David R. Henderson is exactly right in his title but way too kind in his WSJ Op-Ed entitled A War On The Rich Won’t Help The Poor that analyzes the Oxfam report Reward Work Not Wealth. David starts out with a dichotomy that he shows a counter example of later:
There are two ways to close the gap. The first is to concentrate on making the poor better off. Mostly that has happened, thanks to liberalized international trade and reduced costs for shipping goods. Just as Walmart and Amazon have cut costs for Americans, the introduction of container shipping crushed transportation costs for the world. The second way to reduce inequality is to make the rich worse off. Any guess which method Oxfam’s report emphasizes? “Governments should use regulation and taxation to radically reduce levels of extreme wealth,” the authors conclude.
The problem is that he has accepted the Oxfam starting point that inequality is the problem. Inequality is not the problem and Oxfam is (or perhaps no longer is) an antipoverty organization as David describes it. The Oxfam report uses the catch phrase, “Even It Up.” The first might not close the gap as David demonstrates:
Say that wages in a developing country rose by 10%, and in the U.S. by only 1%. For a family in the poor country earning $2,000, that would mean an extra $200. But for a family in the U.S. making $50,000, it would equate to $500. In other words, income inequality would increase, even though wages grew 10 times as fast for the poor family.
The second way has no assurance that it will close the gap either. Eating the rich, or some variant of it, will likely have a negative impact on the poor. Will the gap, however measured, be reduced or increased? It should not matter because making the poor worse off is a bad idea. Go check out Venezuela. We are sure there are studies of various plans to punish the rich but we doubt they are definitive. The solution is to work on poverty by encouraging markets, rule of law, free trade, allowing GMOs, and so on. Income inequality is uninteresting and unimportant. Don’t get sucked into it.