Syndicate content

wealth

The income of the world’s poor is going up, but they’re $1 trillion poorer. What’s going on?

Duncan Green's picture

Oxfam number cruncher Deborah Hardoon tries to get her head round something weird – according to the stats, the poorest half of the world is getting poorer even though the incomes of these people are rising.

It has become something of a tradition that in January every year we take a look at the Forbes list of billionaires and the Credit Suisse Global Wealth databook and calculate how many billionaires it takes to have the same amount of wealth as the bottom 50% of the planet. Since we started doing these calculations, we have watched the wealth of the top grow at the same time as the wealth of the bottom 50% has fallen. The data tells us that the bottom 50% have approximately $1 trillion (that’s $1,000 billion) less wealth than they did 5 years ago, whilst the richest 62 have about $0.5 trillion more.

The extremely wealthy are able to accumulate more wealth in a day than a whole factory full of workers could earn in a year. On 21stApril, in a 24 hour period, Carlos Slim made more than $400 million. Thomas Piketty famously points out that the rate of return on capital is higher than the general growth rate, such that capital owners are at a distinct economic advantage.

Meanwhile those 3.6 billion people in the bottom 50% include people in debt, people with nothing and people with a net wealth of up to about $5,000. People with little, no, or negative wealth, especially in developing countries with poor social insurance mechanisms (four out of five people in the bottom 50% live in Africa or Asia – including China and India), will not only find it hard to respond to financial shocks – like a poor harvest or a medical bill, but will also find it much harder to invest in their families’ future. Having little wealth may be concerning, but having less and less wealth year to year is even more worrying.

Does child sponsorship pay off in adulthood?

Paul Glewwe's picture
An International Study of Impacts on Income and Wealth

International child sponsorship has long been a common way for people in industrialized countries to connect with the poor in developing countries. We estimate that there are at least 9 million internationally sponsored children today, which means that there may be up to 100 million people today in families that are directly affected by child sponsorship (9 million sponsored children and their family members, and 9 million sponsors and their family members)  Sponsorship typically involves payments of $30-$40 per month to an NGO to help support an overseas child's schooling, health, and other needs.  Some faith-based programs also place a strong emphasis on the spiritual mentorship of sponsored children.  But the question remains--does it work? Our research shows that sponsorship translates to higher education levels and future earnings for formerly sponsored children.

Quote of the Week: Thomas Piketty

Sina Odugbemi's picture

Thomas Piketty"This idea, according to which no one will accept to work hard for less than $10m per year... It's OK to pay someone 10, 20 times the average worker's salary but do you really need to pay them 100 or 200 times to their arses in gear?"

- Thomas Piketty, a French economist who works on wealth and income inequality. He is the author of the best-selling book Capital in the Twenty-First Century (2013), in which he argues that the rate of return on capital (wealth) in developed countries is persistently greater than economic growth. Other things being equal, he states, faster economic growth diminishes the importance of wealth in a society, while slower growth increases it. To counter the steady concentration of wealth, Piketty proposes a global tax on wealth. Piketty is also a professor at the École des hautes études en sciences sociales (EHESS), professor at the Paris School of Economics and Centennial professor at the London School of Economics.
 

Quote of the Week: Thomas Piketty

Sina Odugbemi's picture

Thomas Piketty"The success of my book shows there are a lot of people who are not economists but are tired of being told that those questions are too complicated for them." [...] “ What pleases me is that this book reaches ‘normal’ people, a rather wide public.”

- Thomas Piketty, a French economist who works on wealth and income inequality. He is the author of the best-selling book Capital in the Twenty-First Century (2013), in which he argues that the rate of return on capital (wealth) in developed countries is persistently greater than economic growth. Other things being equal, he states, faster economic growth diminishes the importance of wealth in a society, while slower growth increases it. To counter the steady concentration of wealth, Piketty proposes a global tax on wealth. Piketty is also a professor at the École des hautes études en sciences sociales (EHESS), professor at the Paris School of Economics and Centennial professor at the London School of Economics.

Weekly wire: The global forum

Roxanne Bauer's picture
World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.
 

Why don’t voters demand more redistribution?
The Washington Post
If you believe economic inequality is a political problem, these are trying times. As economic inequality increases in many of the world’s wealthy democracies, so does the disproportionate political influence of the rich. As a recent Monkey Cage post explained, even though economic inequality is on the rise, politicians around the world have grown increasingly attentive to the demands of the “1 percent” — and less responsive to the less well-off.  If you believe inequality is a bad thing, this trend is worrisome. The power of the rich to mute everyone else’s political voices could push economic inequality even higher, as the wealthy erect ever-higher barriers to policies that might work to reduce poverty and/or inequality.

Why Technology Hasn’t Delivered More Democracy
Foreign Policy
The current moment confronts us with a paradox. The first fifteen years of this century have been a time of astonishing advances in communications and information technology, including digitalization, mass-accessible video platforms, smart phones, social media, billions of people gaining internet access, and much else. These revolutionary changes all imply a profound empowerment of individuals through exponentially greater access to information, tremendous ease of communication and data-sharing, and formidable tools for networking. Yet despite these changes, democracy — a political system based on the idea of the empowerment of individuals — has in these same years become stagnant in the world.

Anatomy of a Killer Fact: The World’s 85 Richest People Own as much as the Poorest 3.5 Billion

Duncan Green's picture

Ricardo Fuentes (@rivefuentes) reflects on a killer fact (85 individuals own as much wealth as half the world’s population) that made a big splash last week, and I add a few thoughts at the end.

Last week we released a report on the relationship between the growing concentration of income and biases in political decision making. “Working for the  Few” got a lot of attention, generating the biggest-ever traffic day on the Oxfam International website the day of the launch.

 A large part of the attention was generated by one fact: the 85 richest people own as much as the bottom half of the world.

Five conditions to create wealth. Has your country met them?

También disponible en español

In the context of a global economic slowdown and the search for balanced economic growth, I offer some elements for discussion.

All countries aspire to strong, sustainable economic growth given that it makes reducing poverty and expanding opportunities for all citizens much more feasible. There is no doubt about that. But how are high rates of growth achieved over the long term?

The Evolution of Great World Cities: Insights for Developing World Cities

Chris Kennedy's picture

Evolution of Great World Cities Book CoverThis blog is written in response to a generous and humbling offer by the urban anchor at the World Bank to present my book on the Evolution of Great World Cities (Kennedy, 2011). Having provided occasional assistance to the Bank over the past few years, I realized how big a challenge this may be. The Bank has brainpower akin to an Ivy League university, and is a large organization with so many endeavours that are hard for me to keep abreast of. Nonetheless, while tackling enormously complex development challenges, the clear objective of the Bank is to help with the elimination of poverty. Given that my book is primarily about stinking rich cities, there’s a chance that I could completely miss my audience! There again, the rapid rate of urbanization in the developing world provides such a huge opportunity to bring millions out of poverty, if planned well - and many cities in the developing world no doubt aspire to be great world cities.