[News] Capitalism - The gift that just keeps on giving

[Buzzer]

The IEA or Oxfam? There's problems with both, but let's see if we can work out which has the larger problems.

I don't follow. Are you saying that the IEA analysis is also dodgy? Regardless of the world viewpoint of the IEA or your opinion of them, I'd say their critique of the Oxfam interpretation of Credit Suisse figures is spot on: Oxfam have extrapolated far too much into what is simple data and completely mixed up the concepts of wealth and poverty to give a very misleading new headline.

As the Adam Smith Institute puts it:

Commenting on Oxfam’s inequality report, Head of Research at the Adam Smith Institute, Ben Southwood, said:

Oxfam’s wealth statistics do not make sense. According to their methodology, Michael Jackson was one of the poorest people in the world, and Ivy League graduates just starting their jobs at Goldman Sachs are in the direst poverty. It just doesn't make sense to look at net wealth without considering the incomes people might be expected to earn. What’s more, it’s not clear why we should care all that much about rising global wealth inequality, when it has come with unprecedented declines in global poverty. Hundreds of millions have escaped penury in India and China, but it is not just there where global living standards have been rising—African poverty fell 38% between 1990 and 2011.

http://www.adamsmith.org/news/oxfams-inequality-figures-dont-add-up/

 

[Machiavelli]

So when's this due to kick in?

Marxist Economics – The Self-Destruction of Capitalism

The theory of Marxist economics maintains that capitalism eventually destroys itself as it exploits more and more people until everyone has been reduced to worker status. Engels explains the process: “Whilst the capitalist mode of production more and more completely transforms the great majority of the population into proletarians, it creates the power which, under penalty of its own destruction, is forced to accomplish this revolution. [Eventually] The proletariat seizes political power and turns the means of production into state property."

In this way, the proletariat acts as a catalyst for the downfall of capitalism and the rise of the new socialist system. “The extremely sharp class conflict between the exploiters and the exploited constitutes the basic trait of the capitalist system. The development of capitalism inevitably leads to its downfall. However, the system of exploitations does not disappear of itself. It is destroyed only as the result of the revolutionary struggle and the victory of the proletariat.”

The concept of the dialectic illustrates that the downfall of capitalism and the subsequent rise of socialism and eventually communism are inevitable. The bourgeoisie (thesis) and the proletariat (antithesis) clash to create socialism (synthesis) that guarantees the advent of communism.

This only goes to show that the claim that the world is governed by dialectical logic is a load of old tosh.

 

[Machiavelli]

I don't follow. Are you saying that the IEA analysis is also dodgy? Regardless of the world viewpoint of the IEA or your opinion of them, I'd say their critique of the Oxfam interpretation of Credit Suisse figures is spot on: Oxfam have extrapolated far too much into what is simple data and completely mixed up the concepts of wealth and poverty to give a very misleading new headline.

As the Adam Smith Institute puts it:

Commenting on Oxfam’s inequality report, Head of Research at the Adam Smith Institute, Ben Southwood, said:

Oxfam’s wealth statistics do not make sense. According to their methodology, Michael Jackson was one of the poorest people in the world, and Ivy League graduates just starting their jobs at Goldman Sachs are in the direst poverty. It just doesn't make sense to look at net wealth without considering the incomes people might be expected to earn. What’s more, it’s not clear why we should care all that much about rising global wealth inequality, when it has come with unprecedented declines in global poverty. Hundreds of millions have escaped penury in India and China, but it is not just there where global living standards have been rising—African poverty fell 38% between 1990 and 2011.

http://www.adamsmith.org/news/oxfams-inequality-figures-dont-add-up/

The ASI are even worse. Both of their projects are merely to do what they're doing at the moment, which is to seed doubt about any substantial critique of the current system. And they're funded extremely well to do this, by precisely the 1% that are being collared in their report. We've sparred on Piketty before, but his is the most comprehensive analysis of these issues and he's done this over several centuries. The direction of travel he plots is very clear, and it maps on to Oxfam's analysis far closer than the ASI and IEA. It also backs the analysis by key figures in the World Bank on poverty and in/equality, most prominently Branko Milanovic -- see his recent The Haves and Have-nots for instance.

 

[Buzzer]

The ASI are even worse. Both of their projects are merely to do what they're doing at the moment,

Forget party politics for one moment and let's focus on these specific stats from Credit Suisse that Oxfam are using. Are you saying that the ASI and IEA are wrong when they both state that the quoted figures of net personal wealth are simply personal assets less personal debts? If you disagree, please point me to the Credit Suisse methodology that they use that the ASI and IEA have missed.

If you agree with the interpreted definition of net wealth then do you not think it muddled/mischievous/just plain wrong for Oxfam to extrapolate this concept of net wealth as equivalent to poverty?

 

[beorhthelm]

poverty and lack of wealth are not at all the same thing. for one thing, when we say "poverty" we nearly always mean "relative poverty", and that's measured in different ways from country to country. without a raft of assumptions, exclusions, inclusions and caveats, talking about equality is a nonsense within a country let alone region or world wide level.

 

[Flex Your Head]

This only goes to show that the claim that the world is governed by dialectical logic is a load of old tosh.

Absolutely.

 

[gordonchas]

Does anyone ever bother to read the actual reports or is everyone just happy to accept soundbytes from vested interests such as Oxfam, particularly if it reinforces their own prejudices?

1% of global population sounds minsicule, but currently that represents over 71,000,000 people. In fact Credit Suisse say anyone with net assets of over £500k is in that 1%.

If you have more than £50k you're in the top 10% in the world. This includes property of course so practically every home owner in the South East of England is in the top 10% and huge numbers make up the 1% so many of you are complaining about.

In fact, the report shows that every region of the world with the exception of Asia Pacific has increased its wealth, Asia Pacific's drop being largely due to first-world Japan. Increased wealth being, generally, a good thing.

As for % change, well populations in the developed world are static, population growth is amongst the poorest nations, ergo as world population increases the likelihood is that the % of worldwide wealth held by the richest 1% will increase, just as reported. The richest 1% is now over 71 million people, whereas in 2009 it was 68 million.

Now that I've shown you all how rich you are, I look forward to the biggest complainers amongst you voluntarily giving up the fabulous wealth you enjoy compared with the majority of the world's population. Fat chance.

 

[jgmcdee]

Worth noting that a number of people on the list have stated that they will give away the majority (and in some cases, like Warren Buffett, 99%) of their wealth during their lifetime. So you would expect this to balance out somewhat over the next 20 or so years.

 

[jimbob5]

Someone provide me with an alternative, where you get democracy to.

well apparently any system adopted by most countries in the western world creates more equality than the UK does. ironically we have a massively expensive NHS . a lot of their time is taken up by drunken slobs who don't pay for their treatment in A and E.

 

[Hastings gull]

It means the view that "everyone deserves equal economic, political and social rights and opportunities" has an alarmingly low level of influence in 2015 Britain and the trend seems to be in one direction.

If you look you see it all around you.

Just one easy example. In Eastbourne where I live we have a new government funded "Free School" which is transparently just an excuse to create an exclusive place of privilege for those who can afford to live in its affluent catchment area. How on earth can that be justified? It can't be justified, but it happens because the people with unequal economic, political and social power want to perpetuate unequal opportunity for their next generation.

Your first para: I am not sure if I look around me how I would detect that "everyone deserves equal . . opportunities". This is obvious and I am sure that no one would deny that. You again follow it up with a sweeping and exaggerated statement, offering no real evidence, and come to the conclusion that you want.

I was intrigued with your example about Free Schools, and here again a sweeping statement, with the conclusion that you want, with no evidence to back it up. I have taken the below quote from the NUT research, so can not be accused of looking round for something to support free schools. It shows a difference of just under 5% FSM pupils, and we must also bear in mind the vague nature of "surrounding areas" - nowhere does it say that the Free School's immediate catchment area is involved. Assuming that these figures are not "skewed" for political convenience, than the figure is not that huge, and could just as easily be explained by the fact that parents of non-free school meals children ,may just be that shade more ambitious with regard to their children's education, and prefer a smaller school. You are trying to make it out as some extreme bastion of privilege, whereas the reality might just be rather different, though it is of course also possible that some form of selection is involved. I doubt very much that such parents think "we must send our son/daughter to such and such school to perpetuate continued unequal opportunity".

•Free schools act as their own admission authorities and analysis of their intakes show they are not representative of the communities they serve. Research, by the Centre for Learning and Life Chances (LLAKES) at the Institute of Education (IoE) published in July 2014 found that around 13.5 per cent of pupils attending primary free schools were eligible for free school meals, while within the neighbourhoods of free schools, 18.3 per cent of children were eligible. Researchers also found that 17.5 per cent of pupils attending secondary free schools were eligible for FSM despite 22.1 per cent of young people being eligible in the areas surrounding the schools.4

 

[jimhigham]

Fictional but this would be something like the ideal. Inequality will almost certainly be with us and the planet's experiments with communism have not been conspicuous in their success. I have no problem with the existence of a richer class provided that this elite pay their way to try and mitigate against the worst effects of poverty elsewhere. Unfortunately the last three decades seem to have strayed in the other direction and that elite appears to be doing everything in its power to gather up ever more wealth.

 

[Hastings gull]

Fictional but this would be something like the ideal. Inequality will almost certainly be with us and the planet's experiments with communism have not been conspicuous in their success. I have no problem with the existence of a richer class provided that this elite pay their way to try and mitigate against the worst effects of poverty elsewhere. Unfortunately the last three decades seem to have strayed in the other direction and that elite appears to be doing everything in its power to gather up ever more wealth.

I imagine that most folk would agree with this? There will always be a richer class, if only because some people just work harder than others, and of course it will also be down to inherited wealth. Perhaps it is a question of degree, afterall, I imagine that most readers on NSC will either have inherited or intend to leave their estate to their children - it is not necessarily wrong. When billions are involved, then somehow it all seems to have got out of hand, but where do you draw the line? When does it become obscene? Anyone with assets over a million ? but that would involve thousands in the South East, many of whom would not regard themselves as rich. And of course, if entrepreneurial folk think they are going to be stifled by what they perceive as excessive taxation, say, then that is a huge disincentive. Capitalism has undoubtedly brought relative wealth to millions but also inequality, but dealing with this inequality is never going to be easy, short of force.

 

[Machiavelli]

Forget party politics for one moment and let's focus on these specific stats from Credit Suisse that Oxfam are using. Are you saying that the ASI and IEA are wrong when they both state that the quoted figures of net personal wealth are simply personal assets less personal debts? If you disagree, please point me to the Credit Suisse methodology that they use that the ASI and IEA have missed.

If you agree with the interpreted definition of net wealth then do you not think it muddled/mischievous/just plain wrong for Oxfam to extrapolate this concept of net wealth as equivalent to poverty?

I'm not really engaging in party politics, as this extends to a global scale and concerns long-term economic rationales. I haven't looked into the methodology of this study, and accept the point that you've been making about negative wealth -- or debt. But such debt is just another facet of the neoliberal ordering that we've suffered over the past few decades, within which wages and real incomes have declined, and debt has proliferated -- and is increasingly used as a mechanism of control. So, to answer your final question, I don't think it's muddled/mischievous/wrong for Oxfam to use Credit Suisse's methodology, especially if that's how they've calculated this in the past.

 

[cunning fergus]

Millionaires are often just regular, albeit successful, people. They are in no way the problem.

The problem is the multi-billionaires who can just sit on their wealth to earn millions every day - and that's exactly what they're doing. The richest 1,000 people in Britain increased their personal wealth by £65bn in 2013, the richest 100 people increased their personal wealth by £40bn in 2014... don't you think that is obscene, considering how strained regular people are and how our vital public services are being cut? This (obviously) needs to change.

The problem is getting significantly worse - every year the wealthy ruling classes increase their slice of the pie exponentially. Regular people, regardless of how hard working or gifted, will never have access to such wealth. It is a rigged game, capitalism is no longer competitive and it has spiralled out of control... it is only a matter of time before the system implodes completely, and we really need to avoid that scenario.

This social inequality issue is a complex matter, and subject to various relative and algorithim interpreatations of data. It will point to whatever you want it to point to if you look hard enough.

However, in the last few years capitalist economies have been hampered by politicians in a way we have not seen before, and this is a major factor in the ongoing dynamic of the gap between the rich and poor. We only need to look at what is happening in the eurozone to understand how politicians have subverted economic logic for political expediency and the "people" are now dealing with the whirlwind.

Last weeks unpegging of the Swiss Franc to the euro created a massive FX bubble, and some global FX firms have gone to the wall....................there has not been much on TV here about this but this is just another symptom of the euro problem. Greece has an election next week.

What ever happens, the next step in the descent to doom will be some form of QE (printing money) in the eurozone, and no doubt that will please all the EU enthusiasts.

What QE will do however (like it did in the UK) will make credit available to the rich at absolutely no cost.

What will they do?

Buy everything they can put their hands on because QE means they are getting free money.................from the state. That is a major factor why in the last few years the rich got richer so much quicker.

Like or not its going to happen again.

 

[Buzzer]

I'm not really engaging in party politics, as this extends to a global scale and concerns long-term economic rationales. I haven't looked into the methodology of this study, and accept the point that you've been making about negative wealth -- or debt. But such debt is just another facet of the neoliberal ordering that we've suffered over the past few decades, within which wages and real incomes have declined, and debt has proliferated -- and is increasingly used as a mechanism of control. So, to answer your final question, I don't think it's muddled/mischievous/wrong for Oxfam to use Credit Suisse's methodology, especially if that's how they've calculated this in the past.

Not engaging in party politics but it's the fault of neo-liberals...not looked into the methodology of the study but it's not wrong for Oxfam to use that method to classify poverty.

I think I'll have to agree to disagree with you on that.

 

[Hastings gull]

Millionaires are often just regular, albeit successful, people. They are in no way the problem.

The problem is the multi-billionaires who can just sit on their wealth to earn millions every day - and that's exactly what they're doing. The richest 1,000 people in Britain increased their personal wealth by £65bn in 2013, the richest 100 people increased their personal wealth by £40bn in 2014... don't you think that is obscene, considering how strained regular people are and how our vital public services are being cut? This (obviously) needs to change.

The problem is getting significantly worse - every year the wealthy ruling classes increase their slice of the pie exponentially. Regular people, regardless of how hard working or gifted, will never have access to such wealth. It is a rigged game, capitalism is no longer competitive and it has spiralled out of control... it is only a matter of time before the system implodes completely, and we really need to avoid that scenario.

The minute I saw this thread, I knew it would be fatal as it would set you off !! Of course the vast differences are obscene, though would it be as simple as the alternatives you allude to? Also, I am sure that it has been pointed out that your continual references to the 1000 wealthiest people in Britain is misleading, as this includes foreigners residing mainly in London. Whether it is all getting out of control apocalyptic -style is rather an exaggeration, do you not feel? As to what could be done, I simply do not know enough about economics. I imagine it is not so easy just to say we will tax the wealthiest?

 

[CheeseRolls]

This social inequality issue is a complex matter, and subject to various relative and algorithim interpreatations of data. It will point to whatever you want it to point to if you look hard enough.

However, in the last few years capitalist economies have been hampered by politicians in a way we have not seen before, and this is a major factor in the ongoing dynamic of the gap between the rich and poor. We only need to look at what is happening in the eurozone to understand how politicians have subverted economic logic for political expediency and the "people" are now dealing with the whirlwind.

Last weeks unpegging of the Swiss Franc to the euro created a massive FX bubble, and some global FX firms have gone to the wall....................there has not been much on TV here about this but this is just another symptom of the euro problem. Greece has an election next week.

What ever happens, the next step in the descent to doom will be some form of QE (printing money) in the eurozone, and no doubt that will please all the EU enthusiasts.

What QE will do however (like it did in the UK) will make credit available to the rich at absolutely no cost.

What will they do?

Buy everything they can put their hands on because QE means they are getting free money.................from the state. That is a major factor why in the last few years the rich got richer so much quicker.

Like or not its going to happen again.

I don't accept the 1% figure needs to be accurate, it is there to demonstrate and in some respect challenge the concentration of economic power.

I also don't accept that democracy and unbridled capitalism are intrinsically linked. The people have a right to determine there own economic model via the ballot box.

More specific to your point I really don't give a stuff about a bunch of currency speculators taking a hair cut. The unpegging of the Swiss Franc removes an artificial market control, supported by the Swiss bank (you don't get more free market than that) and is an issue for Switzerland not the Euro zone.

 

[beorhthelm]

The problem is the multi-billionaires who can just sit on their wealth to earn millions every day - and that's exactly what they're doing. The richest 1,000 people in Britain increased their personal wealth by £65bn in 2013, the richest 100 people increased their personal wealth by £40bn in 2014... don't you think that is obscene, considering how strained regular people are and how our vital public services are being cut? This (obviously) needs to change.

you keep on harking about this, and i keep on correcting you about the detail, how you apparently want us to tax Indian steel factories to fund our first world welfare... never mind, you clearly want to create a falsehood.
instead how about explaining what do you think those rich people are doing with that wealth? if they are "sit on their wealth to earn millions every day" that means they are, well, earning. profits are invested in something.

these billionaires are sitting on share and assets that are nominally theirs but they cant do anything with them other than reinvest or sell and reinvest the procedes. all you are objecting too is they decide what gets invested in, presumably you want a government to do that instead. or the people? they dont know how to invest, leave them to the consuming.

 

[cunning fergus]

I don't accept the 1% figure needs to be accurate, it is there to demonstrate and in some respect challenge the concentration of economic power.

I also don't accept that democracy and unbridled capitalism are intrinsically linked. The people have a right to determine there own economic model via the ballot box.

More specific to your point I really don't give a stuff about a bunch of currency speculators taking a hair cut. The unpegging of the Swiss Franc removes an artificial market control, supported by the Swiss bank (you don't get more free market than that) and is an issue for Switzerland not the Euro zone.

Your sentiments about the fate of a bunch of currency traders is exactly how I feel about those heading off to Switzerland for a skiing holiday bleating about the 30% increase in the cost of a ski pass etc.

The bigger picture, and my point about the gap between the rich and poor, is that in 3 days time the ECB is going to start the printing presses and print billions of euros to flood Eurozone economies with cheap money in an attempt to hold the Eurozone together. This will further devalue the euro.

The Swiss knew that to continue the peg to the euro would be financial suicide (sound familiar) so they gave up the ghost, and accepted the financial reality of a devalued euro and the catastrophic effect this will have on the Swiss state and their economy.

Who will benefit from this Tsunami of cheap euros?

The rich, they will get this free money for absolutely nothing to go and buy more stuff..............just like they did here and in the US.

If people want to moan about the gap between rich and poor they should understand the causes, QE is one and will only help the rich get richer, it will not help the poor.

 

[Machiavelli]

Not engaging in party politics but it's the fault of neo-liberals...not looked into the methodology of the study but it's not wrong for Oxfam to use that method to classify poverty.

I think I'll have to agree to disagree with you on that.

You can, and do, disagree with me, but you're missing the target on those points:
-- re party politics/neoliberals: I explained that in the post you're responding. New Labour are/were neoliberals, as is Osborne and co, and most current Tories (although not One Nation Tories). It's unclear whether Miliband is brave enough to break from neoliberalism (see Mandelson today)
-- re methodology: apologies, I simply don't have the time to look at this; my point is that the leading experts on these issues repeatedly indicate that the gap is getting wider, and the top x% are growing at an exponential rate. And while we're on the critiques of the ASI and IEA, they're also missing the target, because they're not engaging with the runaway growth in wealth of the top x%. What they're trying their hardest to do is to defend the myth that is 'trickle-down economics'. Under neoliberalism, wealth hasn't trickled down, let alone flooded down; instead, it's flooded up.