As Oxfam points out governments are just blowing the money

This is not the lesson we are supposed to be taking from this statement but it is the lesson that is true: governments are blowing the money and billionaires are not.

“Inequality is a deliberate policy choice. Despite record wealth at the top, public wealth is stagnating, even declining, and debt distress is growing,” said Oxfam’s international executive director, Amitabh Behar, in a statement.

Taxation is at decadal highs as a portion of the economy. Governments - as shown by how debt distress is growing - are still borrowing ever more. So, if governments were investing that river of cash in things that were worth doing then public wealth would be growing, not stagnating or declining.

No, think on it. If you gain money from taxation, or borrow, to invest then you will have an investment that is a positive on that balance sheet of public wealth. If the investment was worth doing - the value of the investment is greater than the cost of investing - then public wealth will grow by more than the borrowing and the net position will be increasing public wealth. Oxfam’s insistence is that this is not happening. Our conclusion must therefore be that governments are either not investing in public wealth - spending it on buying votes perhaps - or investing badly, creating assets which are worth less than the cost of creating them.

The same logic applies in reverse to the billionaires. For the net wealth position to be increasing in that sector then the billionaires must be producing assets which are worth more than the cost of their creation.

Society thus gets richer overall if the billionaires are doing the investing - for the billionaires are investing in the things that are worth doing and governments are investing in those not. Shown by that simple fact that net public wealth is declining, net billionaire wealth is rising.

From which we can derive that taking all the money off the billionaires, who invest it productively, to give to governments who invest it unproductively, is contraindicated. But then we knew that already, right?

Tim Worstall