Why is wealth better than knowledge

Statistics on rich and poor : Do we even know how unequal our society is?

Statistics and data determine our society: whether the minimum wage is increased, the wealth tax introduced or corporate taxes lowered depends largely on statistics and how we discuss them. The economist and managing director of the Tax Justice Network Alex Cobham shows in his book "The Uncounted" how misleading and incomplete statistics are often.

At the higher end of the income spectrum, the wealthy can hide their wealth. At the lower end, the poverty and exclusion of millions of people are not statistically recorded. Some are voluntarily "uncounted". The others remain uncounted because of inadequate statistics or a lack of political representation.

Multimillionaires and billionaires escape statistics in a variety of ways, Cobham said. Statistically, your wealth often remains “untold” because studies and population surveys are only based on random samples. The super-rich are only insufficiently or not at all included in these samples. The German Institute for Economic Research (DIW) also points out that the extent of wealth inequality is “tending to be underestimated” due to this statistical deficiency and that “there has probably been an increase in wealth inequality in the past ten years”.

Tax avoidance obscures wealth

Probably the best-known method of how the wealthy remain “uncounted” is tax avoidance. Rich private individuals and (multinational) corporations shift profits to tax havens in order to be artificially poorer in front of the tax authorities. They use anonymous bank accounts, letterbox companies and lax legal transparency regulations in their home countries. According to Cobham, around 40 percent of all profits of multinational corporations are shifted to tax havens.

The damage is immense: States lose an estimated 100 to 600 billion US dollars annually through corporate tax avoidance alone - developing and emerging countries are more severely affected in proportion to their tax revenue, according to Cobham. He criticizes the fact that this is one of the reasons why people with middle and low incomes have to pay more for the financing of the common good.

The book brings new insights to light when Cobham addresses the "innumerable at the bottom of society". The attempt to manipulate the US census is one of the most relevant examples of this, Cobham said. In the US, the census is the basis for the number of seats in Congress and the number of electors to elect the US President. If the census is inaccurate, states can lose seats in Congress and thus electors.

The Trump administration planned to add a question about the nationality of the respondents to the census. Such a question would have affected the census results. Migrants had canceled the survey for fear that their data would be passed on and would have remained uncounted. Cobham writes, however, that the discussion about the so-called "Citizen Question" created a climate of fear. Minorities are deterred. They will withhold information, so the high-immigrant states are likely to lose seats in the US Congress and electorate. This shows how statistics can be manipulated by political interests.

GDP "marginalizes women"

According to Cobham, however, the largest number of "uncounted" people live in developing and emerging countries. This is mainly due to the unit of measurement for economic development: the gross domestic product (GDP). The GDP marginalize women, so Cobham's allegation. Because it does not include subsistence agriculture, in which many women in developing and emerging countries are active.

"The invisibility of women's contribution to society through GDP is perhaps the single most serious example of the 'uncounted' phenomenon," said Cobham. This also applies to Germany: Here, many women still take on the private care of the elderly and the sick or the rearing of children. This housework and family work remains uncounted, which creates wage and pension inequalities.

New benchmarks needed for economic development

The services of indigenous peoples are also mostly not included in GDP. It is precisely these communities that make the greatest contribution to nature conservation. The blindness of GDP for nature and climate protection reinforces "the tendency towards a policy that destroys countless’ habitats and ways of life in the name of economic progress, "said Cobham.

This can be seen in a frightening way in Brazil at the moment. There, President Jair Bolsonaro is actively promoting the destruction of the rainforest, because agriculture and mining would increase the GDP and thus the supposed prosperity of the country. Cobham sees overcoming GDP as the central measure of economic development as "extremely important" in reducing the number of the "uncounted" and marginalized.

With “The Uncounted”, Alex Cobham has succeeded in conveying his experiences from working for international organizations and research institutions to a wide audience. Using numerous examples, he shows how important it is that and how statistics are collected. It would have done the book good, however, to have gone into the most striking examples of incomplete or misleading statistics.

The large number of examples is often dealt with somewhat superficially. At times the book lacks a common thread. Nevertheless, the book is to be recommended in order to sharpen the senses for the problem of the "uncounted". Because it also affects Germany in the form of smoothed unemployment figures, tax avoidance or the above-mentioned inadequate statistics on wealth distribution.
Alex Cobham: "The Uncounted", Polity Press, 200 pages, 18.33 euros

Now new: We give you 4 weeks of Tagesspiegel Plus! To home page