They’re eyeing the other half.
By> Lynn Stuart Parramore
October 21, 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 “ 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 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.