Date: Wed, 22 Oct 2014 21:56:09 +0200
Shocking New Report: Superrich Have Grabbed Half the World's Assets
They're eyeing the other half.
October 22, 2014 |
According to a new report, the richest one percent have got their mitts on
almost half the world's assets. Think that's the end of the story? Think
again. This is only the beginning.
The "
<https://publications.credit-suisse.com/tasks/render/file/?fileID=60931FDE-A
2D2-F568-B041B58C5EA591A4> Global Annual Wealth Report," freshly released by
investment giant Credit Suisse, analyzes the shocking trend of growing
wealth inequality around the world. What the researchers find is that global
wealth has increased every year since 2008, and that personal wealth seems
to be rising at the fastest rate ever recorded, much of it driven by strong
equity markets. But the benefits of this growth have largely been channeled
to those who are already affluent. While the restaurant workers in America
struggled to achieve wages of $10 an hour for their labor, those invested in
equities saw their wealth soar without lifting a finger. So it goes around
the world.
The bottom half of the world's people now own less than 1 percent of total
wealth, and they're struggling to hold onto even that minuscule portion. On
the other hand, the wealthiest 10 percent have accumulated a staggering 87
percent of global assets. The top percentile has 48.2 percent of the world
wealth. For now.
One of the scary things about the wealth of the supperich is what French
economist Thomas Piketty pointed out in his best-selling book, Capital in
the 21st Century. Once they've got a big chunk of wealth, their share will
get bigger even if they sit by and do absolutely nothing. Piketty sums up
this economic reality in a simple and horrifying formula: r > g.
Basically, this means that when rate of return on wealth is greater than the
overall rate of growth of the economy, as it has nearly always been
throughout history, the rich will grow inevitably richer and the poor poorer
unless there is some kind of intervention, like higher taxes on wealth, for
example. If r is less than g, the assets of the super-wealthy will erode,
but if r is greater than g, you eventually get the explosion of gigantic
inherited fortunes and dynasties.
This is happening now: If you look at the
<http://www.forbes.com/forbes-400/> Forbes 400 list of the wealthiest people
in America, you see a lot more inherited fortunes in the upper ranks than
you did a couple of decades ago, when the policies that held inequality at
bay began to get dismantled. In today's top 10, there are more scions of the
Walton family than entrepreneurs like Bill Gates or Mark Zuckerberg. These
people have essentially done nothing of value for society, and yet their
undue influence shapes our political landscape with the wave of a wad of
cash.
There have been moments in history when things were not so lopsided. During
the post-war period, inequality was contained because governments made sure
their rich didn't accumulate at such alarming rates by doing things like
taxing their estates at a high rate. At the same time, they created policies
to lift the incomes of the less well-off and allow them to have some basic
security. But that's an exception in history. Most of the time, this kind of
intervention did not happen, and so the rich kept gobbling more and
accumulating more power to keep it that way until one of two things happened
- a revolution or some kind of catastrophe or disruptive event, like a war,
shook things up.
As the Credit Suisse report states:
"[Wealth inequality] has been the case throughout most of human history,
with wealth ownership often equating with land holdings, and wealth more
often acquired via inheritance or conquest rather than talent or hard work.
However, a combination of factors caused wealth inequality to trend
downwards in high income countries during much of the 20th century,
suggesting that a new era had emerged. That downward trend now appears to
have stalled, and possibly gone into reverse."
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