The simplest explanation is probably the correct one. Oxfam writes dodgy reports on inequality because it works. Dodgy reports yield sensationalistic headlines, which drive donations to Oxfam.
You may remember Oxfam for annual dodgy reports on wealth inequality that typically try to tally up how many billion people have net wealth of less than a top handful of people. As Tim Harford pointed out years ago, his friend's daughter, who just received her first fifty-cent piece, had higher net wealth than about two billion people who have negative or no net wealth. Anyone finishing university with student debt, and who hasn't been gifted a pile of wealth by their parents, will be listed as having less net worth than a subsistence farmer in whatever most-destitute place you want to pick. Why? None of the figures count the value of the degree. It's all nonsense.
Noah Smith fisked it over at Bloomberg in 2019; I've had a running series on these things too. Oxfam's numbers are designed to mislead.
And journalists keep getting suckered by them. How can Oxfam help but be a bunch of humbugs when so many people want to believe things that are not true? Tom Hunt turned Oxfam's 2019 numbers into a front page story in the Dom, without any thinking through whether the numbers make any sense. It was quickly apparent that the main action for NZ was in currency movements, and that Oxfam's source, the Credit Suisse report, showed declining wealth inequality in NZ in any case.
But zero NZ journalists bother to check. Because it's Oxfam right? Don't they do good things abroad? Why would they lie, consistently, about the statistics?
Earlier this year, Oxfam put up another one claiming huge increases in global poverty. Noah Smith went through it fairly comprehensively. Bottom line, Oxfam was just inventing huge numbers. And then Noah reminded everybody that "Oxfam is a serial repeat offender of dodgy statistics".
So. When I saw a Newshub headline on a new Oxfam report claiming New Zealand's tax system is ranked 136th in the world in reducing inequality, I groaned. Not again. I hoped that nobody else was going to pick it up. The number was surely so obviously stupid that nobody other than Newshub might run with it.
But then the Herald ran it. And the interview kept conflating wealth inequality and income inequality and making weird claims about the need for a wealth tax when that wouldn't even move the Oxfam measure, which only counts income, consumption, and company tax.
So I had to go through it.
You can read it at Newsroom. The data for it is here - the Google sheet pastes in the Oxfam tables, the OECD tables, then runs the comparative rankings.
The points should be obvious to readers here:
- Looking at any tax in isolation is a mistake; Oxfam complaining about GST being regressive is 1) wrong; 2) stupid because it's part of a progressive tax system.
- Looking at tax in isolation of transfers is even stupider. Imagine two countries. One runs fifty different income tax schedules depending on your household circumstances. The other runs one income tax schedule and then transfer programmes that depend on your household circumstances. You can design the two to yield identical results. But if you rank countries by tax system on its own, you'll wind up saying stupid things.
- The OECD data has NZ middling of 37 countries when assessed on tax and transfer. We start with low(ish) market income inequality and we wind up with middling after-tax-and-transfer income inequality. Take the difference as a percentage and NZ's tax and transfer system is 18th of 27. Middling. Like should be obvious to anybody who's ever looked at this freaking data.
- Any ranking of the inequality-reducing powers of tax systems that puts the US ahead of Sweden, and Costa Rica ahead of either us or the Swedes - how can you believe anything in the report if you see that? What's wrong with you? In the OECD data, Costa Rica starts with the highest market inequality among OECD-ranked countries, and still has the highest income inequality after tax and transfer, and has the system that does the least to reduce income inequality regardless of whether you measure it as a Gini-point difference or as a percentage reduction in the initial Gini measure. And Oxfam had Costa Rica ranked more than a hundred places above New Zealand. Even if you don't know anything about Costa Rica - how could you miss that they've ranked the US ahead of Sweden? Don't American and Kiwi social democrats constantly yearn to be more like Sweden? Think about it for half a second.
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