The Financial Express

Rise of new billionaires

Rise of new billionaires

In popular perception, the Covid-19 pandemic has wreaked unprecedented havoc across the globe. Right? Perhaps, it is true for the less privileged people globally as they and those close to them have suffered, died and lost their incomes. But it is one side of the coin. On the other side, there are people who have made a fortune during the pandemic-stricken months and are still doing so according to study done by the global financial services company, Credit Suisse. Group. The study revealed how in pandemic time the wealth of millions of people increased phenomenally and is continuing to increase.

In the US alone, in the Group's estimate, there will be 28,055 million millionaires by 2025, a 27.8 per cent rise from last year's. Interestingly, contrary to common belief, the household wealth, as noticed in last year bore no relation to the growth of GDP. So, what happened? The wealth per adult increased by 6.0 per cent to USD 79.952 million. In 2020 (at the height of the first wave of the pandemic), the total global wealth grew by 7.4 per cent from what it was a year before! And what was the aggregate result globally? It grew by USD 28.7 trillion taking the total to as high as USD 418.3 trillion globally by the year end! However, in the three months immediately after the pandemic struck (from January to March 2020), the global household wealth dropped by 4.4 per cent. But by June, 2020, the overall picture reversed.

If the trend continues, by 2025 the number of millionaires will increase by 49.5 per cent reaching a total of 84,014. Clearly, this phenomenon points to the rise of the new middle class, especially in the developing economies. However, the US has the lion's share at 39.1 per cent of the new global nouveau riche making a total of 22 million millionaires.

Meanwhile, the wealth of the existing richest people has increased by USD 5.0 trillion in the past one year of the pandemic, according to the Forbes' annual list of billionaires. The total number of billionaires worldwide in 2021, according to the list, is 2,755. This figure shows that 493 new billionaires have been added to the list of global billionaires since 2020. The total wealth of the world's billionaires as of March 2021 stood at USD 13.1 trillion whereas till March 2020, their combined wealth was USD 8.0 trillion.

When the number of millionaires and billionaires across the globe is growing so fast even during the pandemic, hundreds of millions of people have been pushed into extreme poverty. The World Bank estimates that the number of people rendered extreme poor in 2021 may range from 88 million to 155 million. In that case, the total increase in the number of extreme poor is slated to reach 150 million.

Should the rest of the less privileged world population celebrate the development that they have so many millionaires and billionaires among them? The organisations that conducted the studies were, however, dispassionate about their comments on the rise of so many ultra-rich people in such uncertain times. When the supply chain was disrupted globally, when the movement of goods, services and people came to a near standstill, how could they amass such huge fortunes? How could this be a record-breaking year, according to Forbes' assistant managing editor for wealth, is that there has been a record number of new billionaires particularly in this year? On this score, the Forbes' list of global billionaires also showed how the arrival of newcomers on the scene has pushed some of the traditional billionaires to the background. Consider the case of once world's richest businessman, Warren Buffet. Now lagging behind in the sixth position, this is for the first time since 1993 that he has failed to make it to the Forbes' list of world's top five of billionaires!

True, the ups and downs in the value of company shares in the global stock exchanges have a lot to do with the sudden rise of new billionaires and the fall of others. The speculators, too, have a big role in the gamble. But it is also true that without any fundamentals no business firm can hope to see the value of their shares skyrocketing and turning them into billionaires overnight. In the final analysis, the rich cannot just overreach one another at the global gambling table to make unlimited fortunes. In fact, what is missing here is the way the world's wealth being created every moment by the normal green and white collar workers is being siphoned off from them on to the gambling table. It goes without saying that, in the new digital era of business online, the remote operators can exploit the 'digital era slave labour' to accumulate unheard-off quantities of wealth at places far removed from where the wealth is being generated. As such, the new billionaires are basically owners of high-tech firms created recently. Never before in human history was such a novel way of drawing wealth from any corner of the globe was possible within the blink of an eye. The tech-giants are exactly doing that to amass enormous amount of wealth within a short span of time.

The average person cannot be convinced of the fact that such enormous wealth has fallen on the global superrich out of thin air. They would definitely want to know what the trade-off is. Whatever the modus operandi of the new billionaires is in creating wealth, the fallout of it is for all to see! It is the common people who are ultimately facing the consequences.

Clearly, such a fast rise in the number of superrich people worldwide has taken place, though indirectly, at the expense of the people who have meanwhile lost everything during the pandemic. It is time the governments of North American, European and Asian nations took responsibility and started to rein in the superrich. They must acknowledge that the rest of the world population has a share in this new wealth so created globally.


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