World wealth and world Inequality

World wealth and world Inequality

By: Gholamhossein Davani

Economic Researcher and Member of Association of Economists Professional British Columbia, Ca

The three richest people in the world possess more financial assets than the lowest 48 nations combined!! And According to the New York Times on July 22, 2014, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent and As already noted, global household wealth equates to 51,600 US dollars per adult, a new all-time high for average net worth in spite that more than half world population are living with less than $2 per day and the 85 richest people in the world have as much wealth as the 3.5 billion poorest   !! Kindly note that world total world total GDP from 1960 to 2013 was about $1,226trillion and world GDP in 2007 was about $65 trillion and world global annual value of major financial asset market transactions (includes foreign exchange turnover, stock market trading, bonds and other over-the-counter transactions that is named financial weapons of mass destruction = Global Derivatives Market $900 trillion!! so paper wealth (Non-real economic) at 2007 was 13.8 times more than real economy!!? And the value of financial assets worldwide is expected to touch $ 371 trillion by 2020, with emerging economies including India, accounting for about one third of the total amount, says global consultancy McKinsey. Compare the world billionaire’s assets to the total cost of first world war $186.3  Billion was equal real price $ 2,880 Billion in 2013 (http://www.statisticbrain.com/world-war-i-statistics) and second world war was$288 Billion that was equal real price $ 4,550 Billion in 2013’s dollars.( http://www.cwc.lsu.edu/cwc/other/stats/warcost.htm) and  (http://www.measuringworth.com/uscompare/relativevalue.php ).

Every year, Forbes, Fortune, Merrill Lynch and other website and economic institution publishes world wealth, world Billionaires and world unequal report.  It regularly shows the increasing inequality of wealth, with the super-rich, representing just 0.13% of the world’s population, owning 25% of all financial assets (stocks, bonds and cash in banks)!  Most of these people did not get their wealth by clever deals or investments, or by hard work (God forbid!), but mainly by inheriting it.  They just make more money and own more wealth because they had it in the first place. The UN found that the top 10% of the world’s population owned 85% of all wealth, including property.  And one-quarter of these people were in the US alone.  The poorest 50% own just 1% of the world’s wealth! And they say Marx was wrong about the ‘amiseration’ of the working class. McKinesy & Company research funded that such flows matter for global GDP growth. Today, we estimate, they add between $250 billion and $450 billion to it every year, or 15 to 25 percent of the total. In addition, we find that countries with a larger number of connections in the global network of flows increase their GDP growth by up to 40 percent more than less connected countries do. The penalty for being left behind is rising.(MacKinsey April 2014).in the other hand Suisse credit report emphasis that despite a decade of negative real returns on equities, several equity bear markets and the collapse of housing bubbles, the 2013 Credit Suisse Wealth Report finds that global wealth has more than doubled since 2000, reaching a new all-time high of 241 trillion US dollars. Strong economic growth and rising population levels in emerging nations are important drivers of this trend. Average wealth per adult has also hit a new peak of 51,600 US dollars, but inequality remains high. I prepared below table that source were economic reports that shows from 1987 to 2013 inspite the world was involve in financial crisis several years in financial crisis ( 2002 and 2007till 2013) the number and total wealth of rich billionaires has been increased so much ( $B3500 to $B6400= 4.4 times) . the main reason of world inequality are as common factors thought to impact economic inequality include as, globalization, privatization, labor market outcomes ,corporate corrupt, corporate fraud, change to high technological ,policy reforms , more regressive taxation, plutocracy(Tax Haven& Off shore Company), dead of ethics , criminal capitalism , ethnic discrimination, gender discrimination,  nepotism ,variation in natural ability, neoliberalism. Time magazine at March 25, 2013 wrote a September study from the Economic Policy Institute (EPI) in Washington noted that the median annual earnings of a full-time, male worker in the U.S. in 2011, at $48,202, were smaller than in 1973. Between 1983 and 2010, 74% of the gains in wealth in the U.S. went to the richest 5%, while the bottom 60% suffered a decline, the EPI calculated. No wonder some have given the 19th century German philosopher a second look.

 

                                   Comparative World Billionaires regional 1987-2013*

Year

Total No.

North America

Japan

Europe

Asia pacific

Russian

China

Others

Total assets

$BUSD

1987

140

41

24

 -

 -

-

 -

 223

 295

1990

169

 99

 40

 -

 -

 -

 30

 542

1995

 365

 129

 35

 -

 -

 -

 -

 201

 892

2000

 470

 49

 43

 87

 -

 -

 -

 291

 898

2002

 497

 283

 -

 121

 61

 -

 -

 32

 1500

2005

 691

 384

 -

 188

 90

 --

 -

 29

 2200

2007

 946

 476

 -

 242

 160

 -

 -

 68

 3500

2010

 1011

 464

 -

 248

 234

 62

 -

 65

 3600

2012

 1226

515 

-

 310

 243

 96

 122

 183

 4600

2014

 1645

 540

 27

 340

 349

 111

 152

 74

 6400

 

 

According to Dayarayan reported about world in 2060 the estimated of world billionaires in 2060 are as below table:

 

Year

2017

2018

2020

2030

2050

2060

World GDP

109

115

120

145

223

240

Total wealth=$TR

8.7

9.3

11.04

15.9

21.4

25

 

The economic research said that  three richest people in the world possess more

financial assets than the lowest 48 nations combined!! And According to the New York Times on July 22, 2014, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent"-

 

 

 

Source: http://www.vox.com

 

In spite that every year the rich wealth has been increase average 60% in past 2o years but world poverty also increased that the table shows world poverty in 2013

Region

% in  $1.25 a day poverty

Population (millions)

Pop. in $1 a day poverty (millions)

East Asia and Pacific

16.8

1,884

316

Latin America and the Caribbean

 8.2

550

45

South Asia

40.4

1,476

596

Sub-Saharan Africa

50.9

763

388

  Total Developing countries

28,8

4673

1345

Europe and Central Asia

0.04

473

17

Middle East and North Africa

0.04

305

11

Total

 

5451

1372

 

 

Source: http://www.vox.com

 

According to last economic research the total world wealth in 2013 was about $B241,000 that comparison were North America ($B 78,800), Europe ( $B 76,000) , Asia Pacific includes China and India( $B73,800) , Latin America and carbon( $B9,000) , Africa( $B2,700) that 41% were belong to 1% world population and 86% world wealth is belong to 10% of top population. The special report said $B 98,000 are belong to 32 Million persons that more than 50% are living in United States and important notes of Oxfam report are as follow:

1-      The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.

2-      The bottom half of the world’s population owns the same as the richest 85 people in the world.

3-      Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

4-      The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.

In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

.I believe Corrupt, Fraud , privatization and  criminal capitalism are most tie with world wealth richest that you can look at richest man in emerging countries same Russia, India, China , Brazil , Turkey , Indonesia and Philippine that these countries have huge external and Internal debt and have must poverty population but number of Billionaires has been increased every year ! and in some country same Greece the total wealth of richest are more than 30% of GDP !!

Tax Justice Network reported has published in 2013 has emphasis that  fraud is a branch of Corruption and I argue that fighting with fraud is part of corrupt fighting. The world's developing countries lost a total of $946.7 billion to corruption, trade misinvoicing and tax evasion in 2011, according to the research. And to make matters worse, the amount that gets spirited away is growing larger with each passing year. Money lost to corruption in developing nations was 13.7 percent greater in 2011 than was lost the year before; illicit outflows totaled $832.4 billion in 2010. The total figures are staggering: between 2002 and 2011, developing countries lost about $5.9 trillion to illicit outflows (Illicit Outflows from Developing Countries 2002-2011,” was released by Global Financial Integrity, a research and advocacy organization based in Washington, D.C). Especially Tax Justice Network in the index was launched on November 7, 2013.estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world. Illicit cross-border financial flows add up to an estimated $1-1.6 trillion each year. Since the 1970s African countries alone are estimated to have lost over $1 trillion in capital flight, dwarfing their current external debts of 'just' $190 billion and making Africa a major net creditor to the world. But those assets are in the hands of a few wealthy people, protected by offshore secrecy, while the debts are shouldered by broad African populations. All fraud research increasing alarm is just reminded fraud should not happen, but it does. It can happen from the highest to lowest levels in an organisation. Recent surveys by PricewaterhouseCoopers and Ernst & Young show that incidents of fraud have increased globally by 22% over the past two years and here in the UK the average corporate fraud costs a company some £200,000. The government estimates the annual cost of fraud to the UK economy is in the region of £14bn. As the world becomes more integrated the global dimension of inequality is likely to become increasingly relevant and In spite that there are many reasons for economic inequality within societies that said the main reason of world inequality are as common factors thought to impact economic inequality include as, globalization, labor market outcomes ,corporate corrupt, corporate fraud,privitization , change to high technological ,policy reforms , more regressive taxation, plutocracy(Tax Haven& Off shore Company), dead of ethics , criminal capitalism , ethnic discrimination, gender discrimination,  nepotism ,variation in natural ability, neoliberalism.

Recently Economist Thomas Piketty, who specializes in the study of economic inequality, argues that widening economic disparity is an inevitable phenomenon of free market capitalism when the rate of return of capital  is greater than the rate of growth of the economy but I believe that  rising income inequality is structural to basic of capitalism since corporation increasingly substitute workers for capital equipment under competitive pressures to reduce costs and maximize profit and capitalist system would inevitably impoverish the masses as the world’s wealth became concentrated in the hands of a greedy few, causing economic crises and heightened conflict between the rich and working classes. “Accumulation of wealth at one pole is at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole. Over the long-term, this trend increases the organic composition of capital, meaning that less labor inputs (workers) are required in proportion to capital inputs, increasing unemployment and increasing the size of the reserve army of labour. This process exerts a downward pressure on wages. The adoption of capital equipment for the substitution of labor (job automation) increases productivity per worker and thus profits for the capitalist class, resulting in a situation of relatively stagnant wages for the working class amidst rising levels of property income for the capitalist class. With above explanation that 99% in Occupy movement said Capitalism is collapsed, so we need new structure!! Might be we consider to quotes Supreme Court Justice Louis Brandeis, who said, ‘We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.’

__________________________________________________________________

*- Asia pacific and Europe were in other countries from 1987to 2000 and Japan were joined to Asia pacific from 2002.

 

 

Source:

1-       www.iresearch.worldbank.org/PovcalNet/povDuplic.html 

2-      www.web.worldbank.org/WBSITE/EXTERNAL

3-      www.www.bidnessetc.com

4-      www.Forbes.com

5-       www.Wikipedia.com

6-      www.knoema.com

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