Economic Myths #13 – Wealth Inequality and “The 1%”


Economic Myths #13 – Wealth Inequality and “The 1%”

By Duncan Whitmore

The inequality of wealth and income is a frequent bone of contention in the mainstream media. According to The Guardian, 1% of the world’s population will own two-thirds of its wealth by the year 2030. A typical response to this kind of revelation is the following utterance from the Executive Director of Oxfam in 2015:

An explosion of inequality [is] holding back the fight against poverty. Do we really want to live in a world where 1% own more than the rest of us combined?

The mainstream debate over this issue fails to understand the true nature of the problem (although, interestingly, The Guardian article referred to above is unusually far sighted in recognising some of the causes of inequality).

The pro-free market side is wont to point out that such inequality “doesn’t matter” and that governments should not do anything to interfere with the progress of business. The likely call from the opposite side, however, is for increased taxation and redistribution and, indeed, Oxfam itself stressed the need for a greater crackdown on tax avoidance by large, multinational corporations. However, the reality is much more nuanced than the false dichotomy between “pro-business” and “pro-government/anti-poverty”. Continue reading

Economic Myths #10 – Taxes Benefit “Us”


Whenever there is the appearance of some headline berating large corporations for arranging their affairs so as to pay as little tax as possible on profits earned in the UK, the indignation from the general public seems to centre on the belief that the “lost” state revenue was somehow a “lost” benefit to the average citizen. After all, won’t lower tax revenues result in fewer hospitals and worse schools? Such was the fury greeting the news, on August 3rd of this year, that Amazon UK’s tax bill fell from its 2017 figure of £7.4m to just £1.7m in spite of pre-tax profits having almost trebled.

Unfortunately for libertarians, tax avoidance (together with the deliberate blurring of the legal and moral distinction between that concept and that of tax evasion) has become a favourite topic of heavily indebted governments as they attempt to balance their books without reducing their profligate spending. Continue reading