June 12, 2013
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In 2006, a UN report revealed that the world’s richest 1% own 40% of the world’s wealth, with those in the financial and internet sectors comprising the “super rich.” More than a third of the world’s super-rich live in the U.S., with roughly 27% in Japan, 6% in the U.K., and 5% in France. The world’s richest 10% accounted for roughly 85% of the planet's total assets, while the bottom half of the population – more than 3 billion people – owned less than 1% of the world’s wealth.
Looking specifically at the United States, the top 1% own more than 36% of the national wealth and more than the combined wealth of the bottom 95%. Almost all of the wealth gains over the previous decade went to the top 1%. In the mid-1970s, the top 1% earned 8% of all national income; this number rose to 21% by 2010. At the highest sliver at the top, the 400 wealthiest individuals in America have more wealth than the bottom 150 million.
A 2005 report from Citigroup coined the term “plutonomy” to describe countries “where economic growth is powered by and largely consumed by the wealthy few.” The report specifically identified the U.K., Canada, Australia and the United States as four plutonomies. Published three years before the onset of the financial crisis in 2008, the Citigroup report stated: “Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries.”
"The rich," said the report, "are in great shape, financially.”
In early 2013, Oxfam reported that the fortunes made by the world’s 100 richest people over the course of 2012 – roughly $240 billion – would be enough to lift the world’s poorest people out of poverty four times over. In the Oxfam report, "The Cost of Inequality: How Wealth and Income Extremes Hurt Us All," the international charity noted that in the past 20 years, the richest 1% had increased their incomes by 60%. Barbara Stocking, an Oxfam executive, noted that this type of extreme wealth is “economically inefficient, politically corrosive, socially divisive and environmentally destructive...We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true.”
The report added: “In the UK, inequality is rapidly returning to levels not seen since the time of Charles Dickens. In China the top 10% now take home nearly 60% of the income. Chinese inequality levels are now similar to those in South Africa, which is now the most unequal country on Earth and significantly more unequal than at the end of apartheid.” In the United States, the share of national income going to the top 1% has doubled from 10 to 20% since 1980, and for the top 0.01% in the United States, “the share of national income is above levels last seen in the 1920s.”
Previously, in July of 2012, James Henry, a former chief economist at McKinsey, a major global consultancy, published a major report on tax havens for the Tax Justice Network which compiled data from the Bank for International Settlements (BIS), the IMF and other private sector entities to reveal that the world’s super-rich have hidden between $21 and $32 trillion offshore to avoid taxation.
Henry stated: “This offshore economy is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and – most importantly – to have very significant negative impacts on the domestic tax bases of ‘source’ countries.” John Christensen of the Tax Justice Network further commented that “Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people... This new data shows the exact opposite has happened: for three decades extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich.”
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