Oxfam has released a report titled An Economy for the 99%, slating the super-rich and calling for transformation of the economic system.
Oxfam’s quest is to “build a human economy that benefits everyone, not just the privileged few”.
It bemoaned the fact that “just eight men own the same wealth as the poorest half of the world”, adding that “as growth benefits the richest, the rest of society – especially the poorest – suffers”.
“Our economy must stop excessively rewarding those at the top and start working for all people,” said Oxfam.
Aren’t these beautiful words and a great vision for the future? A future where no one is poor, hungry, or uneducated. A future where everyone is equal and where there is prosperity for all.
These words find a sympathetic ear among a large part of society – who doesn’t love to hate people who earn more in a month than what they will earn in a lifetime?
The reality Oxfam and its ideological followers must face is that the super-rich – Bill Gates, Mark Zuckerberg, and Warren Buffet – are the ones making people’s lives better.
Here are a few facts to consider before you start your bid to dismantle the evil capitalist system and its corporations.
Thanks to capitalism, the world has never had it so good
Allister Heath described in his Telegraph column that we live in largely peaceful times, with better access to medicine and education than ever before. The world is easily in the best place it’s ever been, thanks to capitalism.
World Bank figures show that the percentage of people living on less than $1.90 per day – the international poverty line – declined from 37% in 1990 to 9.6% in 2015.
The worst poverty in the world – people who live on one dollar a day or less – has decreased from 26.8% in 1970 to 5.4% in 2006.
In fact, the world is moving closer to the World Bank’s goal of ending poverty by 2030.
The reason for the reduction in poverty is globalisation, free trade, and the boom in international entrepreneurship. Good old capitalism.
Wealth is not a zero-sum game
Oxfam and other movements bemoaning the wealth of the super-rich paint a picture of a few individuals taking a large slice of the money pie. This is simply not true.
Wealth is not a zero-sum game. Entrepreneurs who start companies create wealth and their shareholders, employees, and governments benefit from their wealth creation and profits.
To prevent companies from making large profits and accumulating wealth will limit economic growth – with economic growth the cornerstone of eradicating poverty.
These super-rich businessmen do not take a large slice of the wealth pie, but rather create these pies – which many others enjoy.
Redistribution of wealth does not stimulate economic growth
Bloomberg’s Noah Smith explains that the redistribution of wealth, which typically happens through taxation, reduces economic activity.
“When you tax people, you usually cause them to reduce the amount that they do the thing that is subject to the tax,” he said.
The message from modern economists is that the more the government tries to shift income around, the less total income there is to distribute.
“The more equal you force your society to be, the poorer it gets,” said Smith.
Companies started by the super-rich employ many people
The companies started by the super-rich employ many people and pay their employees well.
The average salary of an employee at Microsoft, the company Bill Gates started, is just under $100,000 per year. This is more than double the average salary in America.
The table below shows the average salaries paid by the companies started or run by the super-rich listed by Oxfam.
|Companies of the US’s Richest People|
|Company||Person behind company||Number of employees||Typical Salary|
|Microsoft||Bill Gates||114,000||$95,000 per year|
|Berkshire Hathaway||Warren Buffett||331,000||$55,000 per year|
|Amazon||Jeff Bezos||268,900||$83,000 per year|
|Mark Zuckerberg||15,724||$77,000 per year|
|Oracle||Larry Ellison||136,263||$75,000 per year|
|Bloomberg||Michael Bloomberg||19,000||$83,000 per year|
The super-rich are great philanthropists
When you are super-rich, you have a lot of money to tackle some of the world’s biggest problems.
The super-rich are driving many noble initiatives, which include reducing child mortality, finding cures for the worst diseases, and improving education.
The Bill & Melinda Gates Foundation is a good example. It aims to enhance healthcare and reduce extreme poverty around the world.
Berkshire Hathaway CEO Warren Buffett, who is a supporter of the foundation, will give away more than 99% of his wealth to charitable causes during his lifetime or upon his death.
In 2015, Mark Zuckerberg pledged to give away 99% of his Facebook shares during his lifetime.
This money will be used to personalise learning, cure diseases, and connect people.
Killing the rainmakers is stupid
Successful entrepreneurs start great companies which employ people, stimulate economic growth, and create wealth. To limit their success is counter-productive.
Laurie Dippenaar, a South African self-made millionaire, said that while he endorses good Oxfam suggestions like corporations paying the correct amount of tax, taking aim at the rich is not smart.
Oxfam’s 2014 campaign highlighted that the 86 wealthiest people in the world’s asset base is equal to that of the 3.5 billion poorest people.
“Using their own numbers, I did the calculation that if you confiscated every single dollar from the 86 wealthiest people, each one of the poorest 3.5 billion would get $500,” he said.
Doing this means that the rainmakers have been destroyed, which means you have killed job creators and tax payers.
He said you would also destroy people like the Google founders, who provide excellent free services to billions of people.
“How much do you pay for Google? Nothing, so don’t be cross with the Google founders,” said Dippenaar.
This is an opinion piece.