Yesterday the market fundamentalist think tank The Centre for Policy Studies launched its ritual annual attack on Oxfam's report in inequality, produced in time for Davos.
Last year, 82% of wealth created worldwide went to the top 1%. The poorest half saw no increase at all.
All over the world, the economy of the 1% is built on the backs of low paid workers, often women, who are paid poverty wages and denied basic rights. It is being built on the backs of workers like Anju in Bangladesh, working for $0.37 an hour, Dolores in chicken factories in the US, suffering permanent disability and unable to hold her children's hands.
But it doesn't have to be this way. We urgently need governments and companies to help create a more equal society by prioritising ordinary workers and small-scale producers instead of the rich and powerful.
The CPS response was to claim that:
Oxfam increasingly pollutes our discourse with phony statistics and false narratives in a highly politicised way. These findings are being used to call for a policy shift — a turn away from market-based capitalism, which has lifted billions around the world out of poverty. No doubt there will be plenty of wanna-be world planners at Davos this week who will lap up the message — the Shadow Chancellor, John McDonnell, will be one of them. But Oxfam's political agenda goes against the history of the economic development they purport to want.
This morning the Guardian reports that:
The freeze on social security benefits introduced two years ago will lead to fewer and fewer children escaping the poverty trap, according to a study. The biggest increases in child poverty since the freeze in 2016 have occurred in areas already identified as deprivation hotspots, an analysis by the End Child Poverty coalition of charities has found. In four parliamentary constituencies — Bethnal Green and Bow, and Poplar and Limehouse in east London, and Ladywood and Hodge Hill in Birmingham — children are for the first time in recent years more likely than not to grow up poor.
In 25 constituencies, mostly located in London, Birmingham and Greater Manchester, more than 40% of children now live below the poverty line. On a local level the figures are even more damning, with 62% of children in Coldhurst ward in Oldham living in poverty. End Child Poverty says the government must end the benefits freeze which the group says is a major factor in an “emerging child poverty crisis”, along with rising prices.
So, who is right, and what is all this really about?
First, let's be clear that world poverty is not as bad as it was. That however is in no small part due to reform in China (which is not a CPS role model) and India, where problems continue to be enormous. The CPS model is not found there.
Second, the claim that small government has driven this increase in wealth as promulgated by Mark Littlewood of the IEA on Radio 4 yesterday, is also wildly wrong: the simple fact is that people are increasingly better off in countries with higher spending and small trading states such as Hong Kong and Singapore, which he praised a) cannot be a model for all states because most are not small and on major trading routes and b) are not democracies in the accepted sense and are unacceptable to most as a result and c) have massive de facto state sectors. More than 80% of people in Singapore live in state housing, for example.
Third, poverty is not an absolute measure, it is relative over time and at a point in time. To claim otherwise ignores the reality of the human condition.
Fourth, as the Guardian report shows, shrinking the state does increase poverty.
Fifth, whilst it is true Oxfam do play loose when comparing wealth and GDP on occasion, and they are not the same thing, the fact is that what their report does really drive at is the very heart of the neoliberal project, which is why the CPS, the IEA and others are so frightened of it. What I mean here is that what the Oxfam and Guardian reports reveals is the lack of choice most people have, and yet choice is what, supposedly, the neoliberal agenda is about.
When you live in poverty it's not just hope that departs through the window, although it does. With it goes any element of choice in your life. And supposedly the whole neoliberal agenda is about ‘taking back control' to make those choices, except the reality is that, if anything the exact opposite is taking place. What market capitalism is delivering is choice for a tiny proportion, who can pretty much have whatever they want except happiness (which is still not marketable) whilst most get very few options indeed, and no chance to do anything about it.
This is the criteria by which neoliberalism has failed. Other systems have delivered reductions in relative poverty. But neoliberalism has not. And it's core promise of choice is disappearing from view under mountains of debt and stagnating wages.
The Oxfam data highlights that. No wonder the Right hate it. They have no available response. That's because there is none.
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The thing I find with these assaults is that they’ll sort of say “your methodology is wrong thus it should be 2% not 1%” without realising that’s just as bad.
Yes, exactly.
The issue of life choices is indeed a key battle ground for the inequality debate. The CPS and others may simply be advancing a cynical right wing agenda, but there is a growing problem of “meritocratic hubris” which makes elites at the top of society genuinely believe that they got there solely through their own hard work and effort. This means that (1) they don’t believe they owe anything to others or society, so are quite happy to evade taxes and campaign against social justice and (2) They genuinely believe that the only thing the poor need to achieve a better life is simply to work harder and make better life choices, just as they have done.
Such prejudice runs deep. I had a long argument over Christmas with my brother who is a keen liberal and champion of social justice, but he saw red when I stated that real life choices are a luxury that only come with education and income/wealth. My assertion that those in poverty have no real life choices clashed with his deep instinct that it is essential to build self-reliance and positive mental attitude, none of which I would disagree with. But it still blinds us to the divide in society between the educated and well off, for whom the Global economy offers greater opportunities than ever before, and those from deprived families with no assets and poor academic qualifications, who are forced to live on universal credit, or pick from whatever minimum wage, zero-hours contract jobs are available within a very short commute from wherever they can get afford to get a roof over their heads.
This is why I believe our future must be based on providing (1) Free quality public education and (2) A universal basic income. These are the two fundamental steps that will bring the kind of life choices to all, that the professional classes now take so much for granted. The power we would unlock in our economy and local communities for the future would be immense.
My fear is that the “meritocratic hubris” of even those who think of themselves as enlightened liberals, will prevent us from accepting the need for UBI. But we must come to understand that it is futile to tell a person to “pull themselves up by their bootstraps” if they don’t have any boots.
Philip Bruce –
Re. universal basic income (UBI). If this is such a good idea why is it being pushed by a lot of people and groups with strongly neoliberal backgrounds?
The problem I, and most MMTers have with UBI, is that it essentially freezes the existing hierarchy of power without really addressing the economic issue of securing adequate aggregate demand without risking inflation. It makes all its recipients beholden to “wealth creators”, it takes away their agency and prevents them contributing to the monetised economy in any way other than as consumers.
When we obviously live in a time where the existing mode of production is only a few wrong steps away from plunging the entire human species into either nuclear war or an extinction level ecological collapse surely you have to ask yourself: is it wise to continue with our current mode of production?
In contrast MMTers propose a Jobs Guarantee (JG). Superficially similar to a UBI the JG has the advantage that its recipients are both consumers AND producers. It reduces the risk of inflation substantially over UBI but more importantly it has the propensity to allow for greater change to the existing system of production. Whereas UBI recipients effectively get what they’re given with the usual-suspects remaining in control of the means of production JG allows the possibility of JG workers contributing to a greener and fairer mode of production under democratic control. JG can potentially monetise many activities that are currently outside the money economy and hence help avoid market failures associated with externalities.
Perhaps most importantly JG provides a guarantee of a meaningful place in society for all who want it which helps to avoid the possibility of the deserving-poor Vs undeserving-poor method of divide-and-rule so favoured by a certain type of politician the world over.
This is a big issue deserving wide discussion
UBI is also supported by many who are in no way neoliberal. The idea of UBI itself is not either neoliberal or otherwise. It could in theory be introduced in such a way that supports neoliberal interests, but that is not necessarily the case. It is important to note that UBI for most progressive-minded supporters in the UK is seen primarily as a replacement for the current welfare system, not as a replacement for work/jobs per se. Therefore, as I’ve mentioned on previous post on this subject, there is no reason why a JG (or something similar) and UBI cannot happily coexist.
I see merit to both
The meet different needs
I would say that the principle is already there in the concept of ‘Everyone’s wages is someone else’s wages’ as put forward by Paul Krugman.
People need to have this repeated to them time and time again.
It is in my view (social policy wonks please note) becoming increasingly irrelevant where a ‘living wage or means’ comes from.
What the economy needs is money in people’s pockets – not debates about how it gets there.
If austerity has taught us anything it is these basic facts.
And remember – we are talking about the huge amount of people who make up the REAL economy – not the vast movements of funds in the smaller (in people numbers only) financial sector. We’re talking about those millions of transactions in our shops and trades that take place every minute of the day.
Someone who is anti-benefit needs to know that the benefit – whether it is UBI or not – could very well be keeping them in a job just like their wage does when they spend it.
The morality around where one derives one’s income needs to be replaced with a more pragmatic view in the real economy.
Leave the morality element for those who seek excessive and undeserved rent from other people’s needs and activities and the corruption that seems to be growing ever larger in our economy.
@ Robert Philip Bruce.
Your brother might need to acquaint himself with this wonderfully apposite quote from Anatole France:
“The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”
The concept of a UBI originated in a time before the welfare state, which now provides a social wage in the form of public goods and services together with benefits with those with special needs. It is not broken as the right-wing advocates of UBI would like you to believe, it just needs better funding. MMT supports the idea of the state creating sufficient money to maintain full employment, with the backup of a job guarantee. That renders UBI redundant.
I can totally see where you are coming from Carol – the current system could indeed graduate into a UBI without it being declared as such (how it is labelled) but there maybe certain philosophical/design complexities and issues between the two approaches that need to be reconciled first.
Well said and spot on Richard ! The neoliberal project is just about making the 1% wealthy and giving them choice and then depriving the remaining 99% of both wealth and choice. As has always been the case of the Adam Smith approach to economics (and later the Austrian and Chicago economic neoliberalist dogma). Neoliberalism is about economic smoke and mirrors and the justification of the wealthy robbing the less wealthy. And no, I am not a socialist as such. I believe that the capitalist model is the best generator of wealth. But when in comes to the sharing of that wealth, I am to the left of Marx. Only good government can ensure that wealth is spread to everyone and some of the exploitative tendencies of the free market are addressed.
@ Wayne Carr
I think you are conflating `free enterprise` with `capitalism` ( as does just about everyone in my experience)
While enterprise certainly is necessary or even vital to wealth creation, capitalism – the tendency for capital to accumulate and aggregate more power to itself is in the long run anathema to enterprise (and freedom)
I think we need to make more of an effort to distinguish between the two.
Agreed…
Not to mention things like:
– the extreme poverty line being set at a horrifically/criminally low level (1.90 US dollars per person per day using 2011 purchasing power parity (PPP)), so “being lifted out of poverty” means living on USD$1.91 a day or more (the next poverty category is living under USD$3.20 a day) – it’s not exactly being lifted from poverty into luxury!
– an estimated 767 million people are still living under the poverty line (latest figures 2013)
– “poverty” has more indicators than just a person’s financial earnings per day/a country’s GDP (malnutrition, infant and maternal mortality rates, healthy water and sanitation access, access to education, inequality indicators, etc.)
– a lot of the numbers being based on country averages, so elite capture by the very rich with little or no improvement for the poor can make it look like a country is improving overall…
(Source: https://unstats.un.org/sdgs/report/2017/goal-01/; http://povertydata.worldbank.org/poverty/home/)
Thanks
“,,, poverty is not an absolute measure, it is relative over time and at a point in time.” There is another aspect here, that in this age of extensive communication the poor have their noses well and truly rubbed into the dirt.
Carol Wilcox –
You are absolutely right except it is not just the poor who suffer, though they obviously suffer more than anyone else. People at all levels of the social hierarchy are constantly looking forlornly upwards at the exponentially richer and more powerful people above them which causes psychological damage to individuals, drives unsustainable consumption rates and destabilises the fabric of our society.
I honestly think the only people who can possibly be entirely happy with the current situation are the absolutely highest status sociopaths. For them the meaning of existence is simply to dominate others so what’s not to like?
Literally everyone else in society is suffering unnecessarily and society as a whole is potentially doomed into the bargain.
My plea to Oxfam would be to ditch the term ‘inequality’ and replace it with ‘fairness/unfairness’ or something similar.
People know that they/we are not all equal: they accept it – even out of self awareness generated from comparing themselves to others.
What we need is a better language to describe the important stuff that Oxfam and The Spirit Level work picked up.
The apparatus that used to deal with this (social security, free further education, free health care) is being dismantled. These ‘interventions’ were aimed reducing the gaps between the ‘haves’ and ‘have nots’ but also helping the ‘have nots’ to become haves – or even ‘coulds’.
Lets perhaps go back to basics to rediscover a new language. Why was intervening in this way a good thing to do?
To me the purpose of human society was to reject the accepted notion of a ‘cruel and efficient nature’ so rather than the weak, the poor, the ill being left to die or become something else’s lunch we decided to look after each other (sometimes out of genuine kindness; sometimes out of altruism; sometimes because it was strategically beneficial for us to do so).
Good point
Oxfam are a lot closer to the mark this time and the neo lib’s laid into the report without reading it.
If the net-libs felt so comfortable and confident of their position ( and given the power they exert why the hell shouldn’t they ) why would they even consider it necessary to challenge Oxfam and its report. The answer I would have thought is obvious – they don’t. They know that their position is on the slide and so – naturally enough – they are doing all they can to bolster it up . If we just look back a few years to the Occupy movement ; this present debate wasn’t taking place at that time ; the bankers had been bailed out, none of them had gone to jail, but the public at large weren’t motivated. Brexit and Trump have changed all that and ushered in the present discourse which is up and running and the neo-libs sense this and are unnerved by it . So what do they do ? Like any threatened beast they lash out in all directions . And then a Grenfell disaster and a Carillion disaster come along out of the blue and yet more people start to question the narrative of ‘ the market solves everything and is the basis upon which a society should be based ‘ and another brick in the wall falls out.
What would your answer be to the Littlewood question that is currently trending:
If, for the sake of argument, you could only address ONE of these two issues,
which one would you choose to address? Poverty or Inequality of Outcome?
Or put another way, if you could press a button and lift the remaining 700m people on earth out of absolute poverty but the result was more inequality of outcome, would you press that button.
But as is typical of Mark (who I know) and the Right in general, the question is crass
No one has to make that choice so why ask?
That’s why it’s a hypothetical question. You should still entertain it.
You think you’ve got a suite of ideas to make the world a better place – no-one is going to implement the whole set, but you still entertain the possibility in your own writings.
So entertain this thought:
Suppose you could start in 2013 when there was less wealth and higher equality and more absolute poverty
Or start today when there is more wealth, more inequality of outcome but fewer people in absolute poverty
Which starting point would you take?
I reiterate: the question is irrelevant. But it says a great deal about you and Mark Littlewood. You would rather play distracting little games than really change anything. I am not participating.
“Other systems have delivered reductions in relative poverty. But neoliberalism has not.”
I don’t think neoliberalism’s strawmen have ever claimed that their economics reduces *relative* poverty, they just point to the historical evidence that it reduces *absolute* poverty. Assembling iPhones in a Chinese factory may mean that you’re multiples poorer than the dangyuans and hangers-on, but it means that you have three squares a day and a roof over your head instead of being up to your knees in mud and subsisting on waterbuffalo poo.
And the absolutes of mathematics means that *relative* poverty will never go away unless absoltely everybody is in exactly the same place. As soon as you measure more than one item, at least one item is below whatever average you chose to measure.
But you too seem to be ignoring that the distribution of the relativity matters i.e. the differentials really do matter
And because people know that, and see that, too, the Oxfam report resonates, wholly appropriately
If I’m 100 times richer assembling iPhones than I was at the wrong end of a water buffalo, does it matter that the dangyuans are 100 times richer than iPhone assembers or 1000 times richer than iPhone assemblers? I can still afford to build my own house, let all my fields go to seed and buy more pairs of shoes than I can ever eat.
Yes
What you reveal is a belief that life is entirely about material issues: it’s a commonplace right wing delusion
Life is about much more than that, without in any way denying the importance of material sufficiency
The only “waterbuffalo poo” is to be found in your contribution Jonathan,
With a distribution that is so extremely skewed the “absolute” increase that you refer to would have to be unimaginably massive for it to include the majority of the world’s people – and China is not the world.
As I have stated below the appearance of a new but proportionately small middle class in places like China and India is not representative of the majority in those places or the world generally. It never will be unless significant changes are brought to bear.
Why make this a left vs. right thing? I don’t have a problem with the data. I have a problem with the rhetoric. I wrote about it here: http://www.gretglyer.com/oxfams-simple-minded-rhetoric-about-inequality/
But then I have considerable difficulty with your rhetoric which does show little or no understanding of the relationship betwen wealth and poverty (and they are deeply related, relative issues or Marxism, come to that. But dragging Marx in was a bit of giveaway as to your true agenda…..
Go ahead and tell me my “true” agenda…
This should be good.
Do you honestly think I have time to waste?
The thing that the Right hate about Oxfam’s contribution is that it blows this whole “lifting billions out of poverty” bullshit out of the water. That fallacy was previously demonstrated by the UN’s famous “champagne glass of distribution” findings that gave us such a strikingly graphic account. See here:
https://thesocietypages.org/graphicsociology/2009/05/27/champagne-glass-distribution-of-wealth/
or page 9 here:
http://www.un.org/esa/socdev/poverty/PovertyForum/Papers/David%20Gordon.ppt
Globalised “Free Trade” has done little more than re-distribute among the world’s top 20% so that places like China and India are included. Now they have some rich people too. Bravo! As for the remaining 80%, not so good. Oxfam’s contribution reinforces the fact that while millions have been “lifted out of poverty”, billions have been pushed further into it.
Any suggestion that the poor, or the majority in newly industrialising nations have benefited is variously questionable or just plain rubbish. It is like saying that empire and industrialisation in the UK was a boon to the British people. Following the Enclosure Acts a great many were worse-off. At the height of Empire most Britons had nothing to show for it. Expanding wealth a the top was rearranged with the balance shifting from landholders to merchant and industrial capitalists. The only apparent “trickle-down” came with the appearance of an expanded gentry and urban middle class. Expanded but still relatively small. Some of their lower ranks may have been “lifted out of poverty” but as for the rest, inclusion did not come via market forces. It came late through the brave efforts of trade unions and political activists.
I think that a similar pattern can be found in most industrialising nations. The appearance of a smart, new middle class places like in China, India is not representative of the majority in those places and it never will be unless change is forced upon the prevailing order.
Excellent
Has it been updated?
The champagne glass?
I knew it from memory and had a quick look on Google to find an example to show the readers here. I I couldn’t find any that were more recent than the ones I have linked above, but then again I didn’t spend much time looking. If I find something more recent I will let you know.
It probably wouldn’t be that hard to construct one from current data.
I think that would be worth doing
I would publish it
[…] then noted this comment from John Hope (who I do not think I know personally) on the blog when moderating just now, which […]
CPS and IEA are regularly invited onto the BBC, and introduced as ‘centre-right’, when as we know they are far-Right, purely neo-liberal, politically funded organisations with little or no academic substance or research behind them.
Yet another bone to pick with today’s BBC, and Today in particular
‘Balance’!!?
‘Oxfam increasingly pollutes our discourse with phony statistics and false narratives…’
The BBC – those in it from the DG down to Humphryes and his editor – should hang its head in shame that it gives air-time to an organisation that spits out such bile and does so by claiming it’s doing so in the interests of balance. ‘Just obeying orders…’
With respect, there is good reason why the stats are listened to
For example, they’re right
You can argue their motive, of course – and I am aware that CPS hate the fact that it is obvious that much wealth comes from monopoly, which is the antithesis of market practice, but the facts
Sorry: wealth is (within measurable limits) distributed pretty much as they say
Well, I suppose that’s another thing that’s going to be troubling those guys. With Labour moving left and May posing as moderate Tory, Its going get increasingly hard for the CPS and IEA to maintain the pretence of being “center-right” The centre has moved further away from them.
Surely it’s beyond time to reprogramme our attitude to ‘modern’ wealth & poverty. Inevitably we evaluate it through a western historical lens – dating from the beginning of (Christian) European colonisation in the15th century to a more AngloSaxon-centric one since the Industrial Revolution. Wherever we stand on the political spectrum, it affects us all one way or another.
Perhaps it would be wiser to view the issue through another lens, from different parts of the world with different culltures and experiences that preceded our period of global domination. Because I’m neither an anthropologist nor a historian, I’ll not develop the theme further. But, on the basis that “we can’t solve problems by using the same kind of thinking we used when we created them”, I’ll leave you with this brief YouTube clip as food for thought – https://www.youtube.com/watch?v=5Vkt8A8j3HI.
Nice link John,
I enjoyed that and think it might be worth a post of its own. What’s more I fully agree with your comment. Totally.
I remember being infuriated when I first read Paul Krugman’s article “In Praise of Cheap Labor: Bad jobs at bad wages are better than no jobs at all”. As someone who was normally an admirer of Krugman’s I was additionally infuriated.
His take on exploitation in the developing world merely reinforced 2 commonly moronic assumptions:
1. That these millions of people, some of them living in heart of great civilisations, had all spent thousands of years sitting around in an ignorant, impoverished mud-pile waiting for us to give them a slave job in Nike factory.
2. That the conditions of exploited workers would gradually improve with industrial development. The plight of workers in industrial revolution Britain went from bad to worse until the Chartists, the Trade Unions, Labour and a great many others strived to claw back some gains. Likewise for the rest of the Western World.
Sadhguru is right. People in the developing world would be a lot better off if they sought improvement on their own terms and in accordance to their own values. The global, mercantilist rat race isn’t everything that its cut out to be.
I think there is merit in the argument
But it’s hard to sell
Marco – glad you enjoyed the Sadhguru’s clip. He is an inspirational person doing amazingly good works both in India and abroad (https://isha.sadhguru.org).
The reality is that 95%* of our everyday material well-being in the west is based upon both cheap labour and (grossly) under-priced natural resources from someone else’s homeland
(* this is a guesstimate and not a statistical fact). Historically, of course, the UK’s wealth was also augmented in no small measure from both slavery and drugs.
Whenever I mention these facts and the inherent evil of colonialism to many of my contempories, the standard responses are: “We gave them a functioning civil service and trains” (India); “They were better off under us than their own corrupt leaders” & “We didn’t invent slavery” (Africa); “If you don’t like it here why don’t you just bxggxr off”. Nice 🙂
If there is such a thing as Karmic Destiny then the UK will probably not be the best place on the planet to live!
I recently read the Ragged Trousered Philathropist by Robert Tressel published just over 100 years ago. It’s a stunning indictment of poverty in the U.K. based on his personal experience as a painter (house not art!). It rang true with my own experience as a builders labourer as a student in the 70s in a small provincial town. It’s interesting to reflect while there have been some big changes, state pensions etc the tories look set on rolling us back to some of the worst examples of what poverty can do to young families.
[…] source […]
We should be quite worried when organisations on the British right start using terms like phony and false. It basically amounts to them saying that oxfams report is ‘Fake’. And we all know the significance of that label and how poisonous it can be for the health of a Democracy.
Presumably the only reason they call the report false instead of fake is that us Brits are less receptive to the term given its connotions from Trump.
Agreed