Kate Andrews Kate Andrews

Capital punishment: why wealth taxes don’t work

No new year would be complete without the traditional Oxfam survey showing that a few of the richest people on the planet own more assets than the poorest 50 per cent of the world’s population combined. The figures change, but the gist is the same. January is usually a slow month, and it makes for startling headlines, intended to get us thinking about capitalism’s shortcomings.

It’s also been tradition, for those of us more positive about free markets, to offer a retort: before Covid, global poverty was falling at the fastest rate in history. Global inequality was narrowing because of capitalism, not despite it. Oxfam arrives at its figures by calculating, for example, that a recent Harvard graduate with $250,000 of student loans is worse-off than a rural Chinese rice farmer, because her ‘net wealth’ is technically lower. Such statistical stunts do little to assess — or help — the world’s poorest citizens. But they serve as a yearly reminder of the strange nature of wealth: how prosperity cannot be easily captured by crude figures, clumsily interpreted.

This year, though, Oxfam changed its approach. It abandoned its usual focus on wealth inequality and instead switched to an assessment of lockdown inequality. ‘The recession is over for the richest,’ it claimed this week, while the consequences of economic hibernation linger on for everyone else. The poorest are looking at an uphill recovery for the better part of the decade. And here, Oxfam has a point.

The pandemic has beenone of the biggest drivers of inequality in living memory

The pandemic — and subsequent measures to curb its spread — has been one of the biggest drivers of inequality in living memory. Lockdowns are, by nature, nationalistic: countries turn in on themselves and worry less about the outside world. We may furlough our own workers, but what about the millions outside of our borders forced out of work by the sharpest economic collapse in modern times? The poverty caused by Covid could kill more people than the virus itself, according to the United Nations.

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