Foreign Affairs

UN Report: Poor Own Less Than Rich

Another day, another dollar—another media story bemoaning the inequality of the world.

If only inequality could be more evenly shared, I have no idea what the New York Times, CNN, the formerly Big Three and the BBC would whine about then. I suppose that they’d still have global warming and the rights of terror suspects to worry about. Still, even with racism and sexism thrown in, I wonder how they would manage to fill their daily negative content needs.

One of this week’s obligate inequality nuggets was a report released by the UN detailing the fact that the world’s wealthiest own a lot of the world’s wealth. Well, in fairness, the report’s big claim to fame was that it made an earnest attempt to quantify exactly how unequal was the distribution of wealth in the world. Dutifully reported in morose terms were the facts that the wealthiest 2% of the world’s population own half the world’s wealth. By contrast, the poorest 50% of the world owns only 1% of the world’s wealth.

The BBC reported this shocking inequality next to a picture of a Rolls Royce motorcar that was captioned, informatively, “The people at the top of the tree are enjoying the best things in life.” Bastards! Not only do the rich seem to have more money, but now it turns out they have some sort of tree and somehow ended up with better stuff.

The Financial Times showed its acumen for numbers by figuring that “So much of the world’s wealth is concentrated in few hands that if all the world’s wealth was distributed evenly, each person would have $20,500 of assets to use.” I’m not sure why an uneven distribution is the key to the existence of an average, but that’s what they said. Perhaps it seems a sharper statement when printed on pink paper.

Of course, a more complete statement might be “if all the world’s wealth was distributed evenly, each person would have $20,500 of assets to use—destroying the economy and causing a huge spike in sales of useless consumer items. Six months later, the world’s richest 2% would again own 50% of the world’s wealth and the bottom 50% would again be victims of ‘inequality.’”

That’s because the greatest determinate of wealth is culture and behavior—a fact that is usually ignored in reporting the disproportionate and unfair inequality suffered by the underprivileged. Many reporters seem very fond of the term “distribution” when discussing inequality, as in “income distribution” or “the distribution of wealth.” Although the term has a statistical meaning, I don’t think that’s why it is so beloved. If “wealth is distributed so unevenly across the world,” then obviously it needs to be “redistributed.”  It’s just not fair that the wealth fairy distributed so much to so few.

Of course, there is another way to look at inequality. One could note that wealth is a measure of usefulness in satisfying economic demand. There are exceptions to this relationship due to corruption and inheritance (e.g. the Kennedy Family), but overall this rule is more true than not. Looked at this way, the UN report could have declared, “The world’s wealthiest 2% are 50 times more useful than all the poorest 50% combined—what are the poor doing so wrong?”

But the inequality gets worse. My research indicates that the overwhelming majority of welfare and aid programs are being distributed to the poorest 10% of the population. In fact, while the wealthy continue to contribute the greatest share of taxes, those who have already stiffed society by creating a less than equal share of usefulness, often consume more in government services, international aid and charity than they pay in taxes and fees. The inequality of productiveness is a serious problem, and one that contributes very directly to long-term poverty—but one that goes unreported.

Instead we blame the efficient economies for leaving the inefficient economies “behind.” Or we blame the rich for not being more like the poor. Never do we blame the corrupt and backward for failing to keep up, or for failing to carry their share of the load. “Blame” is not the best word here, of course. The poor are not intentionally inflicting their poverty on others. But neither are the rich necessarily harming the poor by creating and managing wealth.

Looking at the problem of “inequality” in terms of blame or guilt is a losing vision. Instead, we should look at why the successful succeed. Wealthy countries all share many cultural traits (intolerance of corruption, a belief in private property, a flexible and motivated workforce, and a love of education and innovation being among them.) No one distributed wealth to Switzerland. The Swiss culture created wealth. And no one failed to fairly distribute equal wealth to Yemen. The county’s culture failed to create wealth.

The greatest inequalities on earth are inequalities of culture. As long as we seek non-cultural solutions to these problems (handouts, treaties, new constitutions, loans, development grants etc.), they will go unsolved.

Unfortunately, most means of cultural influence are now considered unacceptable. Successful nations no longer are expected to expand their borders, export their cultures, or preach their religions.

By contrast, in the name of multiculturalism, the refugees from the world’s poverty-generating cultures are expected to carry their cultures with them into the wealthy societies.

Inside many cultures, the productive are expected to subsidize the unproductive, so that they may remain unmolested by reality in their dependent lifestyle. The subculture of dependency is then transmitted to generation after generation.

Inequality is thus a potentially growing problem.

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