If one morning I had gone overboard across the Potomac River, that afternoon’s headline would have read, “The President Can’t Swim”. President Lyndon Johnson is believed to have said. President Johnson’s complaint was about the media’s tendency to detect a downside even for miraculously positive developments, and to highlight it in reports. The trouble with Oxfam’s inequality report goes beyond a penchant for the negative: it completely erases positive developments from its narrative.
The Oxfam type inequality report is useful for sensitizing those who live in a world of material comfort in their immediate physical environment and in a world far beyond their own patterns of cultural consumption, to the reality of avoidable deprivation and gross grow. inequality in the world. Furthermore, it’s worth dismissing with indulgent firmness its recommendations on how to reduce inequality, usually reserved for the grumpy older relative, who never misses the chance to urge you that happiness is the only source of happiness. The route goes through waking up at 4 a.m., taking a cold shower and performing Prayer and meditation.
The second half of the 20th century has seen more people emerge from the plight of sub-human existence, in which poverty has imprisoned people for millennia, around the world than at any previous period in human history. People who receive an education, eat well, are nourished by no intestinal parasites and have access to health care, can deploy their human creativity and lead a life that is both physically and aesthetically fulfilled. can. A greater proportion of high school graduates go to college today than ever before. This always lays the groundwork for further prosperity and refinement. It is not Oxfam’s job to take into account such massive progress; Its only focus is poverty and want and inequality. The point is not to be co-opted into the Oxfam worldview.
Yes, the pandemic has worsened global poverty, pushing millions into poverty who had climbed out of reach. The pandemic has also seen governments across the world ramping up welfare spending to unprecedented levels. Small government ideologues are clamoring for quantitative easing and welfare checks. Governments respond to the political economy that shapes the priorities of their citizens, and have adopted redistribution policies without the aid of advice from global charities.
Oxfam is spot on to support policies that remove barriers to popular participation in global production, whether based on race or gender discrimination. But it ignores the history of how nations have prospered when it insists on taxation on wealth and redistribution as the primary means of reducing inequality.
Certainly, a country like India needs to increase its tax revenue as a ratio of GDP from its current pathetic level of GDP, which is almost half of the OECD average. We have implemented the Goods and Services Tax, which generates a variety of audit trails, followed by and analysis of the data generated by them is the way to increase tax collection efficiency for both direct and indirect taxes. Tax leakage needs to stop.
Large companies do business on a global scale, but taxation is done country-wise, giving a lot of scope for tax planning and tax avoidance. A global tax deal recently agreed upon by the wealthy country club OECD would eliminate base erosion and profit transfers, reducing the scope for tax avoidance. This is to be achieved by forcing every country, including tax havens, to have a minimum rate of tax and empowering every jurisdiction to levy some tax on large corporations capable of doing business in the jurisdiction without a taxable establishment in that jurisdiction. .
Creating new wealth through production processes in which there is widespread popular participation is the way to eliminate scarcity, not so much to remove the incentives for wealth creation through excessive taxation of wealth and income.
The problem is that media coverage of the Oxfam report tends to over-simplify and exaggerate, distort the political narrative surrounding poverty and inequality, and, many would argue, trigger poor policy choices that are the root causes of deprivation. do little to address. Over the years, the flaws in Oxfam’s methodology for estimating inequality have been pointed out by serious inequality researchers: it excludes income from liabilities and assets to arrive at its estimates. This is problematic. Loans for education are liabilities today but they will be paid later. Similarly, Oxfam does not treat home purchase loans as investments, which distorts its assessment of inequality.
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