, to say the least. The middleman is acting like a bank, with all the issues that brings. The record-keeping and security could be a problem. And so forth. This is more of a problem in some countries than others.

By the way, this is similar to what “Christmas club accounts” in banks did in the 1950s, apparently. Customers would put $5 into the account each week, and get it all back in December.