On January 18th, Oxfam issued an analysis of the direction of the world economy, and titled it “An Economy for the 1%.” They found that:
During the period 2010-2015, the total wealth of the world’s poorer half went down from $2.5 trillion to $1.8 trillion, while the total wealth of the world’s 62 richest people went up from $1.2 trillion (not counting undeclared wealth) to $1.8 trillion (also not counting secret wealth).
However, as I have previously indicated, the wealth of King Saud, whom neither Forbes nor Bloomberg even count because they don’t count the wealth of kings, has always exceeded $1 trillion and was around $15 trillion when oil was at $100/barrel (under the prior King). Furthermore, neither Forbes nor Bloomberg has access to information on hidden wealth, offshore in tax havens and often under layers of shell companies, which also are entirely privately controlled.
Consequently, Oxfam’s calculations are based upon data that grossly underestimate, or even ignore entirely (such as with King Saud), the wealth of the actually-wealthiest people.
What the world has is an astronomical scam-operation. However, even applying the defective data on the basis of which Oxfam was calculating, Oxfam can say this:
“The global inequality crisis is reaching new extremes. The richest 1% now have more wealth than the rest of the world combined. Power and privilege is being used to skew the economic system to increase the gap between the richest and the rest. A global network of tax havens further enables the richest individuals to hide $7.6 trillion.”
In other words: Oxfam is saying that the wealth of the 62 richest people is $1.8 trillion, but that there exists in “tax havens” another $7.6 trillion, which cannot be attributed to any of those 62 nor to anyone, because its ownership is hidden.
Whatever the inequality-problem is, it’s vastly more extreme than the official figures show.
But what the official figures show is already terrible: The bottom half are getting poorer, while the richest 62 are getting richer faster. The report says: “The wealth owned by the bottom half of humanity has fallen by a trillion dollars in the past five years.”
The people who control the world could probably fit in a typical middle-class livingroom, but, while those people might actually know and be in communication with each other (since they buy and sell companies to each other, and need to negotiate with each other, perhaps at first via agents but ultimately through direct contact between themselves), outsiders would probably not be able to draw up an invitation-list to invite them, because their identities could be quite different from the 62 people whom Forbes lists as being the world’s richest. There is probably some crossover between the official lists and the reality, such as, for example, including Bill Gates at around $80 billion (he’s probably higher than 63rd-richest), but, even at only a trillion dollars, King Saud would still be worth twelve of those “#1”s, and the true #2 might be more in Saud’s league than in Gates’s.
Furthermore, when oil was $100/barrel, the Saudi King was lots richer than $7.6 trillion.
Another thing that the Oxfam report indicates is this (indicated on page 3): during the crash of 2008 (from around April 2008 to April 2009), the known wealth of the 62 richest people declined from about $1.3 trillion to about $0.8 trillion. By contrast, the wealth of the poor half of humanity had already taken its big hit starting 2007, declining from about $2.2 trillion in September 2007 to about $1.6 trillion in June 2008. Then, the wealth of the poor half headed back up again, from about $1.7 trillion in June 2008 to around $2.6 trillion in September 2010. And ever since September 2010, it’s been falling for the lower half. Meanwhile, the recovery for the 62 that started in April 2009 has continued ever since (so Oxfam reports: “The wealth of the richest 62 people has risen by 44% in the five years since 2010”), but the poor half of humanity have been losing wealth since September 2010 – more than five years. (Oxfam says: “Meanwhile, the wealth of the bottom half fell by just over a trillion dollars in the same period — a drop of 41%.) So: during those five years, the richest 62 people, according to Oxfam’s figures, gained slightly more wealth than the poor half of humanity lost.
Oxfam says: “A powerful example of an economic system that is rigged to work in the interests of the powerful is the global spider’s web of tax havens and the industry of tax avoidance, which has blossomed over recent decades. It has been given intellectual legitimacy by the dominant market fundamentalist world view.”
Here is what’s at the core of that “market fundamentalist world view” which has “given intellectual legitimacy” to this soaring inequality:
All of economic theory – except Keynes’s and a few other similar macroeconomic theories that aren’t based upon microeconomics and that therefore are likewise viewed skeptically by economists as being foundationless – are based upon microeconomic theory. All of the standard or “classical” macroeconomic theories are based upon microeconomic theory. That’s the foundation of “classical economics.” A core component of microeconomic theory is its equations for ‘welfare,’ and those equations are based upon the Pareto Welfare Principle, which prohibits interpersonal comparisons, and therefore rules-out any consideration of equality or inequality.
Consequently, whatever a given economist might happen to feel about the question of what the “most efficient” or “optimal” or best level of equality and inequality, is, there exists no basis for that in economic theory. It’s a philosophical issue, perhaps, and a political issue, certainly, but the people who are supposed to be (at least by the public) the experts in it, economists, are allowed to talk about it only ex-cathedra – it’s something that’s outside their area of expertise. Consequently, economists generally prefer not to discuss it – least of all in print – amongst themselves or in professional papers.
I view that situation as being outrageous. I have in draft a book that proposes a replacement for the Pareto Welfare Principle. Any economist who might be interested in seeing my proposed replacement for it is welcomed to leave a reader-comment to this article at washingtonsblog, indicating your email address to send it to for your opinion on it, and I shall be happy to send it.
Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.