Global Wealth Inequality
I’d like to briefly examine in this post the extent of global wealth inequality as presented in the 2015 Credit Suisse Global Wealth Report and offer an interpretation. The authors present four wealth tranches in which the top 0.7 percent owns 45.2 percent of total wealth, the next 7.4 percent 39.4 percent, the next 21 percent 12.5 percent and the bottom 71 percent just 3.0 percent. (Rounding errors.) The top 8.1 percent thereby possesses 84.6 percent of wealth with the bottom 91.9 percent having 15.5 percent.
I think we can get a better grip on these enormous asymmetries if we consider them in terms of the relative wealth of a representative individual within each tranche as illustrated below. (I divide the wealth share by the population percentage and index that to the bottom tranche which I set to one.)
We can see here that the wealth of individuals in the 0.7 percent tranche completely dominates that of the rest of the population and especially the bottom 92 percent. This top tier according to Credit Suisse consists of 33.7 million adults with a total wealth of $112.9 trillion. They detail it as follows:
(Credit Suisse doesn’t show an over $1b bracket. I’ve incorporated the billionaire data from Forbes and adjusted CS’s top tier accordingly.)
Let’s compare a few of these wealth figures to the global median wealth of $3,210 which I’ll represent as a modest single story ranch home. The median wealth in the United States is $49,800 which in comparison to the ranch home would correspond to a 16 story building. $1 million of wealth, the bottom of the 0.7 percent tranche, would rise to 312 stories or over three times that of the Empire State Building. $10 million would soar 1/3 higher than Mount Everest. $50 million would rise to the top of the stratosphere and $100 million would penetrate the Karman line which demarcates the boundary of outer space. $500 million would be well above the altitude of the international space station, and that station would orbit at only 1/3 the height of the tower representing $1 billion of wealth. Finally, the $75 billion of Bill Gates would soar ¼ the way to the Moon.
Wealth has no meaning outside these kinds of comparisons for by itself it’s a completely circular number. Oligarchy is a civilization spanning system of power whereby the minority attains its motivational desires of luxury consumption and wealth defense without cost. In the modern world it’s achieved via what I call the diversion-profit loop whereby whatever the oligarchy spends is returned via profit. That is the essential source and meaning of profit. (Profit is also generated via state deficit spending but we’ll lay that aside for now.) Wealth in toto can be conceptualized as the present value of anticipated future diversion spending (and deficits), capitalized at a consensus discount rate. If the outlook for future diversion dropped or the discount rate increased, then total measured wealth would decline but this is of no real importance. The existential meaning of wealth lies only in its measure of relative power, both between oligarchs and, crucially for the systemic structure, between the oligarchy as a class and the population.