Why less than 1% of population controls and possesses 98% of world’s financial resources?

September 29, 2019

Global inequality is growing. The middle classes have been squeezed at the expense of the very rich, according to research by Credit Swiss. 388 individuals have the same wealth as the bottom 50% of the population (that's 3.5 billon people, folks). Let that sink in! This is the latest evidence that extreme inequality is out of control. Are we really happy to live in a world where the top 1% owns half the wealth and the poorest half own just 1%?

The base of the pyramid The layers of the wealth pyramid are quite distinctive. The base tier has the most even distribution across regions and countries, but also the widest spread of personal circumstances. In developed countries, about 30% of adults fall within this category, and for the majority of these individuals, membership is either transient – due to business losses or unemployment, for example – or a life-cycle phase associated with youth or old age. In contrast, more than 90% of the adult population in India and Africa falls within this range. In some lowincome countries in Africa, the percentage of the population in this wealth group is close to 100%. For many residents of low-income countries, life membership of the base tier is the norm rather than the exception.

Mid-range wealth USD 10,000–100,000 is the mid-range band from a global wealth perspective, covering 1.3 billion adults and encompassing a high proportion of the middle class in many countries. The average wealth of this group is sizable at USD 33,100, around half the overall global mean. In combination with its size, this provides the group with considerable economic clout equating to USD 44 trillion in net assets. China completely dominates this segment, accounting for 48% of members, while Asia-Pacific and – to a greater extent – India and Africa are under-represented. The contrast between the number residing in China (641 million, 59% of Chinese adults) and India (73 million, 8.6% of Indian adults) is particularly striking.

The high wealth bands The top tiers of the wealth pyramid – covering individuals with net worth above USD 100,000 – comprised 6.1% of all adults in the year 2000. The proportion rose to 9.3% by the time of the financial crisis, and then fluctuated in a fairly narrow band. The current level is 9.5%. Regional composition includes Europe, North America and the Asia-Pacific region (omitting China and India) and contributes the largest number of members and together account for 79% of the group. Europe alone hosts 156 million members (33% of the total), roughly doubling the number in China (81 million). However only five million members (1.1% of the global total) reside in India, and only three million (0.6%) in Africa.

High Net Worth Individuals For mid-2018, we estimate that there are 42.0 million HNW adults with wealth between USD 1 million and USD 50 million, of whom the vast majority (37.1 million) fall in the USD 1–5 million range (Figure 5). There are 3.3 million adults worth between USD 5 million and USD 10 million, and another 1.6 million have assets in the USD 10–50 million range. Europe and North America had similar numbers of HNW individuals in 2007–09, but North America opened up a gap after 2009, which widened significantly from 2013 onward. North America now accounts for 18.6 million members (44% of the total), compared to 12.4 million (30%) in Europe. Asia-Pacific countries, excluding China and India, have 6.6 million members (16%), and a further 3.5 million are found in China (8% of the global total). The remaining 976,000 HNW individuals (2% of the total) reside in India, Africa or Latin America.

Reference: https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html

In the next article we will look into Women and Wealth. Evidence suggests that women are becoming more successful within the highest wealth echelons. However, certain categories of women remain at a disadvantage as far as wealth creation is concerned.