World’s Richest 0.1% Boosted Their Wealth.
The wealthiest 0.1% of the world’s population have increased their combined wealth by as much as the poorest 50% – or 3.8 billion people – since 1980, according to a report detailing the widening gap between the very rich and poor. The World Inequality Report, published on 7 December 2017 by French economist Thomas Piketty, warned that inequality had ballooned to “extreme levels” in some countries and said the problem would only get worse unless governments took coordinated action to increase taxes and prevent tax avoidance.
The report, which drew on the work of more than 100 researchers around the world, found that the wealthiest 1% of the global population “captured” 27% of the world’s wealth growth between 1980 and 2016. And the richest of the rich increased their wealth by even more. The top 0.1% gained 13% of the world’s wealth, and the top 0.001% – about 76,000 people – collected 4% of all the new wealth created since 1980. “The top 0.1% income group (about 7 million people) captured as much of the world’s growth since 1980 as the bottom half of the adult population,” the report said. “Conversely, income growth has been sluggish or even nil for the population between the global bottom 50% and top 1%.”
The economists said wealth inequality had become “extreme” in Russia and the US. The US’s richest 1% accounted for 39% of the nation’s wealth in 2014 (the latest year available), up from 22% in 1980. The researchers noted that “most of that increase in inequality was due to the rise of the top 0.1% wealth owners.” The world’s richest person is Amazon’s founder and chief executive, Jeff Bezos, who has a $98.8bn (£73.9bn) fortune, according to the Bloomberg billionaires index. Bezos, the most prominent shareholder in Amazon, has seen his wealth increase by $33bn over the past year alone. Collectively, the world’s five wealthiest people – Bezos, Bill Gates, Warren Buffett, Amancio Ortega, the owner of Zara, and Facebook’s Mark Zuckerberg – hold $425bn of assets. That is equivalent to one-sixth of the UK’s GDP.
In the UK, the richest 1% control 22% of the country’s wealth, up from 15% in 1984. The very richest in the UK has seen a massive increase in their wealth. The top 0.1% – around 50,000 people – have seen their share of the nation’s wealth double from 4.5% in 1984 to 9% in 2013. “The increase in the concentration of wealth in the last four decades is very much a phenomenon confined to the hands of the top 0.5% (the richest 250,000 Britons), and in particular the top 0.1% (the richest 50,000),” the report said. The wealthiest people in the UK are the Hinduja family, who control a conglomerate of businesses including cars and banks, and are worth $15.4bn.
The economists, led by Piketty who shot to global fame after the publication of his book Capital in the Twenty-First Century, said there was a “huge gap” in wealth between the richest people in the UK and everyone else in the country. They said the bottom 90% of people in the UK had an average wealth of £68,000, compared with £321,000 among the richest 10% and the top 0.5%, who were worth £3.7m on average. While inequality was high in North America and Europe, the researchers warned that the problem was acute in Africa, Brazil and the Middle East, where they said “inequality has remained relatively stable at extremely high levels in recent decades. The top 10% receives about 55% of total income in Brazil and sub-Saharan Africa, and in the Middle East, the top 10% income share is typically over 60%,” the report said. “These three regions never went through the postwar egalitarian regime and have always been at the world’s high-inequality frontier.”
The report warns that unless there is globally coordinated political action, the wealth gap will continue to grow. “The global top 1% income share could increase from nearly 20% today to more than 24% by 2050,” the report said. “In which case, the global bottom 50% share could fall from 10% to less than 9%.” However, the economists said increasing inequality was “not inevitable” if countries acted to bring in progressive income tax. “It not only reduces post-tax inequality, but it also shrinks pre-tax inequality by discouraging top earners from capturing higher shares of growth via aggressive bargaining for higher pay.” The authors said taxation alone was not enough to tackle the problem as the wealthy can avoid and evade tax, as shown by the recent Paradise Papers investigation. The report said a tenth of the world’s wealth is in tax havens.
Credit: Rupert Neate for The Guardian, 14 December 2017.