Are Many Americans Really Some of the Poorest People in the World?

 

Anti-poverty group Oxfam has published a report making some flashy claims about global inequality. Among them: Just 62 individuals had the same wealth as 3.6 billion people — “the bottom half of humanity” — an estimated $1.76 trillion. Also, the richest of the rich are hiding $7.6 trillion in a “global network of tax havens.”

Now apparently one of Oxfam’s main data sources was a wealth report from the bank Credit Suisse. Note this chart from the report showing which regions have what share of rich and poor and in between:

011916CSwealthNow, look at that bit of blue at the top left-hand corner, which suggests North Americans (Europeans, too, in aqua) represent a big chunk of the the poorest 10% of people in the world. China on the other hand, has virtually none of the world’s poorest. That, even though the US and Canada have a per capita GDP of about $70,000 a year versus less than $10,000 for China. Really?

Well, it all makes more sense when you realize “wealth” is defined as the present value of all assets minus debts. So, as the CapX blog pithily points out, “A young investment banker with student debts is deemed one of the poorest people in the world. However, a rural farmer in India with minimal savings is considered richer than the young investment banker.” Likewise this from the Adam Smith Institute:

By Oxfam’s measures, the poorest people in the world are recent Harvard graduates with student debt piles. The bottom 2bn don’t have zero wealth, but rather about $500bn of negative wealth. The poorest person in the world is richer than the next 30% put together. Having negative wealth may actually be a sign of prosperity, since only people with prospects can secure loans. But there is a bigger issue with the narrative: more meaningful measures show greater equality. Those in the middle and bottom of the world income distribution have all got pay rises of around 40% between 1988-2008. Global inequality of life expectancy and height are narrowing too—showing better nutrition and better healthcare where it matters most.

And this from Felix Salmon of Reuters:

Some poor people have modest savings; some poor people are deeply in debt; some poor people have nothing at all. (Also, some rich people are deeply in debt, which helps to throw off the statistics.) By lumping them all together and aggregating all those positive and negative ledger balances, you arrive at a number which is inevitably going to be low, but which is also largely meaningless. The Chinese tend to have large personal savings as a percentage of household income, but that doesn’t make them richer than Americans who have negative household savings — not in the way that we commonly understand the terms “rich” and “poor”. Wealth, and net worth, are useful metrics when you’re talking about the rich. But they tend to conceal more than they reveal when you’re talking about the poor.

It’s also very much worth mentioning that global extreme poverty — defined as $1.90 a day by the World Bank — has fallen to 700 million, or 9.6% of the world’s population, from nearly 2 billion, or 37.1% of the worlds population in 1990. Did this happen through a global wealth confiscation and the closing of tax havens? No. It’s due to faster economic growth in Asia. And how do nations achieve that? From The Economist:

The world now knows how to reduce poverty. A lot of targeted policies—basic social safety nets and cash-transfer schemes, such as Brazil’s Bolsa Família—help. So does binning policies like fuel subsidies to Indonesia’s middle class and China’s hukou household-registration system (see article) that boost inequality. But the biggest poverty-reduction measure of all is liberalising markets to let poor people get richer.

There are 15 comments.

  1. Merina Smith Inactive

    As they say, you can make statistics prove anything you want.

    • #1
    • January 19, 2016, at 11:04 AM PDT
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  2. Valiuth Member

    What was that famous quote? “Lies, damned lies, and statistics.”

    • #2
    • January 19, 2016, at 11:08 AM PDT
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  3. Misthiocracy secretly Member

    It’s an attempt to counter the meme that everybody who earns more than about US$35,000 per year is a member of the global one-percent.

    If North Americans, as individuals, realized just how rich they actually are they wouldn’t agitate against “the rich” nearly as much.

    On the other hand, conservatives can still use this graph to illustrate the inherent economic strength of the Chinese people, if not their leaders.

    That bulge between the 6th and 9th deciles represents a heck of a lot of wealth, and their lack of representation at the bottom end illustrates their trend towards saving rather than borrowing.

    In other words, the “Global Middle Class” is utterly dominated by China, and they didn’t get that way by maxing out their credit cards.

    Meanwhile, the section of the graph devoted to India kinda spoils the hopes of that country being much of a “democratic alternative” to China in the immediate future.

    As a measure of poverty this graph is pretty useless. As a measure of the economic health of the various regions, it’s pretty interesting, useful, and perhaps a bit startling. I thought India was in way better shape than this graph suggests.

    • #3
    • January 19, 2016, at 11:31 AM PDT
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  4. Johnny Dubya Inactive

    Just 62 individuals had the same wealth as 3.6 billion people — “the bottom half of humanity” — an estimated $1.76 trillion.

    This is the sort of statistic that gets progressives whipped up into an outraged state of MVAE (Moral Vanity and Exhibitionism).

    Personally, I find factoids such as this somewhat interesting, but no more worthy of harrumphing about than are facts about the global variability of human body height.

    Rather than thinking, as the progressives do, “If those 62 individuals only gave X% of their wealth to the bottom half of humanity…”, my thinking runs along the lines of, “If the super-wealthy weren’t taxed so punitively, they would be able to donate more to worthy causes that help the poor globally.”

    • #4
    • January 19, 2016, at 11:50 AM PDT
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  5. Misthiocracy secretly Member

    Johnny Dubya:

    Just 62 individuals had the same wealth as 3.6 billion people — “the bottom half of humanity” — an estimated $1.76 trillion.

    This is the sort of statistic that gets progressives whipped up into an outraged state of MVAE (Moral Vanity and Exhibitionism).

    Personally, I find factoids such as this somewhat interesting, but no more worthy of harrumphing about than are facts about the global variability of human body height.

    Rather than thinking, as the progressives do, “If those 62 individuals only gave X% of their wealth to the bottom half of humanity…”, my thinking runs along the lines of, “If the super-wealthy weren’t taxed so punitively, they would be able to donate more to worthy causes that help the poor globally.”

    Gotta remember, this isn’t measuring income or liquidity. It’s measuring all assets.

    How much of the wealth of those 62 individuals is tied up in assets they cannot reasonably liquidate, like their ownership in a particular company, without decimating the value of the asset?

    How much of this wealth is highly variable and dependent on stock prices, commodity prices, etc.?

    One could argue that this graph is measuring ownership of the means of production more than it measures rich folks’ ability to throw money around.

    • #5
    • January 19, 2016, at 12:21 PM PDT
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  6. donald todd Inactive

    Having seen some real poor people I know that real poor people are real thin. It seems to have something to do with a lack of food. If there are some real poor people in this country, I’d be surprised.

    • #6
    • January 19, 2016, at 12:31 PM PDT
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  7. Zafar Member

    North America includes

    • Mexico
    • Guatemala
    • Honduras
    • Nicaragua
    • Costa Rica
    • El Salvador
    • Panama

    .

    Some of these countries might be where most of the poor North Americans on the chart come from.

    • #7
    • January 19, 2016, at 1:19 PM PDT
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  8. RyanFalcone Member

    Given the methodology, could the poorest people in the world be Americans who are being consumed by their massive debt?

    • #8
    • January 19, 2016, at 1:25 PM PDT
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  9. Misthiocracy secretly Member

    Zafar:North America includes

    • Mexico
    • Guatemala
    • Honduras
    • Nicaragua
    • Costa Rica
    • El Salvador
    • Panama

    .

    Some of these countries might be where most of the poor North Americans on the chart come from.

    I downloaded the Databook from which this chart is derived. Everything south of the US/Mexico border is part of Latin America for the purposes of this study.

    The relevant table starts on page 19.

    (Interestingly, Greenland is included as part of North America, but it contributed no data to the study.)

    • #9
    • January 19, 2016, at 1:34 PM PDT
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  10. Ekosj Inactive

    My favorite statistics quote is applicable here …

    Statistics are like a light pole….they can provide either illumination or support for a drunkard.

    • #10
    • January 19, 2016, at 1:36 PM PDT
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  11. Zafar Member

    Misthiocracy:

    I downloaded the Databook from which this chart is derived. Everything south of the US/Mexico border is part of Latin America for the purposes of this study.

    Oops. Why oh why don’t people respect geography? It makes me sad.

    • #11
    • January 19, 2016, at 1:57 PM PDT
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  12. dbeck Inactive

    I don’t care as long as (fill in the blank) takes care of me. Let them eat cake.

    • #12
    • January 19, 2016, at 2:36 PM PDT
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  13. Valiuth Member

    Zafar:

    Misthiocracy:

    I downloaded the Databook from which this chart is derived. Everything south of the US/Mexico border is part of Latin America for the purposes of this study.

    Oops. Why oh why don’t people respect geography? It makes me sad.

    People are just lazy, but so many of these groupings come down mixing up cultural vs. geographic groupings. North America is Anglo and Mexico and south is Iberian. Much like how people make Egypt part of the Middle East and not Africa because Egyptians aren’t black and African means black so everyone just forgets about Everything north of the Shara when thinking of Africa. Or Asia coming to mean Chinese, Korean, or Japanese, but not Indian or Pakistani. Granted in its original meaning Asia would mean Turkish.

    • #13
    • January 19, 2016, at 3:14 PM PDT
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  14. I Walton Member

    I find the issue most often approached with dishonesty and ideological bias. Wealth and poverty are not mysterious but like everything else require honest inquiry to understand. Extreme poverty and extreme wealth have been the norm throughout history, but some civilizations broke the norm even if for only short periods by historical standards and they are the ones to study. In the modern period, those with wealth and upward mobility and broad income distribution are those of us that inherited British Common law and Christianity, and the Nordics and Germans on the other. Japan is unique and we can’t learn much about ourselves by studying them. Classical Greece was wealthy and the wealth was broadly distributed and they were very literate so we know about it. Where else?

    • #14
    • January 20, 2016, at 5:33 AM PDT
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  15. Mark Wilson Member

    James Pethokoukis: Well, it all makes more sense when you realize “wealth” is defined as the present value of all assets minus debts. So, as the CapX blog pithily points out, “A young investment banker with student debts is deemed one of the poorest people in the world. However, a rural farmer in India with minimal savings is considered richer than the young investment banker.”

    It’s always irked me how “wealth” on paper is so often used as shorthand to imply something about standard of living.

    • #15
    • January 20, 2016, at 2:56 PM PDT
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