Gasp! The rich are getting richer and the poor are getting poorer! In 2020 only one person will own half the wealth on the planet! We’re all going to die!

Or, wait, are we really?

As Leon Louw points out so eloquently in his talks on the matter, the latest global scare – the next big thing, the next reason people around the world will need to sacrifice their personal and economic freedom – after Global Cooling, the Cold War, Global Warming, and the Financial Crisis, is inequality.

Oxfam, the world’s largest charity – read that again: charityclaims that eight men have the same wealth as half of the world. This ‘charity’ believes that there is some sort of inherent problem with this state of affairs.

The 48 page report – by the charity – is rife with fallacies and assumptions which have no basis in the real world. To name but one example, the report (on pages 5 and 12) relies on a quote by American billionaire Nick Hanauer, who said “No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out.”

The opposite, as we know, is true. There is no example in human history where wealth accumulation per se has led to pitchforks coming out. Marxism, on the other hand, did lead to AK-47s coming out. Cronyism, on the other hand, did lead to riot police coming out. Wealth accumulation? Not so much. Be ever wary of the left’s slight of hand. Their mere insistence that something has happened is not enough ‘proof’ that it did, in fact, happen. I patiently await the day when they will be able to produce an example where violent conflict has broken out because the mass of the poor were painfully envious of the rich.

The cult of inequality – otherwise known as people who bought into Marxian logic without bothering to see if it holds any economic validity – believes that conflict springs from wealth inequality (Or is it income inequality? What about capital inequality? I don’t remember what we’re outraged about, today.), when, in fact, conflict has sprung out of the intellectualist agitation for conflict. The Marxist theory of revolution is nothing but a self-fulfilling prophesy, because the peasants rise up because their Marxist leaders tell them to, not because they are unhappy about inequality.

Inequality – speaking from a social and economic perspective – is meaningless. Politically, on the other hand, inequality has been become a powerful tool in the hands of the political class (and the Oxfam report does not hesitate to sing the praises of government). It is the ‘unlimited political capital’ cheat which politicians enter when they don’t know what else to say. It is the epitome of political scapegoating when politicians have to explain why government programs fail to alleviate poverty, which is something they inherently cannot do.

Inequality is a perfectly natural consequence of human conduct and voluntary, mutually-beneficial engagement in the economy. In South Africa, Apartheid exacerbated inequality tenfold. However, since all South Africans received property rights in 1993 and the black middle class has grown to a size greater than the entire white population, it is fair to say that the inequality which persists nowadays has less to do with malicious or fraudulent conduct, and more to do with life just carrying on. The poverty in South Africa, however, is another story, and the reason it persists, is nothing other than the government and its dead hand in every industrial pie.

The report says the following, on page 33:

“Extreme wealth and extreme inequality do not exist in a human economy. This could be achieved by helping design businesses and the economy to ensure that excessive wealth is not generated in the first place, for example, by putting limits on the pay of those at the top and encouraging business models that do not provide undue reward to shareholders.”

The arrogant elitist mentality of the left can hardly be summed up better in one paragraph. In their infinite wisdom, they are able to dictate to businesses and the people who work in them, what is and what is not ‘excessive wealth’, and what is and what is not ‘undue reward.’ How do they measure what is due, and what is excessive? In all likelihood, they will say anything more than what is required to live comfortably is excessive, which opens another can full of fallacies, all of which will spring out of the left’s refusal to read basic economics.

Acknowledging that value is subjective, how can the great economist kings at Oxfam tell others how they should measure comfort?

But they won’t acknowledge that value is subjective, simply because Oxfam is socialist. And socialists believe in the labor theory of value. This nonsensical ‘economic’ theory dictates that the value of something is determined by the amount of time and effort it took to produce it. And because we sell these things we produce at their value, how is it that greedy bosses can make a profit? The socialist answer, of course, is that there is ‘surplus value’ – work that the worker is compelled to do above and beyond what it took to produce the value of the thing. In other words, workers work (significantly) longer hours for which they are not paid, and the greedy bosses walk away with massive profits for which they themselves did not work.

The labor theory of value, on the surface of modern economics, has not been taken seriously for generations. Value is subjective – something is only worth as much as consumers are willing to exchange for it. If I am dying of thirst in the desert, a glass of water has a much higher value than a truckload of solid gold. Even if a worker puts weeks of work into producing a particular product, that work and that product is worth nothing if nobody wants it. However, despite the consensus rejection of Marxist pseudo-economics on the surface, the labor theory of value lingers heavily; even if only under the surface of modern discourse, especially here in South Africa.

And make no mistake, Oxfam is not simply a confused ‘progressive’ institution. It’s an avowedly socialist institution per se, even though it might not want to say so explicitly. For instance, on page 29 of the report, the charity makes the following suggestion for how the government can better serve the people:

“A revival of economic planning and strategic investment by states for progressive outcomes.”

Because economic planning always works out so well, right?

The South African press media, of course, has allowed the Oxfam (i.e. the charity) report to monopolize its airwaves. Woke radio stations are popularizing the #inequality hashtag and everyone from the intellectualist class wants a chance to publicly vent their outrage, so they can multiply their virtue signalling score.

Don’t be too quick in gobbling up the inequality narrative. It is rife with fallacies and misunderstandings of economics, but mostly, it consists of slights of hand with data and outright deception.

Even if you don’t agree with me, or you have a healthy skepticism about receiving any kind of information from an overtly ideological platform such as the Rational Standard, at least do yourself the favor of thinking about these things before just eating up what the press media and intellectual elites have to tell you. It is your own freedom which depends on it, after all.

  • Oh thank goodness someone took Oxfam to task. It’s true that inequality is one of the most widely cited and most widely misunderstood measures out there. It is worth spending some time on Wikipedia reading up on the Gini coefficient, its limitations and how it doesn’t mean anything when it’s a big number or a small number. It’s just an index, and by itself, it does not indicate a desirable or undesirable state of affairs.

    If you had a low level of income inequality in say Saudi Arabia, but all the wealth is still concentrated in the hands of many ruling families, you’d arguably be worse off as an average Arab living there than what you would be as a wage worker in a country with more economic opportunities and a wider income gap.

    In fact, shortly before the much vaunted Arab Spring, income inequality was on the decline…

  • Thank you, Martin, for writing what very few people point out when debating with economic progressives. Very few ever point out the fundamentally flawed theoretical foundations of their ideology.

    Looking at the construction of value, they don’t take utlity theory into consideration. Consequently, they find themselves basing their ideas on the labour theory of value. That alone shakes the base of anything they have to say with regards to economic matters.

    They also seem to be part of the camp that views the economy as a zero-sum game, and thus wealth, immoral. To them, wealth accumulation rather than forced redistribution is theft; income and wealth redistribution to them is justice. Should there be the lack of economic opportunity, they don’t view the state as the problem but the solution. They say they want to liberate people economically and their solution is to impose heavier economic restrictions upon them. This is just a case of the progressive pattern of solving ‘problems’ by inverting them, mirroring them, or contradicting themselves.

    They talk about inequality as if it’s the same as poverty. Well, they do not have sufficient evidence to relate the two. To overcome this, they construct other unverified problems with inequality such as the separation in the experiences of different people in a society, as if that’s even a problem to begin. And when that is debunked they consruct another one. They fail to mention that poverty is decreasing as people are becoming more educated and attaining more specialised skills. Those left behind are often people who are structurally unemployed, such as the case with South Africa (another problem with Trump’s rhetoric). It would be their desire to regress specialisation and skill demand to keep us in a stalled economy where their concept of the fixed pie in the sky becomes a reality. The schools of Adam Smith and Milton Friedman have already explained how wealth grows and history has proven them. Oxfam is one of the entities on the camp that specialises in revisionism because historical evidence disproves the core of their claims.

    In order to efficiently debate with those who take flawed stances and misinform the public, instead of bashing them with 140 characters when they give dress up as intellectuals and present us with reports, we need to deconstruct them on a theoretical and practical level with sound theory and good evidence. Otherwise, thanks to a phenomenon I call cosmeticism/superficialism, they will continue being taken too seriously for people to see their flaws and lead public opinion into a dangerous bubble of ideas. Once again, thank you, Martin for having writing on the issue. For there to be debate, there should be at least one opponent and I hope more will join you on the front to retain and preserve the liberty of every individual. If we don’t guard our liberties against those who wish attain power over us for any reason, we will find ourselves working as serfs, slaves and servants again. We should not take for granted Milton Friedman’s warning that, “The road to Hell is paved with good intentions.”

  • Harald Sitta

    Very well written! The challenge is that the hefty-lefty chatting class are chewing and chewing this nonsense. Basically they all want the old commando system back. The first point is that NOBODY in this world has the information to make that claim. it is the same with this bloody GINI coefficient. Nobody possesses the data and we all know if a big amount of data is collected and analyzed at the time of making a conclusion the data are outdated. Second – my response- if one speaking about inequality is always: Inequality in intelligence, culture, style, elegance, behavior, education, tact, manners .. what you mean ? Long faces are the response.And if the usual suspects say it is about material wealth then i say : why discussing materialistic and not idealistic things first ? And finally i do not give a damn if I have 5 bottles of Champagne and another one 500 !!

    BY THE WAY; what about my articles in the pipeline >> US election and ‘political hegemony’ ???? Thank you, H.S.

  • Adoons Blou

    People who support equality politics prefer not to have the tens of thousands of jobs that people like Bill Gates and Mark Zuckerburg create through their enterprises. They prefer that everybody remains equally poor.

  • Steven van Staden

    Thank you for taking this up. It never ceases to amaze me how many misnomers are bandied about in political propaganda with the intention that repetition will transform deceit into truth. As noted, equality before the Law – to quote but one example – is to be fought for because it should be achievable. On the other hand, equality of intelligence – again, to quote but one unfortunate example – is so unattainable that the religious among us would need to call upon their gods to fix that one up. It’s interesting that among all animals this difference in endowment is by far the greatest in our species, and certainly not entirely due to nurture.