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Saturday, 16 May 2015

Super Rich Feasting On Us All

Every few years of so, there is a declaration by one organisation or another (Oxfam, or the Credit Suisse bank for example), that all the worlds wealth is falling in to the hands of the few, at the expense of the many. And while this is certainly true in a literal sense, its also compounded by factors that make it seem harsher than reality.  

This year, Oxfam have updated their report of last year that the 85 richest people on the planet have the same wealth as the poorest 50% (3.5 billion people). Now the figure has risen (or fallen depending upon your point of view), to the 80 richest people, having the same wealth as the poorest 50%.

According to their calculations, pretty soon the wealthiest 1% will also soon own more than the rest of the world's population combined, with their research indicating that the total share of the world's wealth owned by the richest 1%, increased from 44% in 2009,  to 48% last year, and that its expected that the wealthiest 1% will own more than 50% of the world's wealth by 2016.

Even outside the top 1%, global inequalities indicate that of the wealth not owned by the richest 1%,  52% is owned by those in the richest 20%. So the remaining 80% of the worlds population, accounts for just 5.5% of global wealth, and their average wealth was $3,851 (£2,544) per adult in 2014. That compares to an average wealth of $2.7m per adult for the elite 1%.

These figures are obtained by the simple method of totalling up the total wealth that was attributed to the poorer half of the world's population - less than 1% of the world's wealth, about $1.7tn (£1tn) via GDP reports etc. The by using the 'Forbes Rich List', and adding up all the wealth of the top billionaires until the figure of 1.7 trillion US dollars was achieved .... this was reached when adding the assets of the 85th richest person in the world (according to Forbes). Using a similar method for the UK (Forbes and The Times Rich List), you get the figure that the five richest families, have more wealth than the poorest 20%.

The idea that these super-rich individuals have so much wealth that it's making half the world poor is actually nonsense, as their wealth is not sitting in money piles in banks, its actually shared in physical factories, mines, agriculture, banking, shipping, stocks and shares etc, and its what employs people. In other words the idea of the rich just taking is a very simplistic world view .....

Even within these reports, its not all gloom and doom, as although this latest report echoes earlier reports, such as that by the Credit Suisse bank, there are also differences (perhaps reflecting the political nature of the Oxfam report).

Where The Top 1% Live

The Credit Suisse report also indicated that with total global wealth more than doubling in the last century, the total household wealth in China is now the third highest in the world, only surpassed by the US and Japan. Now considering where the Chinese started from in the 1980's, that's actually a positive, and very large redistribution of the worlds wealth, away from the previously rich West, to a previously poor East.

Obviously though, even there, the wealth is accumulating in ever fewer hands ... hence the anti-corruption drives to weed out the politicians who are getting rich via non standard wealth creation methods. India has very similar issues which it has not even started to tackle ... But even so, if trends continue in China and India, there will be a general rise in wealth of a third of the globe of the next 50 years .... that means that while the overall figures for wealth ownership may remain the same, underneath there is a general rise in wealth across large areas of the globe. 

Now we at PC towers have discussed the fact that letting wealth accumulate in ever fewer hands is not a positive thing, in fact it is in our opinion sewing the seeds of anger that leads to revolutions and violent asset seizures ....

We favour some taxation measures that lower the rates at the bottom (by excluding income below a higher threshold), and gently raising taxes on higher incomes, coupled with a very much more aggressive anti-tax avoidance regime across the globe (Tax avoidance by the wealthy should be instant imprisonment for them and their financial advisor's) ... to bring wealth ownerships back to the the levels they were in the more egalitarian 1970's.

However there are those who would advocate more violent or socially aggressive measures .... but as we have seen in France, where President Hollande has initiated tax on salaries above 1 million Euros at 75 percent for this year and the next, for the super rich, in these globalised economy times, they don't always achieve the expected results. 

So why don't we seize from the Uber Rich and just give to the poor?

Well because if you simply took all the money of the 85 richest people, and gave it to the worlds poor in a one-off payment, it would only increase each person's wealth by about $500 (£300) .... and then it would be dissipated ... well until, just like is happening in the East now, it started to accumulate in the hands of the clever and industrious again, and a new rich arose.

The Rich And Poor Are Always With Us

Just as its been said the the poor are always with us, so is it equally obvious that conversely, the rich will always be with us .... its how we manage both the rich and the poor that determines the societies we live in.

2 comments:

  1. Excellent piece. Food for thought, or crumbs off the table at least.

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    Replies
    1. There's always an alternative way to look at these questions. The simplistic manner in which these 'reports' are presented and often reported upon, just fuels the economic ignorance that allows politicians to get away with policies that harm us all.

      I have noted that this weekend has seen Yvette Cooper, Ed Balls and even that economic guru John Prescott, all now claiming that Labour was only running a small public spending deficit when the economy crashed and that it was all 'Tory Spin' that a gullible public had swallowed. Although how such a 'small deficit' resulted in the UK having such debt problem, that its taking a decade to rebalance the books, they failed to explain.

      However they are trying to reset the narrative in time for the next election, and no doubt we will have all forgotten by then. Politicians spin and lies will also, like the poor, seemingly always be with us.

      Glad you enjoyed the posting Vroomfondel.

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