Part I .... Part 2 ... This is part 3 of my extracts from The World Distribution of Household Wealth, by James B. Davies, Susanna Sandström, Anthony Shorrocks, and Edward N. Wolff, February, 2008, found here.
Table 2 has two panels. The upper panel shows the world's worth deciles, plus the top 5% and top 1%.
The bottom decile has no wealth; the average wealth, expressed in American dollars, is less than $1. The next 10% of us have 0.1% of the wealth; the 3rd decile holds 0.2% of the wealth; the 4th 0.3%, the 5th 0.5%; the sum of these is about 1.1%.
The 6th decile has 0.8%. The 7th decile has 1.4%. The 8th decile has 2.7% of the world's household wealth, and the 9th decile has 8.7% of the wealth -- not too far from their per capita share, but still below it.
How is the remaining household wealth distributed?
- The top decile -- the top 10% of us -- has 85.2% of the world's household wealth.
- The top 5% of us have 70.7% (which suggests that the second 5% have 14.5%).
- The top 1% have 40.1% of the wealth; the next 4% have 30.6% of the world's household wealth.
How is it that 1% of the world's people hold 40.1% of the world's wealth? What sort of forces are at work here? Natural talent? Industriousness? Good laws and structures that favor business? Wise government that fosters -- what? God is on their side (and thus not on the side of the other 99%)?
Or is it structures that steal wealth from others, or structures which steal their labor?
Does our assertion that all men are created equal illuminate the question at all?
That's the top panel.
The second panel is even more revealing. It lists the regions of the world down the rows, and the deciles of wealth across the columns -- North America, Latin America and the Caribbean, Europe, Africa, China, India, Rich Asia-Pacific, Other Asia-Pacific, and World:
- North America has 6.1% of the [adult] population, 34.4% of the wealth. Only 0.2% of the people in the bottom decile are in North America; 13.6% of those in the 9th decile are in the North America; 27.3% of those in the top decile, and 38.9% of those in the top 1%. We are overrepresented in the top 3 deciles.
- Latin America and the Caribbean have 8.2% of the population and 4.3% of the wealth. They are overrepresented in the 89th and 9th deciles.
- Europe has 14.9% of the population and 29.6% of the wealth. Of those in the top decile, Europeans represent 36.2%, and they are 29.7% of the next decile. They are over-represented in the top 3 deciles.
- Africa has 10.2% of the population and 1.0% of the wealth. Of the bottom decile, 27.2% live in Africa, and 17.8% of the next decide are there. They are highly over-represented in the bottom 3 deciles.
- China has 22.8% of the population and 2.6% of the world's household wealth. 2.6%. Their people represent large percentages of the middle deciles.
- India has 15.4% of the world's population and 0.9% of the world's wealth. Their people are largely concentrated in the bottom 4 deciles.
- Rich Asia-Pacific has 5.0% of the world's population and 24.1% of the world's wealth. Their people are concentrated in the top 2 deciles
- Other Asia-Pacific has 17.5% of the world's population and 3.0% of the world's wealth. Their people are concentrated in the bottom 4 deciles.
Africa is very rich in natural resources. Yet they have only 1.0% of the wealth. What structures have led to this? Who is extracting their wealth and taking it to other countries ... and, within those other countries, concentrating its value among a small fraction of the population?
Table 3 is similar to Table 2, but looks at individual countries. The countries are ranked by their wealth shares.
- The US has 5.5% of the population, 32.6% of the wealth, and a Gini coefficient of 0.801
- Japan is second, with 2.7% of the population, 18.3% of the wealth, and a Gini of 0.547
- Germany is third, with 1.8% of the population, 5.7% of the wealth, and a Gini of 0.667
- Italy is fourth, with 1.3% of the population, 4.5% of the wealth and a Gini of 0.609
- the UK is fifth, with 1.2% of the population, 5.9% of the wealth, and a Gini of 0.697
- France is sixth, with 2.3% of the population, 4.1% of the wealth, and a Gini of 0.730
- Spain is seventh, with 0.9% of the population, 2.2% of the wealth, and a Gini of 0.570
- Canada is eighth, with 0.6% of the population, 1.7% of the wealth, and a Gini of 0.688
These eight countries have 16.3% of the world's adult population, and 75.0% of the world's household wealth.
The Gini coefficient is a measure of the concentration of wealth or income. A Gini coefficient of 1.000 means that the top 1% of the population has 100% of the income; the US Gini coefficient is higher than that of any of the other countries, meaning that our wealth is more concentrated than any other, except Switzerland, with a 0.803. The lowest Gini of the countries shown is Japan with 0.547. To quote the study:
The global wealth Gini is estimated to be even greater at 0.892. This is equivalent to the Gini value that would be registered for a 100-person population in which one person receives $900 and the remaining 99 people each receive $1.
Table 3 also shows that
- Americans represent 37.3% of the world's top 1% wealthholders; Japan has 27.0%, and the next largest concentration is the UK, with 6.4%. France has 5.2%
- Americans represent 24.8% of the world's top 10% wealthholders; Japan has 20.5%; Germany 7.6%; Italy 6.6%; UK 5.9%.
- Americans represent 11.7% of the second decile; Japanese has are 5.0% of that group; Germans 3.6%, Italy 4.4%. Brazil 4.5%, Mexico 4.0%, China 9.3%.
- Americans represent 7.2% of the third decile; Chinese represent 29.6% of this decile; India 7.4%
- Americans represent 4.2% of the world's fourth decile; China has 35.1%, India 11.6%, Russia 3.8%, Brazil 3.4%, Indonesia 2.9%
- Americans are represented in all ten deciles of the world's wealth distribution, but are concentrated in the top two deciles.
The study's conclusions include:
- This paper has provided a first estimate of the world distribution of household wealth. It is evident that the distribution is highly concentrated — in fact much more concentrated than the world distribution of income, or the distribution of wealth within all but a few of the world’s countries. While the share of the top 10 per cent of wealth-holders within a country is typically about 50 per cent, and the median Gini value around 0.7, our figures for the year 2000 using official exchange rates suggest that for the world as a whole the share of the top 10 per cent was 85 per cent and the Gini equalled 0.892. By comparison, Milanovic (2005) estimates that the world income Gini was 0.795 in 1998.
- About 34 per cent of the world’s wealth was held in the US and Canada in the year 2000, 30 per cent was held in Europe, and 24 per cent was in the rich Asia-Pacific group of countries. Africa, Central and South America, China, India and other Asia- Pacific countries shared the remaining 12 per cent. The location of top wealth-holders is even more concentrated, with North America hosting 39 per cent of the top global 1 per cent of wealth-holders, and Europe and rich Asia-Pacific having 26 per cent and 32 per cent respectively. The high share of top wealth-holders in North America is particularly disproportionate, as this region contains just 6 per cent of the world population.
- Looking lower down in the global wealth distribution, India supplies about one third of the bottom three deciles, while China contributes about a third of the people in the fourth to seventh deciles. Latin America is fairly evenly spread across all deciles, reflecting the fact that wealth inequality in the region mimics that in the world as a whole, according to our estimates. Africa and low-income Asia-Pacific are heavily present at the bottom. While North America and rich Asia-Pacific have little representation in the bottom deciles, this is not true for Europe which comprises about 9 per cent of the world’s population in the bottom three deciles.
- If current trends continue, the bottom deciles in the world wealth distribution may come to be increasingly dominated by Africa, Latin America, and low-income Asia-Pacific countries.
Where are the world's valuable natural resources, and in whose portfolios do they reside? Isn't there a better alternative than their privatization?
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