CPS Director Tim Knox wrote “Why we can dare to be optimistic about inequality” for CapX, Friday 30 September 2016.
To read the full article, visit the CapX website.
It is wonderful that Oxfam recognises the “astonishing progress in poverty reduction” over the past few decades, and that “business can be a great force for good” in this respect. But I want to be greedy. I want Oxfam and all those other organisations which, rightly and commendably, want to see a reduction in global poverty to take one more step: to recognise that much of this astonishing progress has marched hand in hand with the extension of free trade, democracy, property rights and the rule of law around the world.
This week, there has been something of a debate on CapX – ahead of a similar debate the Centre for Policy Studies is holding at Conservative Party Conference – about the causes, and potential cures, for global inequality.
Yes, there is too much inequality. And we are certainly “not there yet”. But we should unashamedly celebrate the fact that the share of the world’s population who are living on less than $1.90 a day has fallen from 44% in 1980 to 9.6% in 2015.
We should also be careful when looking at the data on both wealth and income inequality. For example, as Tim Worstall has explained, “wealth” is defined as assets minus debts. So a brilliant Harvard student, who will have significant student debts and no real assets (but fantastic potential to earn) will be classified as one of the least wealthy people in the world.
Using this definition, there are more poor people in the US or Europe than there are in China: in fact 30% of the world’s poorest people when measured by wealth are actually in the rich countries of Europe and North America. But that is because rich countries have relatively efficient financial markets, which allow people to take on debt to go to university or buy their own homes.
To read the full article, visit the CapX website.
Date Added: Saturday 1st October 2016
