Tell Oxfam World on Cusp of Poverty Eradication

By Jasson Urbach

OXFAM’S motto is “the power of people against poverty”. You could be forgiven for assuming it promotes proven policies that lift the poor out of poverty. Instead, in its latest report, released to coincide with the annual gathering of the rich and powerful at the World Economic Forum in Davos, Switzerland, the group once again focuses exclusively on the rich and calls for failed economic policies that empower governments and stifle economic growth.

Oxfam’s obsession with redistributing the wealth of the rich overlooks the tremendous strides that the world has made in recent decades to eliminate poverty.

The World Bank classifies persons with incomes of less than $1.90 (R26) per day as living in extreme poverty. It demonstrates that extreme poverty in the developing world has shrunk from 57% in 1980 to 35% in 2000 and 10% in 2015. The World Bank’s preliminary forecast is that extreme poverty declined to 8.6% in 2018.

As the World Bank Group’s outgoing president Jim Yong Kim stated, “Over the last 25 years, more than a billion people have lifted themselves out of extreme poverty, and the global poverty rate is now lower than it has ever been in recorded history. This is one of the greatest human achievements of our time”.

For an organisation that purports to be focused on eliminating poverty, Oxfam strangely overlooks the fact that the world is on the cusp of a historic feat – the complete eradication of extreme poverty.

This remarkable achievement has been thanks to the wider adoption of more open trade and free market policies that promote individual liberties.

According to the research organisation, the Fraser Institute, “The developing countries that moved most markedly toward economic freedom achieved both strong economic growth and substantial reductions in poverty. This indicates that an institutional and policy environment consistent with economic freedom is an important ingredient of progress against poverty.”

In simple terms, if you are poor, the best place to live is in economically free societies where government intervention is kept to a minimum. That is why millions of people trying to escape despotic nations seek refuge in the most economically free nations on earth.

In addition to its proposals on how wealth and income should be redistributed, Oxfam calls on governments to “curb corporate tax dodging” by implementing “a much more ambitious set of global reforms... that reverse the race to the bottom on corporate tax”.

But companies do not pay taxes. People pay taxes. Most large corporations are owned by shareholders (people) and groups of people such as government employees through their pension funds.

Since pension and mutual funds are collections of the savings of millions of middle- and low-income individuals, when Oxfam calls for increased taxes or complains companies are not paying their “fair share”, they are calling for reduced dividends, pension fund pay outs and so on. High corporate tax rates reduce the returns on the investments and life savings of individuals.

If, as a shareholder, you do not like the idea of a company trying to maximise your returns, just sell your shares. Nobody forces anyone to invest in any company. What could be more democratic?

To permanently help the poor, history demonstrates that what is required are greater levels of economic freedom characterised by less government intervention. This is the proven and surest path to increased economic prosperity.

A cynical observer might ask why Oxfam keeps on giving governments such bad advice. Perhaps it is because Oxfam is only all too aware that if governments keep liberalising and world economies keep growing, it will then be out of a job.

Jasson Urbach is a director at the Free Market Foundation.

The Free Market Foundation (FMF) is a classical liberal think tank located in Bryanston, Johannesburg, South Africa. Founded in 1975, the FMF was established to further human rights and democracy through the principles of an open society, the rule of law, personal liberty, and economic liberalism and press freedom. According to The Mercury editor Fikile-Ntsikelelo Moya, the FMF is a "libertarian think tank" wanting "unfettered capitalism" which "eschews all forms of state intervention in the life of the individual citizen". In 1987, Leon Louw, the FMF's Executive Director, described the work of the FMF as follows:

"We mobilise public opinion, we lobby, we fight government, any government, and make representations and submissions. Our objective is to create a climate of public opinion among politicians, radical groups and unions in favour of free markets."