Often we forget that the world is created equal due to the disparity in the assets owned by people across the various strata of the society. There are super rich, rich, moderately rich, poor and the very poor. The following figures may sound atrocious. By the new reports of Credit Suisse, the top 1% of rich people that is the super rich or the ultra-high-net-worth-individuals own more than 50% of the world’s wealth. And the bottom 50% of the people owns only one percent of the total global wealth. Earlier, Oxfam, an international community working against global poverty warned that in 2016 the top 1% would earn more wealth than the remaining 99%. But, it has already happened a year well before.That explains the seriousness of growing economic inequality. Back in 2007, the top 1% owned 40% of the global assets according to a study conducted by World Institute for Development Economics Research.
If you do not own a penny now, you may need $759,900 to become one among the top 1% of the richer elites and $68,800 to become a part of the top 10%, where as you only need $3210 to be in the bottom 50% of the wealthy citizens.
The report also comes up with the information that there are more poor people in the United States than in China. This may sound odd because it really is. We are talking about wealth, not income. In the US, if someone working in the Wall Street has an education loan of $100K, he would be counted as a poor, despite the fact that he earns well from the Wall Street. Thus, the poor people in the United States mean people are not impoverished but they have more debt than wealth, even if they are earning good. In a similar way, the report claims that the number of middle-class families is more in China than in the United States.
The United States has the most number of millionaires and ultra-high-net-worth-individuals than any other country, with China at the second position and India at the eleventh. The number of millionaires in the United States is more than 15 million.These are not good signs for the global economy. An analysis by International Monetary Fund says that when the income of the top rich grows, it doesn’t reflect in the GDP growth of the country they belong to, whereas when the income of poor or middle-class families goes up, the growth is pervasive and is reflected in the overall GDP growth. Thus, the overall growth of the economy is fuelled by the growth of the lower and middle-class families.
Putting the above concept in a different way, when the economy is growing at a lower rate than the investment returns, the rich get richer quickly and they have to invest only a lesser sum of what they have gained through returns in a slowly growing economy. Thus, income gets trapped in the form of wealth with the richer resulting in increased inequality.
Inequality is a very serious concern, and it can have a negative impact on the economic growth, found a research conducted by Organization for Economic Co-operation and Development. When the income of the top 20% goes up by one percentage point, the economic growth can shrink by 0.05% in five years, explains The Economist.Research shows that over the past decade, inequality has grown in those countries where policies like a tax hike for the top rich are dropped. With the kind of inequality rate that we have at our hands, it demands a lot of political intervention and will of the elites to balance the distribution of wealth for a healthy economy in the long run.
It is best to remember that the wealth we own is not ours but is given to us so that we as responsible citizens redistribute it to maintain a balance in the society and harmony in our lives. Back in April 2014, Pope Francis tweeted that ‘Inequality is the root of social evil’.
Related video: How Economic Inequality Harms Societies: TED Talks Richard Wilkinson
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