STWR - Share The World's Resources

Personal wealth is distributed so unevenly across the world that the richest two per cent of adults own more than 50 per cent of the world’s assets while the poorest half hold only 1 per cent of wealth.

A survey released on Tuesday shows that middle-income countries with high growth rates still have a long way to go before they have a hope of catching up with the levels of prosperity of the richest.

Adults with more than $2,200 of assets were in the top half of the global wealth league table, while those with more than $61,000 were in the top 10 per cent, according to the data from the World Institute fpr Development Economics Research of the United Nations University (UNU-Wider).

To belong to the top 1 per cent of the world’s wealthiest adults you would need more than $500,000, something that 37m adults have achieved.

So much of the world’s wealth is concentrated in few hands that if all the world’s wealth was distributed evenly, each person would have $20,500 of assets to use.

Almost 90 per cent of the world’s wealth is held in North America, Europe and high-income Asian and Pacific countries, such as Japan and Australia.

While North America has 6 per cent of the world’s adult population, it accounts for 34 per cent of household wealth.

The concentration of wealth in different countries varies considerably, with the top 10 per cent in the US holding 70 per cent of the country’s wealth, compared with 61 per cent in France, 56 per cent in the UK, 44 per cent in Germany and 39 per cent in Japan.

According to Anthony Shorrocks, the director of UNU-Wider, the number of wealthy individuals in a country depends on the size of the population, the average wealth and its inequality.

“China fails to feature strongly among the super-rich because average wealth is modest and wealth is evenly spread by international standards”, he said.

As countries grow richer, their population changes how it holds wealth, according to the report.

In developing countries, property, particularly land and farm assets are important, while cash savings tend to dominate in middle-income counties.

Only in certain advanced countries such as the US and the UK with developed financial sectors is there a strong appetite for holding equities and other more sophisticated financial assets.

Debt is also low in poor countries because financial institutions do not exist to allow people to borrow.

In contrast, the authors say “many people in high-income countries have negative net worth and, somewhat paradoxically, are among the poorest people in the world in terms of household wealth.”

Wealth is difficult to measure even in the most advanced countries, so the research was based on painstaking compilation of aggregate and survey data for the 38 countries of the world where it exists and statistical models for the rest of the world.

Chris Giles

Published on 8th December 2006, by The Financial Times

© Copyright The Financial Times Ltd 2006.

Economic inequality has now been increasing in the United States for more than 30 years, and for much of that time its causes seemed fairly clear. Computers and other new technologies replaced many blue-collar workers, undercutting the bargaining power of those workers. Global trade was doing the same by allowing companies to make their products elsewhere. Highly educated workers, on the other hand, were able to work more efficiently — and thus make more money — thanks to new technology, and to play on a bigger stage thanks to globalization. This was the story of inequality from the mid-1970s through the late 1990s.

But the story seems to be changing. This year, a new economic statistic that casts doubt on the old consensus began getting some serious attention. Over the last five years, the average pay of college graduates grew at only a little better rate than inflation. For now, most holders of bachelor’s degrees appear to be on the wrong side of the inequality divide, which suggests that the slice of the American work force on the right side of the divide has become extremely narrow. Even families at the 90th percentile of the income distribution (now earning about $110,000 a year) have received only a marginally bigger raise over the last decade than those in the middle of the distribution.

A comprehensive approach can help address misperceptions as well as find sustainable pathways out of destitution

All human rights - the right to speak, to vote, but also the right to food, to work, to health care and housing - matter to the poor because destitution and exclusion are intertwined with discrimination, unequal access to resources and opportunities, and social and cultural stigmatization. A denial of rights makes it harder for the poor to participate in the labor market or have access to basic services and resources. In many societies, they are prevented from enjoying their rights to education, health and housing simply because they cannot afford to do so. This, in turn, hampers their participation in public life, their ability to influence policies affecting them and to seek redress against injustice.

Huge gifts to charity from U.S. billionaire Warren Buffett and others have won widespread praise, but some say the same economic process that helped earn those fortunes is leaving billions more in dire poverty.

The World Bank - which has to be applauded for having made the first such attempt started making international comparisons of poverty only about two decades back. For obvious reasons of convenience it developed two simple notions of poverty. The US Treasury being the power behind the institution, and the dollar being the reserve currency by design, the lower poverty line was set at $1 a day per capita. Those below it were considered to be “the poorest of the poor”. The upper poverty line was set at $2 a day. Those living on $1-2 a day were still poor, but not as badly off. The updated numbers today, corrected for inflation, are $1.08 and $2.15.