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The Financial Express

Wealth of billionaires and the poor  

Masih Malik Chowdhury   | Published: May 14, 2020 22:41:42 | Updated: May 18, 2020 22:04:39


Wealth of billionaires and the poor   

Forbes published the 2020 list of the richest Billionaires amidst Covid19, as of March18, 2020. It stated, as we all know, that the richest people on earth are not immune to corona virus. "As the pandemic tightened its grip on Europe and American, global equity market imploded, tanking many tortures", it mentioned. As of March 18, Forbes counted 2095 billionaires, 58 fewer than 2019, 226 fewer than 12 days ago. On March 6, the initial date of calculation of net worth, 51.0 per cent of billionaires sustained billionaire status despite being poorer than last year. These billionaires own $8.0 trillion, down by $700.0 billion from 2019.

This statement of Forbes meant in 12 days, 226 persons lost being billionaires while 51.0 per cent of  2,095 billionaires were less wealthier than 2019, 58 billionaires of 2019 were not placed in the list of 2020 billionaires as on March 18, 2020.

The report sums up altogether 267 people from last years list dropped off as businesses faltered. Another 21 died, while 178 newcomers hailed from 20 countries. The USA remains on top having homed 614 of them with China (HK+Macao) homed 456. This reveals policy change effect in China which is fast going to take over USA in number, if not in net worth very soon.

Paul Krugman, a noted Nobel laureate economist and New York Times columnist, has augmented the ongoing fray: "Billionaires should not live for ever". Krugman is a voice in academic and mass media. The global trend on human beings are to be richer and wealthier no matter how much he or she would be able to consume in own life time. We are in a race of wealth and income, be it in developing and developed parts, fair or unfair, ethical or otherwise. Last centuries after the abolition of empires showed evolution of wealthier people forming empires like Rockefeller in USA, Tata in India, Rothschild's in France and many others to name. But the 21st century empires are more quickly being built as business trends have taken changed perspectives. Information technology, stock, brokerage, arms trade etc have taken over only decades or less to build empires by billionaires.

The world inequality report 2018 can be quoted being relevant here. Its wild statistics was - the 26 richest people on earth in 2018 had the same net worth as the poorest half (50.0 per cent) of the world population, some 3.80 billions. Again in 2018, OXFAM report stated that 2200 billionaires worldwide claim their wealth grow by 12.0 per cent and the poorest half had a wealth fall by 11 per cent (?). Oxfam used the credit Suisse Global Wealth Report as its primary data source on the bottom half's (50.0 per cent) wealth.

The figure depicts regional composition of global wealth distribution in 2018.

As regards wealth control by global richest minority, the pyramid figure is pertinent

The pyramid reflects that 42 million people or only 0.8 per cent of the world population own in excess of $1.0 million worth of wealth. This strata constitute less than 1.0 per cent of the world population. To the utter surprise of many, 44.8 per cent of the world wealth is owned by them. A meager 8.0 per cent or specifically 42 million world people control close to half of the world's wealth.

It also observed that US$ 10,000 to US$ 1.0 million of wealth was owned by 436 million (8.7 per cent) of world population. Then again 1,336 million or 1.336 billion people (26.6 per cent) of world population owned US$10,000 to US$100,000 worth of wealth. Thus wealth of US$ 142.0 trillion (44.8 per cent) is owned by 42 million (0.8 per cent) people. Again the wealth of US$ 124.7 trillion, (39.3 per cent) is owned by 436 (8.70 per cent) million people. While 13.9 per cent of wealth for US$ 44.2 trillion worth was owned by 1336 million (26.6 per cent) people. And it classified 3,211 million people (63.9 per cent) owned only US$ 6.2 trillion (1.90 per cent) of global wealth.

It is very logical to read it as world's 9.5 per cent people own about 84.0 per cent of the world wealth, while 90.5 per cent own only the rest 16.0 per cent. What an inequality indeed! This means the rich are really getting preposterously rich. Looking at the rich people, one analysis suggested that up to 50.0 per cent of world poverty could be resolved if developing countries adopted a higher tax rates.

Many economists and analysts lament that they are unaware about any statistics which proves that as the rich get older, they become better business persons or make money at a faster pace. However as one billionaire sustains, wealth opportunities thrives for him/her and the experience of getting rich counts as a factor.

It is to surmise that 9.50 per cent people dominate 84.0 per cent wealth while 91.0 per cent strive for survival with 16.0 per cent wealth only at modest lives. Yet they are not together inclined to counter the adversely growing trend towards inequality. However, the top billionaires can be taxed to finance a means for the bottom part to be better off.  But who take the lead when minority rules the World?

 

Masih Malik Chowdhury FCA is an Economist, Past President ICAB & Managing Partner Masih Muhith Haque & co, Chartered Accountants.

masih@masihmuhith.com

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