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Richest 2% Own Half the World's Wealth
kop writes "The richest 2% of adults in the world own more than half of all household wealth, according to a new study by a United Nations research institute. Most previous studies of economic disparity have looked at income, whereas this one looks at wealth — assets minus debts. The survey is based on data for the year 2000. Many figures, especially for developing countries, have had to be estimated. Nonetheless, the authors say it is the most comprehensive study of personal wealth ever undertaken." The study itself is available from the World Institute for Development Economics Research.
Inequality and Risk
Mind the Gap
The numbers sound staggering, but the majority of the world's population are dirt poor (of course something should be done about that). If you live the west and don't believe me, enter your income here and find out for yourself.
Not Quite. Here for more
The top 1% pay about 30% of all taxes
The top 5% pay about 50% of all taxes
and the top 50% pay about 98% of all taxes
Tax breaks for the rich?! DUH only the rich can get 'em cause the botom 50% is getting the money.
>>it kinda makes you think what exactly are they doing with this money anyways?
But surely it's not hidden in a mattress anywhere. It's out in the economy, making the economy work. The money *is* changing hands. Sure, it's making Rich Bastard wealthier, but it's making us wealthier, too. Maybe it's in a treasury bill, giving our government a loan and working capital to buy things and pay salaries. Or in a stock, which gives a company working capital to buy things and pay salaries.
What would happen to to the US government if all of its bonds and bills were suddenly called in and no one else bought? For that matter, what happens to a company? That money *has* to be there for our economy to work.
--Jim (me)
Do they use more than 18% of the expenditure of State?
If not, on what ethical basis do we justify taking from them what they or their parents have earned and spending it on ourselves?
Because the rich have more stake in the state keeping the status quo intact (i.e. enforcing property rights, repelling foreigh takeover) than the poor. Not to mention many often receive indirect benefits in the form of subisidies, etc. from the government.
Not in China. Peasants were free, and owned their own land which they could buy and sell as they pleased. It was also common for farmers to run their own small business in addition to farmer, most commonly selling the cloth that the farmer's wife weaved.
Another thing in China helped redistribute wealth. While in most places the eldest son inherited everything, in China, the property was divided equally amongst all the sons. This meant that "rich" families often became "ordinary" over a few generations unless they can produce one or two men of great ability every generation or so. In fact, this custom was deliberated introduced by the Chinese emperors to reduce the chance of feudalism.
"The rich get richer" is basically a result of something sometimes called the "risk free asset" by modern portfolio theory aka "risk free rate of return" -- generally the interest rate the government pays to borrow money. In classical economics its called "economic rent" or "Ricardian rent" (after the classical economist Ricardo). It results from systemic growth in the economy -- growth that increases the value of assets that do not increase with increasing demand, such as land. If you shove more people onto the Earth, you get higher land prices but you don't get more land. (BTW: This is the real reason guys like Gates, Bush and Kennedy are for immigration liberalization.) In a natural setting, this corrects itself through die-offs and/or fighting over the land -- or whatever the monopoly at issue happens to be (it could be a monopoly on, say, the right to make copies of an operating system that everyone happens to have standardized on, which is what made the present day's richest man). Governments protect wealth holders from this natural redistribution by taxing things to pay for police, courts, military, and other things that protect nonsubsistence property rights. When this service is paid for by taxing things other than those property rights, you have a subsidy of nonsubsistence property rights.
If you don't tax away all monopoly profits and redistribute it evenly to everyone, then you end up with a class of people who have an incentive to load up the economy with more people, whether through immigration or birth rates, in order to increase the demand for their property. This class can be the private owners of the monopolized rental properties or it can be public officials that reserve to themselves and their special interests the economic rent derived from taxation.
Think of it as signal processing where you don't subtract out the DC component of the signal before integrating. You end up overflowing your accumulators and losing the information you were trying to extract.
The only exception you might make is for intellectual property representing genuine invention of technological utility, and subsistence property rights since people will generally fight to the death to retain their subsistence.
That's why "the money quote" from my white paper says:
Seastead this.
Amazing 31.02% procent of the world population has an income of less than nothing!
You don't even need to read the article, but please at least RTFSummary:
". Most previous studies of economic disparity have looked at income, whereas this one looks at wealth -- assets minus debts. "
It's not income, it's wealth.
So apparently 31.02% of the population owe more than they have.
I don't know about any other countries, but I know that's fairly common in the US, even among middle-class people with good standards of living.
The libertarian solution to the failures of capitalism is to apply more capitalism til the failures are fixed.
Does that mean that 1% of the richest are not quite the same as 1% of the top tax payers? What happened to the progressive tax system?
It means exactly that. We tax based on INCOME, not WEALTH. If I have one TRILLION dollars in assets, but an income of only fifteen thousand a year, I pay no taxes. And that trillion is pretty much meaningless.
So Bill Gates doesn't pay taxes based on what his Microsoft stock is worth, but rather on what Microsoft pays him (plus what he gets for selling any stock over and above what Microsoft pays him). In his case, wealth and income are totally disjoint.
Once upon a time, the last time but a few (dozen) that we had a discussion that got around to taxes, I went to the IRS website to get their tax statistics. The "rich" (in terms of income, NOT wealth) pay a higher percentage of their income as taxes than the rest of us do. Not an astoundingly higher percentage, but higher. Which is as it should be - a flat tax is an inherently bad idea, just as an extremely progressive tax is a bad idea.
"I do not agree with what you say, but I will defend to the death your right to say it"
I was reading a book recently on wealth accumulation (checked out free at the library). The author recommended writing down everything you spend everyday for a month, consolidate your similar expenses into categories, then see if there is anything you could reduce or eliminate to find a way to save some of what you make.
He told about how he went on a radio show, gave this advice, and was ridiculed by the talk show host, who admitted he was shoe stringing it on $100k/year in New York. The talk show host finally gave in and did this. He found he was spending $16,000/year eating out. Some people spend a couple thousand a year on coffee-like substances, when inexpensive or home-brewed varieties can be had for a couple hundred or less. Any regular expense that you incur that doesn't relate directly to running your house or car should be viewed in a similar manner, and decide which is a bigger priority, having that item today or setting the money aside to invest and turn into 5 or 10 times as much money later.
I can imagine paying 3 or 4 thousand a year to cook (excellent meals) for myself and my wife (and soon our children), and finding a much better use of the other 12k dollars. And, actually we do similarly, instead of paying rent and eating out, we eat at home and bought a house three years ago when interest rates were really low. In less than 10 years, we'll own our house debt free, and what we were paying on house payments (or would otherwise be spending on rent), about $7100, will be money we can use to do things we consider fun or invest for retirement, or buy our next house. We'll probably do more of the last two, but some of the former too. Keep in mind that when we executed our house purchase, my average expected income for the next 8 years was around $35,000 in the mid-USA, and we bought a house for $110,000, with my wife quiting her job (planned) to stay at home with our children. I got an unexpected promotion and nearly 40% raise this year, which is making things much easier. I expect that in 30 years, we'll have $5 million in assets divided between 401k, real estate, RothIRA (we pay little in taxes currently, and I'd rather avoid the taxes I can't predict in 30-40 years) and other stock market investments.
In the end, people make their own decisions about their priorities, and choose not to spend a couple dozen hours figuring out how to do more with less, thus making themselves wealthy in the end. The book I was looking at was The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich, available for about $10 on Amazon, but it really comes down to a few simple steps.
1: Eliminate unnecessary expenses, set aside that money, and put it to work for you.
2: Buy a place to live, paying rent makes others rich at your expense, owning your place will be your foundation to future wealth.
3: Have a certain portion of your paycheck directly diverted to your retirement/investment program, and plan the rest of your budget like that money doesn't exist. (This can be done manually, if you have discipline, but it must happen)
4: Profit!!! (sorry, couldn't resist)
As for the grandparent post, houses in New York for very modest places rent for thousands depending on the area/building, I could get a similar place for 1/4 the cost or less in less urban areas. And when you rent, that becomes nothing as far as your balance sheet is concerned, when you are paying on the mortgage, that expense you pay on the principle becomes an asset.