The share of global wealth held by the wealthiest people ballooned by nearly a full percentage point over the last year.
That increase in billionaires' share of wealth was the largest ever, according to the World Inequality Report 2022.
The top 0.01% of individuals now hold about 11% of the world's wealth, compared to just over 10% in 2020.
By Dave Allen for Discount Gold & Silver
The share of global wealth held by the wealthiest people ballooned by nearly a full percentage point over the last year.
That increase in billionaires' share of wealth was the largest ever, according to the World Inequality Report 2022.
The top 0.01% of individuals now hold about 11% of the world's wealth, compared to just over 10% in 2020.
Unprecedented measures taken by governments and central banks around the world to battle the pandemic’s economic effects have helped drive a huge appreciation in assets from stocks to real estate — further widening the gap between the haves and the have nots.
Here are the report’s major findings:
Contemporary income and wealth inequalities are very large. The average adult earned $23,380 a year in 2021, with the average adult owning $102,600 in assets.
On average, an individual from the top 10% of the global income distribution earns $122,100 a year, whereas an individual from the poorest half of the global income distribution makes $3,920 a year.
Overall, the richest 10% of the global population currently takes 52% of global income, whereas the poorest half of the population earns 8% of it.
Global wealth inequalities are even more distinct than income inequalities. The poorest half of the global population barely owns any wealth at all, just 2% of the total. By contrast, the richest 10% of the global population own 76% of all wealth.
On average, the poorest half of the population owns $4,100 per adult, while the top 10% own $771,300 on average.
The Middle East and North Africa region is the most unequal in the world, while Europe has the lowest inequality levels. In Europe, the top 10% income share is around 36%, whereas in MENA it’s 58%.
In between these two extremes exists a diverse set of patterns. In East Asia, the top 10% make 43% of total income and in Latin America, 55%.
A world map of inequalities shows that national average incomes are poor predictors of inequality. Among high-income countries, some are very unequal (e.g., the U.S.), while other are relatively equal (e.g. Sweden).
The same is true among low- and middle-income countries, with some exhibiting extreme inequality (e.g., Brazil and India), somewhat high levels (e.g. China), and moderate to relatively low levels (e.g. Malaysia, Uruguay).
Inequality is a political choice, not an inevitability. Income and wealth inequalities have been on the rise nearly everywhere since the 1980s following a series of deregulation and other policy changes.
The rise has been inconsistent, i.e., certain countries have experienced extraordinary increases in inequality — including the U.S., Russia and India.
Others — such as European countries and China — have experienced relatively smaller rises.
The authors argue that these differences confirm that inequality is not inevitable, it is a political choice.
Current global inequalities are close to early 20th century levels, at the peak of Western imperialism. The share of income currently enjoyed by the poorest half of the world’s people is about half what it was in 1820.
Although inequality has increased within most countries, over the past two decades, global inequalities between countries have declined.
The gap between the average incomes of the richest 10% of countries and the average incomes of the poorest 50% of countries dropped from around 50 times to a little less than 40 times.
At the same time, inequalities increased significantly within countries. The gap between the average incomes of the top 10% and the bottom 50% of individuals within countries has almost doubled, from 8.5 times to 15 times.
This sharp rise in within-country inequalities has meant that despite economic catch-up and strong growth in emerging countries, the world remains particularly unequal today.
Nations have become richer, but governments have become poorer. The report says one way to understand these inequalities is look at the gap between the net wealth of governments vs. their private sector.
Over the past 40 years, the share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in private hands.
This trend has been magnified by the pandemic, during which governments have borrowed the equivalent of 10-20% of GDP, essentially from the private sector.
The currently low wealth of governments has important implications for state capacities to tackle inequality in the future, as well as the key challenges of the 21st century.
Wealth inequalities have increased at the very top of the distribution Global multimillionaires have captured a disproportionate share of global wealth growth over the past several decades.
The top 1% took 38% of all additional wealth accumulated since the mid-1990s, while the bottom 50% captured just 2% of it.
This inequality stems from serious inequality in growth rates between the top and the bottom segments of the wealth distribution.
The wealth of richest individuals on earth has grown at 6 to 9% per year since 1995, whereas average wealth has grown at a little over 3% per year.
Wealth inequalities within countries shrank for most of the 20th century, but the bottom 50% share has always been very low. Wealth inequality was significantly reduced in Western countries between the early 20th century and the 1980s.
But the poorest half of the population in these countries has always owned very little, i.e. between 2% and 7% of the total. In other regions, the share of the bottom 50% is even lower.
The report also reviews a number of policy options for reducing global income and wealth inequality and for funding the challenges of the coming generations.
Most of them involve redistributing wealth with “modest progressive taxes” to generate significant revenues for governments.
The report concludes that recent developments in international taxation “show that progress towards fairer economic policies is indeed possible at the global level as well as within countries.”
But as someone much wiser than me once wrote, “There are no solutions, only tradeoffs.”