Oxfam report on the wealthy conflates Bill Gates with Carlos Slim
A recent report from Oxfam has sparked concerns over wealth inequality in Canada. Unfortunately, discussions about wealth inequality too often overlook a critical point—how wealth is accumulated. This matters for any assessment about the state of wealth inequality.
We should all decry wealth gained through cronyism (as Oxfam does), where people become wealthy due to political favours, receiving handouts or special privileges from governments at the expense of everyone else. Examples of this are when governments provide subsidies to their favoured companies, grant monopolies to the politically connected, or protect certain industries from competition. And of course, there’s no justification for wealth amassed through corruption and outright theft.
Simply put, wealth gained through cronyism or corruption comes at the expense of citizens.
But wealth is not always accumulated through nefarious means. Wealth can also be earned in a way that actually benefits others. Indeed, many entrepreneurs and businesspeople accumulate wealth by serving their fellow citizens. They take risks in creating and developing companies that aim to provide people with goods and services they demand. Unlike cronyism and corruption, accumulating wealth this way doesn’t come at the expense of others. In fact, many people benefit by receiving products they desire at prices they are willing to pay.
Unfortunately, in its condemnation of the wealthy, the Oxfam report says nothing about how many individuals amass their wealth through mutually beneficial exchanges. Indeed, the report overlooks the benefits that many of the world’s wealthy have brought—not just in terms of goods or services but in terms of the opportunities created for workers to prosper and succeed.
Instead, the report conflates wealth earned by the likes of Bill Gates with Mexico’s telecom giant Carlos Slim (pictured above). Gates amassed his wealth by founding Microsoft, a company whose innovations and products have not only revolutionized human interaction but have been purchased willingly by millions of people seeking to better their lives. Compare this to Carlos Slim, who owes much of his wealth to the Mexican government shielding his business interests from competition in that country’s telecommunications industry, allowing Slim’s company to charge higher prices than it would have in a competitive market.
Moreover, the report fails to recognize that some countries have economic systems and institutions that encourage wealth accumulation through productive means. As a recent Fraser Institute study points out, while Ukraine has lower levels of economic inequality than Canada, Ukraine also ranks much lower on international measures of perceived corruption and economic freedom. Specifically, Transparency International’s Corruption Index gave Ukraine a score of 2.4 (out of 10) compared to Canada’s 8.9. And the Fraser Institute’s Index of Economic Freedom gives Ukraine a score of 5.9 (out of 10) compared to Canada’s 8.1. Despite being more equal overall, issues of cronyism and corruption are more pervasive in Ukraine than in Canada.
Simply looking at the extent of inequality without considering all the different sources of that inequality paints an incomplete picture. Distinguishing between different sources of wealth, particularly between wealth gained through cronyism and corruption versus wealth accumulated through legitimate productive means, is critical for assessing reports such as the latest from Oxfam.