Most of the discussion I’ve seen of wealth and income inequality has focused on trends in the USA. Now comes the annual report from Credit Suisse, one of the world’s largest financial institutions, on wealth and inequality worldwide. The picture looks familiar: a small number of individuals control most of the globe’s wealth.
Among their findings released October 14:
- The number of millionaires worldwide is likely to increase from 35 million to 53 million in the next five years;
- The USA is “the undisputed leader in terms of aggregate wealth;”
- The USA, Switzerland, and Hong Kong are the most unequal “developed countries;”
- Countries labeled as “emerging markets,” especially China, can be expected to grow their shares of global wealth in the next five years. But there, too, inequality is rising.
Credit Suisse, which no doubt wants to handle those millionaires’ accounts, also finds that the USA leads the world with 14.2 million millionaires, 41% of the members of the worldwide millionaire club. Credit Suisse refers to them as ‘high net worth” or “HNW” individuals.
Above the HNWs on the ladder are the UHNWs, the “ultra high net worth individuals,” those with with more than $50 million in net assets. The Global Wealth Report says this group has 128,200 members, 49% of whom live in the USA.
“The number of HNW and UHNW individuals has grown rapidly in recent years, reinforcing the perception that the very wealthy have benefitted most in the favorable economic climate,” the report says. Indeed.
“HNW and UHNW individuals are heavily concentrated in particular regions and countries, and tend to share more similar lifestyles, participating in the same global markets for luxury goods, even when they reside in different continents,” the authors observed.
Here’s more numbers:
- The poorest 50% of the global population owns less than 1% of the world’s wealth.
- The wealthiest 10% (those with more than $77,000 of net worth) owns 87% of the world’s wealth.
- The top 1% (more than $798,000 of wealth) owns 48.2% of the world’s wealth.
- The world now has 35 million millionaires, less than 1% of the population. Together they own 44% of the wealth.
Figures such as these demonstrate that the world’s wealth is in the hands of a very small group of individuals. The figures don’t, by themselves, tell us anything about trends in wealth distribution. But this topic has finally gotten the attention of policy makers and bankers, even those whose clientele is ultra-rich.
“The changing distribution of wealth is now one of the most widely discussed and controversial of topics, not least owing to Thomas Piketty’s recent account of long-term trends around inequality. We are confident that the depth of our data will make a valuable contribution to the inequality debate,” the report’s introduction says.
Credit-Suisse also says, “During much of the last century, wealth differences contracted in high income countries, but this trend may have gone into reverse.”
It may be significant that the Global Wealth researchers find that while the top 10% has seen its share of the global pie rise from 67% in 1989 to 72% in 2007 and topped 75% in 2013, the share in the pockets of the top 1% has “shown little upward movement for the past two decades.”
For the USA, however, they find that shares held by the top 10% and the top 1% have held steady, at about 75% and 38% respectively. This finding contrasts with that of Emmanuel Saez and Gabriel Zucman, who recently wrote
“Wealth inequality [in the USA] has considerably increased at the top over the last three decades. By our estimates almost all of the increase is due to the rise of the share of wealth owned by the 0.1% richest families, from 7% in 1978 to 22% in 2012.
The conflict may result from differences in methodology or from Saez and Zucman’s attention to the top 0.1%, a smaller sliver than Credit Suisse studied. Nevertheless, both reports add to a body of evidence that the economy is doing just fine for a tiny class of people while just about everyone else is getting left behind.
It wasn’t long ago that economists generally avoided discussion of the distribution of wealth. Even if they now differ on some fine points, it probably represents progress when economists working for an institution like Credit Suisse are adding their weight to a call for a change of direction.
“In mature economies,” they conclude, “policies to address wealth inequality are receiving increased attention and can hopefully be designed to avoid unwanted effects on growth or economic security. Among emerging markets, policy makers would be advised to study countries, such as Singapore, which have tried to ensure that wealth gains are broadly shared, and which have succeeded in keeping wealth inequality in check.”
[Note: There’s a link to the Global Wealth Report on the Credit Suisse publications page, but the link did not work for me. Instead, I contacted the bank’s New York press office, where I found someone to send me a copy.]