Note: This was originally published in 2014, however the 2015 Oxfam report is just as dumb – claiming that the richest 1 percent in the world will have amassed more than half the world’s wealth by 2016.
Making the rounds this week is a report from Oxfam detailing so called wealth inequality. The major headline is that 85 billionaires have as much wealth as 3.5 billion people combined. As Slate puts it:
In other words, the top 0.00000001 percent are worth as much as the bottom 50 percent combined. The top 1 percent, meanwhile, control nearly half the world’s wealth, or 65 times as much as the world’s less-fortunate half.
That sounds astounding. It seems almost inconceivable that 85 guys could have more wealth than 3.5 billion people combined. But then you have to put your 8th grade thinking cap on and realize that 3.5 billion times zero is, well, still zero.
Because the reason they have as much net wealth as 3.5 billion people is because those people have near zero net wealth – it has nothing to do with how much money the billionaires have. In fact, if you do the math and assume on average each of the billionaires has something like $50 billion (on the high end), that meanss each of the 3.5 billion people a net worth of around $1,000 each – essentially meaning their net worth is about the same as 1/15th a Ford Fiesta.
No one is saying that is a good thing that half of the world has zero or near zero net worth. Just that net worth is a shitty way to measure wealth. To put it simply, an unemployed hillbilly who just sold a possum carcass to his dentist/bartender for $5 and a can of Busch light has a greater net worth than all of the first year cardiologists in the US combined. Why? Because despite making a good salary, cardiologists have massive debt.
Similarly, the average Nigerian has a greater net worth than the average first year lawyer in the US, regardless of whether or not they scammed your aunt’s money via email. So despite the fact that a first year lawyer may make $100k, lives in a posh apartment, and do rich people things like get the Pottery Barn catalog mailed to his door, he has $100,000 in student loan debt which makes him “poorer” than an African child who doesn’t even have enough money to travel to a bank to ask for a loan.
Even most Americans have near zero net worth. The median American has around $38,000 in net worth – or about what you can win in a day on Jeopardy. 20% of Americans have negative net wealth which means that if you’re not in that group, you have more wealth than SIXTY MILLION AMERICANS COMBINED!!!
Do you see how scary and rich and powerful that makes you sound? You’re an evil rich person, even though technically you could be in that category and still not have enough money to purchase a stuffed mouse for your cat. (Notice you can never be too poor to have a cat. Somehow the poorer you are, the more cats you acquire.)
So in the end it doesn’t mean a whole lot that 85 billionaires have as much net wealth as the rest of the world combined. All it means is that the majority of the world isn’t sitting on fat stacks of cash and has to work for a living. But don’t get confused and think that wealth inequality isn’t a problem. It is, and it appears to be growing. So much so that we don’t need stupid studies and distorted statistics to prove it.