The international charity, Oxfam, is calling on governments to “end extreme wealth” and further intervene in the business of wealth-producing entrepreneurs to reduce inequality.
The Free Market Foundation disputes the intellectual honesty of Oxfam’s report and, rather than the doom and gloom the charity believes is gripping the world, believes all people – especially the poor – are being empowered by free enterprise.
In 2016, Oxfam decried the notion that wealth is being concentrated in the hands of increasingly few people. It cited that eight people owned the same amount of wealth as the poorest half of the world. Now, the charity claims that the world in 2017 “saw the biggest increase in the number of billionaires in history, one more every two days”. Its latest report cites that 61 people – no longer eight – own the same amount of wealth as the poorest half. Instead of celebrating the fact that the number of billionaires has increased – a greater dispersal of wealth among more people – Oxfam condemns it, calling on government to “use regulation and taxation to radically reduce levels of extreme wealth”.
It is perverse in the extreme for a self-described charity to call so explicitly for the reduction of wealth. A charity should be concerned with the welfare of the poor, not the prosperity of the wealthy. How did these new billionaires create their wealth? By exploiting others, or did they create businesses, employ people, trade, supply cheap goods and services, and make smart investment? Oxfam ignores these crucial questions. Wealth cannot be condemned if it was created without force or fraud, and in the direct service of the poor.
Oxfam claims that the billionaire group saw its wealth surge by $762 billion (about R9.2 trillion), which is ostensibly enough to end extreme poverty seven times over. This outrageous claim assumes poverty can be ended by plundering wealth-producers and handing their wealth to wealth-consuming governments. The United States, for instance, has spent nearly $15 trillion on welfare since President Lyndon Johnson declared “war on poverty” in 1964. In 2011 alone, the U.S. spent $668 billion on 126 welfare programmes. Bearing in mind that the US has a tiny proportion of the world’s poor, all US poverty should have disappeared long ago if Oxfam’s incredible claim has any substance.
The poor, rather than needing money thrown at them – or, more likely, consumed by redistributive governments – need jobs, investment, and an enabling environment.
According to FMF executive director, Leon Louw, “Entrepreneurial wealth is not in vaults waiting for governments to redistribute. It is invested in ways that provide the poor with jobs, goods and services. Where governments do less, not more, for the poor, the poor are universally better-off. And they know it, which is why they always and everywhere risk and lose their lives to go from places that do what Oxfam recommends to ones that do the opposite. Caring governments do the opposite of what Oxfam recommends.”.
The increase in the number of billionaires is a clear indication that vast amounts of wealth are being created, not only for those fortunate enough to wear the label ‘billionaire’, but for everyone else in society. These billionaires did not become billionaires by accident. They provided goods and services that the people around them desired, and those communities rewarded them for it.
Oxfam claims that the inequality in the world today is produced by “inheritance, monopoly or crony connections to government” rather than “talent, effort and risk-taking”. To remedy this situation, Oxfam believes empowering government to expropriate more wealth and have more control over the affairs of entrepreneurs is the solution. This contradiction is concerning.
Even if some of these new billionaires are billionaires through inheritance with no intention of spending their newfound wealth, their wealth was earned in the service of the poor by those who left it to them. That they saved and invested has always been associated with prosperity. Economist Ludwig von Mises wrote that we “are the lucky heirs of our fathers and forefathers whose saving has accumulated the capital goods with the aid of which we are working today”.
Monopolies exist only if governments create them – as South Africans have learnt by living under nine-decades of the government’s Eskom electricity monopoly. Professor Sylvester Petro wrote that what “really disturbs people about monopoly is not that a single person or firm has control over a commodity but that force, compulsion, or special privilege has been used to keep other people out”. Force, compulsion, and special privilege are features of governments, not enterprising individuals in open markets. Cronyism is possible only if governments interfere excessively. Where governments leave markets free and nearly free, there is no cronyism.
Oxfam should be praising people who have managed to work, trade, invest and grow their own wealth to the point where they enter the domain of billionaire. They should thank them for what they did for the poor to get there. Their wealth was produced mostly in countries with the highest scores on the economic freedom index. Those countries are where the poor risk and lose lives to migrate legally or illegally. Instead of calling for more government in the affairs of freely transacting people, thereby contradicting is own claim that government is a likely cause for “extreme inequality”, Oxfam should be calling on governments to back off and allow the entrepreneurial spirit to continue emancipating and enriching the global poor.