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Richest 1% will own more than all the rest by 2016

oxfam.org

41–50 of 136 posts

Re: Richest 1% will own more than all the rest by 2016

#41
post #18

Strange to see a Rothschild speak out against inequality. (FTA) Lady Lynn Forester de Rothschild [...] said: “Oxfam’s report is just the latest evidence that inequality has reached shocking extremes, and continues to grow. It is time for the global leaders of modern capitalism, in addition to our politicians, to work to change the system to make it more inclusive, more equitable and more sustainable."

You may have heard of Amartya Sen, welfare economist specialising especially in inequality and poverty.

His wife, I learned recently, is Emma Georgina Rothschild.

So: not all that improbable.

https://en.wikipedia.org/wiki/Amartya_Sen

Re: Richest 1% will own more than all the rest by 2016

#42
post #11

This sure seems to be HN's flavor of the month (and possibly for good reason). One thing I haven't seen mentioned is the fact that markets are created, not discovered. LLC's and Delaware C-Corps didn't materialise out of the aether, nor did the property rights regarding their shares. I dislike the concept of "deserving" at the best of times, but under this light, those that are the most successful reap their rewards…

>One thing I haven't seen mentioned is the fact that markets are created, not discovered. Probably because most capitalists don't believe this? >nor did the property rights regarding their shares. Debatable. Most capitalists would say that property rights naturally exist and that "shares" are simply an agreed upon way of dividing property rights over a complexity of assets and agreements (i.e. a business). >Taxing la…

"Most capitalists would say that property rights naturally exist ..."

I would like those capitalists to show me the "property rights" molecule.

Re: Richest 1% will own more than all the rest by 2016

#43
post #18

Strange to see a Rothschild speak out against inequality. (FTA) Lady Lynn Forester de Rothschild [...] said: “Oxfam’s report is just the latest evidence that inequality has reached shocking extremes, and continues to grow. It is time for the global leaders of modern capitalism, in addition to our politicians, to work to change the system to make it more inclusive, more equitable and more sustainable."

A few more questions regarding your point:

- Lynn Forester de Rothschild, Chief Executive Officer of E.L. Rothschild has what interest in fighting inequallity? A look at the list of investments of E.L. Rothschild http://www.elrothschild.com/investments paints a picture of an investment fund. So, the very 1% that is getting richer by moving money around while working population earns the dividends. Funny thing, one of the companies listed is The Economist Group. It would be interesting to know, how favourable/critical of Oxfam is The Economist.

- Oxfam had a budget of €947.1 million for the period 1st April 2013 - 31th March 2014. Almost a billion euros! And who has given them that much money? https://www.oxfam.org/en/annual-and-financial-reports has that data. Or, at least, that is what I have hoped for. The list of donors om page 68 of the annual report for 2013 - 2014 is just a birds-eye view.

- In its report, Oxfam says very little about growing inequallity in developed countries. Does that mean, that only developing world has inequallity problems?

Re: Richest 1% will own more than all the rest by 2016

#44
post #21
post #14

Earlier quoted context omitted.

Inequality happens automatically if there is no control. I.e. someone will have way more than others, and not because they created value and are just capturing portions of it. Exceptional value generating individuals are not the norm, they are the exception. Most money is acquired through luck, inheritance, network effects, rents, and interests on investments.

> Most money is acquired through luck, inheritance, network effects, rents, and interests on investments. Inheritance -> heavily taxed about everywhere. rents -> you need capital in the first place to secure rents, so it means that somebody has produced some work in the first place to get it. Interests on investment exist to allow your money to be useful to other people trying new things and building their businesses…

Rebuking the notion that all wealth is earned through directly creating value.

For instance, the biggest reason top actors in hollywood succeed in capturing so much value is because starting in the late 1970's CAA ([1]) moved leverage in negotiations towards actors, not because they are so much better actors. If talent had less leverage, they would create as much value if they were paid less, but studios and their owners would capture the value.

Economy is a wealth creation platform but it does not come with an automatic "fair scoring" system.

[1] https://en.m.wikipedia.org/wiki/Michael_Ovitz

Re: Richest 1% will own more than all the rest by 2016

#45
post #42

Earlier quoted context omitted.

>One thing I haven't seen mentioned is the fact that markets are created, not discovered. Probably because most capitalists don't believe this? >nor did the property rights regarding their shares. Debatable. Most capitalists would say that property rights naturally exist and that "shares" are simply an agreed upon way of dividing property rights over a complexity of assets and agreements (i.e. a business). >Taxing la…

"Most capitalists would say that property rights naturally exist ..." I would like those capitalists to show me the "property rights" molecule.

Ignoring the obvious that it's a 'when did you stop beating your wife?' statement, one might ask to see the 'your wealth is mine while I can bully you into handing over a sizable portion of it' molecule.

Re: Richest 1% will own more than all the rest by 2016

#46
post #19

2.7 million puts one in the richest 1%? Unexpected, but I guess it makes sense. There are still a lot of very poor in the world. I started to think "injustice" when I saw the article, but 2.7 million will barely buy a nice house in some parts of the US. I suppose in some ways wealth is still relative. I guess I'm more curious about what percentage of world assets the .001% control.

Where did you find that 2.7m number? The most recent data is the Credit Suisse 2015 set, which you can see here:

https://www.credit-suisse.com/uk/en/about-us/research/resear...

They put the 1% line at $760k, and that's net worth: include the value of your home, subtract your debts.

I'm pretty unhappy about this oxfam article. It talks about "the richest 1%" and "the billionaires" alongside each other as if these groups were even remotely similar. This is furthering the myth of some kind of group of "shady rich people" who are behind the global financial conspiracy. Reality check: if you're reading this, you're almost certainly in the top 10% ($68,845 in total assets). According to the same data set, the median wealth in the US is $50k, so about half the population is in the top ten percent. You are the rich people this article is talking about.

Comparing the "richest 80 billionaires" to the bottom 50% is similarly misleading, because the bottom 50% has about 0.5% of the global wealth (which I think roughly answers your question about the top 0.001%). If you lined up the top 80 billionaires, shot them all, and redistributed all their wealth to the bottom 50%, then those people would still be in extreme poverty.

There are serious global wealth inequality problems, and this oxfam article doesn't really talk about them at all, and instead tries to perpetuate a popular meme. I strongly suggest that people skip it and read the Credit Suisse report instead - the data tells a much more interesting story.

Here are the numbers which the oxfam article doesn't mention, and should:

85.65% of the global wealth is held by the top 10% of the population, which is 477m people, of which 113m are in the US, with second place going to Japan at 58m.

32.3% of global wealth is held by the middle class (defined as $50k to $500k wealth); 92.4% is held by the middle class or above. 37% is in the US. Africa, India, and Latin America together represent about 4%.

Re: Richest 1% will own more than all the rest by 2016

#47

"The existence of a billionaire is a clear indicator of one or more market failures" I have been banging this around my head for a while since PG's infamous essay. There are plenty of reasons to see wildly successful people as talented, special etc. But nowhere near enough to believe them to be superhuman. Nor as rare as might be expected. Becoming a billionaire (or member of top 1% or what have you) is not something…

I would take a close look at feedback loops from wealth. The very poor is to poor to change anything, while the very rich can change laws and dictate world wide sentiments.

In the end the inequalities of power destroys any linear correlation between skill and income that might otherwise manifest.

Traditionally we've been looking at the lower end of the power distribution to mitigate this (unions, minimum wage, micro loans and so forth) it might be prudent to look at the other end (property laws, corporations, finance and so forth) with similar intentions.

Re: Richest 1% will own more than all the rest by 2016

#48

> Members of this global elite had an average wealth of $2.7 million per adult in 2014. I know plenty of people in their 60s who simply busted their asses at middle-class jobs while saving their pennies who are members of this "global elite."

I don't think you do.

The median income in the USA is $52,000. Assuming that a middle-class job pays 3* that amount, and that someone can reasonably save 30% of their salary for the last 20 years they work, that amounts to about $1m saved. Probably a lot less because a person's salary isn't at it's peak for much of their career. Even factoring for a household with 2 incomes at that level you don't get to $2.7m.

I imagine the people you know are members of the elite as you say, but they got there by by having elite jobs and by investing their elite incomes. If you think they're in the "middle-class" you have a somewhat distorted view of the world.

Re: Richest 1% will own more than all the rest by 2016

#49
post #3

Yet poverty as a whole is decreasing according to numerous measures. Plus their report contradicts the world bank observations: http://ourworldindata.org/VisualHistoryOf/Poverty.html#/Glob... Which is not surprising since Oxfam has a clear political agenda. EDIT: world bank poverty report, clearly showing the decreasing poverty rates globally: http://www.worldbank.org/content/dam/Worldbank/gmr/gmr2014/G...

>Yet poverty as a whole is decreasing according to numerous measures.

Yep. You lift people out of poverty through growth, something capitalists are very good at.

Re: Richest 1% will own more than all the rest by 2016

#50
post #28

Massive income inequality hurts economic growth. Why? The rich don't spend (much of) their money, they hoard it.

What do they do with it then? The only way they could hold money and it not have a positive impact is if it's sitting in cash. If they invest it or hell, even put it in a savings account, the money is having a positive impact on the economy. If they buy a ridiculous $50M yacht? That money flows to the company that built it.

That's not necessarily so. If you invest in real estate (and many do), wealth and income can grow even without any physical improvements, just due to supply and demand. National income will grow (since it includes rent) but it doesn't create any new jobs.

Here's an analysis showing that capital is earning more than labor mostly due to housing prices:

http://www.brookings.edu/about/projects/bpea/papers/2015/lan...

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