By Mickey Friedman
March 23, 2016
Have you ever heard or read something that blew your mind? Short-circuited it. Even though I’ve been writing about money recently, the other day I read something that just plain astounded me. Oxfam reports that “In 2015, just 62 individuals had the same wealth as 3.6 billion people – the bottom half of humanity.”
The scale is reminiscent of the days of kings and serfs.
This isn’t something that’s happened a long time ago. Or in a galaxy far, far away. It’s happening now. Right here. While you’re reading this.
Oxfam tells us: “The wealth of the richest 62 people has risen by 44 percent in the five years since 2010 – that’s an increase of more than half a trillion dollars ($542bn), to $1.76 trillion.”
Meanwhile for the overwhelming majority of us: “the wealth of the bottom half fell by just over a trillion dollars in the same period – a drop of 41 percent.”
This is a trend that has only gotten worse over time: “Since the turn of the century, the poorest half of the world’s population has received just one percent of the total increase in global wealth, while half of that increase has gone to the top one percent.
“The average annual income of the poorest 10 percent of people in the world has risen by less than $3 each year in almost a quarter of a century. Their daily income has risen by less than a single cent every year.”
We’ve all been told time after time, by teachers and TV analysts and politicians from both parties, that capitalism is the very best system on earth. It provides an impetus for those at the bottom to work hard and work their way to the top, and it fosters a competitive spirit that brings the best products to the marketplace.
But it certainly seems to be working best for those at top.
Oxfam notes that, “Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate. Once there, an ever more elaborate system of tax havens and an industry of wealth managers ensure that it stays there, far from the reach of ordinary citizens and their governments. One recent estimate is that $7.6 trillion of individual wealth – more than the combined gross domestic product (GDP) of the UK and Germany – is currently held offshore.”
Now maybe you’re saying to yourself that Oxfam is a charity working to prevent hunger, so can we really believe their research? Well, how about the analysis of Credit Suisse, one of the world’s leading global financial services company. According to their 2015 Global Wealth Report, the world’s ultra-high net worth individuals (UHNWs) “still only accounts for 0.7 percent of population, but owns 45.2 percent of global wealth.”
Credit Suisse notes that “Net worth or ‘wealth’ is defined as the value of financial assets plus real assets (principally housing) owned by households, less their debts.”
It’s interesting to see how this wealth is distributed throughout the world: “North America and Europe together account for 67% of total household wealth but contain only 18 percent of the adult population.” Credit Suisse elaborates: “Despite enormous gains this century, China accounts for 21 percent of the adult population of the world, yet only 9 percent of global wealth. The ratio is similar for Latin America: eight percent to three percent. However, for Africa and India, the population share exceeds the wealth share by a factor of more than ten.”
Credit Suisse charts the gains and losses of household wealth in countries across the globe: Hong Kong, China, the U.S. and Saudi Arabia gained wealth, while many Eurozone nations, Turkey, Colombia, Brazil, and notably Russia and the Ukraine experienced losses ranging from 15-40 percent. Perhaps this is an underlying reason for increasing tensions between our country and Russia.
“Our estimates suggest that the lower half of the global population collectively own less than one percent of global wealth, while the richest 10 percent of adults own 88 percent of all wealth and the top one percent account for half of all assets in the world.”
Credit Suisse’s accompanying 2015 Country Data reveals that American families in the bottom 10 percent possess minus 0.7 percent of our wealth. Remarkably the bottom 40 percent is at zero percent and the numbers don’t turn positive until the 50 percent mark with the bottom half possessing only 1.1 percent. The upper 70 percent have only 6.9 percent. Want a bit of contrast? In Slovakia, the upper 70 percent possess 38.9 percent of wealth.
In the U.S., the top 25 percent possess 90.5 percent of the family wealth; the top one percent possess 35.5 percent. In Japan, the top one percent only possesses 4.3 percent.
When it comes to global distribution the data is both illuminating and horrifying. The United States of America possesses 34.3 percent of the world’s wealth. Our nearest competitor China only 9.1 percent. Saudi Arabia 0.3 percent. Russia only possesses 0.5 percent.
When it comes to Money, Honey, Credit Suisse knows the cash rises to the top.
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Notes:
Oxfam: An Economy for the 1%
http://www.oxfamamerica.org/static/media/files/bp210-economy-one-percent-tax-havens-180116-en_0.pdf
2015 Credit Suisse Global Wealth Report
https://publications.credit-suisse.com/tasks/render/file/?fileID=F2425415-DCA7-80B8-EAD989AF9341D47E
Global wealth distribution: 2015 Credit Suisse Global Wealth Report, p.6
“Money, Honey: The Sixty-Two” was originally published on February 18, 2016 in the Berkshire Record.