Global wealth inequality: top 1% own 41%; top 10% own 86%; bottom half own just 1% | Links International Journal of Socialist Renewal.pdf

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Global wealth inequality: top 1% own 41%; top 10% own 86%; bottom half own just1%

By Michael Roberts

October 10, 2013 -- Michael Roberts' Blog-- Just 8.4% of all the 5 billion adults in the world own 83.4%of all household wealth (thats property and financial assets, like stocks, shares and cash in the bank).About 393 million people have net worth (thats wealth after all debt is accounted for) of over $100,000,thats 10% own 86% of all household wealth!

But $100,000 may not seem that much, if you own a house in any G7 country without any mortgage. Somany millions in the UK or the US are in the top 10% of global wealth holders. This shows just how littletwo-thirds of adults in the world have under $10,000 of net wealth each and billions have nothing atall.

This is not annual income but just wealth in other words, 3.2 billion adults own virtually nothing at all.At the other end of the spectrum, just 32 million people own $98 trillion in wealth or 41% of allhousehold wealth or more than $1 million each. And just 98,700 people with "ultra-high net worth" havemore than $50 million each and of these 33,900 are worth over $100 million each. Half of thesesuper-rich live in the US.

obal wealth inequality: top 1% own 41%; top 10% own 86%; bo... http://links.org.au/nod

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All this is in a new global wealth report published Credit Suisse Bank and authored by professorsAnthony Shorrocks and Jim Davies see the report at global wealth report and the wealth database).The professors find that global wealth has reached a new all-time high of $241 trillion, up 4.9% since

last year, with the US accounting for most of the rise. Average wealth hit a new peak of $51,600 peradult but the distribution of that wealth is wildly unequal.

There is nothing new in this report in one sense because Tony Shorrocks previously authored a UNreport back in 2010 (see my post, http://thenextrecession.wordpress.com/2010/01/10/20/ ) that foundvirtually the same wealth inequality. Branko Milanovic also found similar figures in various World Bankstudies. But what is also interesting is that Professor Shorrocks finds that there is little or no socialmobility between rich and poor over generations 87% of people stay rich or poor, hardly moving up ordown the wealth pyramid.

This inequality is mirrored within each country (see UK wealth distribution). In the UK, aggregate totalwealth (including private pension wealth but excluding state pension wealth) of all private households inGreat Britain was 10.3 trillion. And the wealthiest 10% of households were 4.4 times wealthier than thebottom 50% of households combined. The wealthiest 20% of households owned 62% of total aggregatehousehold wealth.

Moreover, according to the Credit Suisse report, the "American dream" or the British idea of "rags to

riches" is a myth. Two-thirds of US adults are in the same wealth decile as their parents were. Evenglobally, while some individuals do alternate wildly between rags and riches, many stay for their wholelifetime in the same wealth neighborhood for people of their age. Dividing the population into wealthquintiles, about half the population remains in the same quintile after ten years and we estimate that atleast a third would be in the same quintile after thirty years.

Global wealth is projected to rise by nearly 40% over the next five years, reaching $334 trillion by 2018.Emerging markets will be responsible for 29% of the growth, although they account for just 21% ofcurrent wealth, while China will account for nearly 50% of the increase in emerging economies wealth.Wealth will primarily be driven by growth in the middle segment, but the number of millionaires will alsogrow markedly over the next five years.

All class societies have generated extremes of inequality in wealth and income. That is the point of arich elite (whether feudal landlords, Asiatic warlords, Incan and Egyptian religious castes, Roman slaveowners etc.) usurping control of the surplus produced by labour. But past class societies considered thatnormal and "god-given". Capitalism on the other hand talks about free markets, equal exchange andequality of opportunity. But the reality is no different from previous class societies.

From the extremely wealthy to more than a billion in extreme poverty

By Michael Roberts

October 11, 2013 -- Michael Roberts Blog-- The World Bank has now released a report (World Bankstate of the poor) covering the other end of spectrum the level of extreme poverty in the world. Thereare roughly 1.2 billion people completely destitute (living on less than $1.25 a day), one-third of whichare 400 million children. One of every three extremely poor people is a child under the age of 13. This is"extreme poverty", compared with the United Statess own poverty line at about $60 a day for a familyof four. People in extreme poverty tend to lack enough food to meet basic physical and mental needs.So there are over 1 billion people, one-thirds of them children, who are virtually starving in the 21stcentury.

The World Bank says that the number of people living in extreme poverty has sharply declined over the


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past three decades. There are 721 million fewer people lived in extreme poverty in 2010 compared to1981 (assuming what $1.25 a day could buy in 1981 is the same as what it can buy now). That soundsbetter, but this reduction is almost solely due a rise in living standards in the billion-plus populations ofIndia and particularly China in the last 30 years. There has been very little reduction in extreme povertylevels (as defined) in other very poor emerging economies. While extreme poverty rates have declinedin all regions, the worlds 35 low-income countries (LICs) 26 of which are in Africa registered 103million more extremely poor people today than three decades ago. Aside from China and India,individuals living in extreme poverty [in the developing world] today appear to be as poor as those livingin extreme poverty 30 years ago, the World Bank said.

In 2010, 33% of the extreme poor lived in low-income countries, compared to 13% in 1981. In India, the

average income of the poor rose to 96 cents in 2010, compared to 84 cents in 1981, and Chinasaverage poors income rose to 95 cents, compared to 67 cents. Chinas state-run still mainly plannedeconomy saw its poorest people make the greatest progress. But the average poor person in alow-income country lived on 78 cents a day in 2010, compared to 74 cents a day in 1981, hardly anychange.

Three quarters, or 78%, of those living in extreme poverty live in rural areas, with nearly two-thirds ofthe extreme poor deriving their livelihoods from agriculture. The extreme poor also continue to lagsignificantly behind in access to basic services. Only 26% of the poor had access to clean water in2010, compared to 56% among those living above the $1.25 poverty line (hardly an income).Meanwhile, fewer than half 49% of the extreme poor had access to electricity compared to 87% ofthe "non-poor". And while 61% of those above the $1.25 poverty line had access to basic sanitation, just20% of the extreme poor had access to similar services.

As a share of the GDP of the developing world, the Aggregate Poverty Gap is now less than one-10th ofwhat it was 30 years ago. For LICs, the share in 2010 was approximately 8% of their GDP, down from24% in 1981. Notwithstanding this significant decline, the Aggregate Poverty Gap/GDP ratio in LICs is

16 times larger than the average for the developing world. To reach the goal of ending extremepoverty by 2030, the pace of poverty reduction in LICs will have to increase substantially.

What is also interesting is that, except for LICs, lack of resources are unlikely to be the main limitation toending extreme poverty in most countries. As the World Bank puts it: "The challenge for middle and highincome groups is not so much the amount of resources required by the poor, but development andimplementation of policies and programs that help redirect those resources to the poor. For LICs,however, resources are still likely to be a major constraint to ending extreme poverty.

That means that poverty (as defined) could be ended if governments chose to do so. The World Bankexplained it this way:

Suppose that the real GDP growth for the developing world as a whole is 5 percent peryear. If 10 percent of this GDP growth accrued to the 21 percent of the developing worldspopulation who are extremely poor, and this 10 percent was distributed in a way that thegrowth in income of each poor person was exactly his/her distance to the $1.25 line,extreme poverty would end in one year.

Fat chance!capitalism economics United States

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