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Yves here. Has the public become resigned to the great increase in wealth and power among the super rich? In recent years, the publication of an annual report on the state of the plutonomy garnered some chatter and wringing of hands in the press and econoblogoshere. The report was released earlier this month and got comparatively little notice. We’re featuring a short post on it from last week to help fill this reporting gap.
By Mathias Vernengo, Professor of Economics at Bucknell University. Originally published at Naked Keynesianism
The new issue of the Credit Suisse Global Wealth Report (2015) has been published. Below is the distribution of global wealth.
Nothing has changed much since we posted the previous version here. As I commented regarding the previous version, the poor are fundamentally in Africa, India, and Asia-Pacific (mainly Bangladesh, Indonesia, Pakistan, and Vietnam), while the wealthy are in the United States, Europe and Asia-Pacific (i.e. Japan). China has more people in the middle section of the wealth distribution than at the extremes.
Below is the Global Wealth Pyramid.
Not much difference from the previous one, but a bit worse. Now 71% of the population holds 3% of the wealth (before it was the 67% at the bottom who held 3.3% approximately). And the top 0.7% of the population holds slightly more than 45% of total wealth.
By the way, the U.S. has added more people at the top, while Japan and Europe have lost a few. If you are interested on how many really wealthy people there are (not the 34 million people at the top of the figure above, who are the ones worth more than 1 million), here is what the report says:
We estimate that there are 123,800 UHNW individuals worldwide, defined as those whose net worth exceeds USD 50 million. Of these, 44,900 are worth at least USD 100 million and 4,500 have assets above USD 500 million.
UHNW means Ultra-High Net Worth (or what a decade ago Citigroup analysts called the plutonomy). So about 4,500 with a net worth above $500 million.
Read the full report here.
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Not quite sure if this is related/relevant, but I’ve started now so I’ll carry on.
Over the weekend, I met a friend who works in sustainable technologies and, naturally, we got talking about our respective work-in-progresses. He is part of a team consulting on a project which has been initiated by the owners of a small self-contained Scottish island who, to cut a long story short, want shot of it. Owning it was a vanity purchase by the hugely wealthy current freeholder and they are bored and frustrated by the responsibility it brings.
Now, marketing such a niche piece of real estate is always tricky, but the owner and the selling agent are minded to pitch it as some sort of prepper’s paradise and put in even more infrastructure to make it a self-sufficient hidey-hole for some UHNW Russian, Chinese, Ukrainian, etc. etc. (take your pick or add your own) to run to should things get too hot for whatever reason and they need to leg it to somewhere safe and out-the-way. The island already has a reasonably deep dock (sufficient for a very, very large yacht), water, electric power, hi-band via microwave telecoms, private drainage and a fish farm nearby plus enough reasonable quality land for agricultural production. However, the power and HVAC are a bit rudimentary with some single points of failure (in the climate conditions concerned, you could die of hypothermia if the heating fails for whatever reason for a significant amount of time in the wrong season) so the proposal is to implement some upgrades there. Plus there’s some other work going on to enhance the infrastructure but I don’t have the details of these — likely to be making it really robust.
Anyhow, it’s been on the market over a year and while there’s been some interest from representatives of, presumably, the target market (squillionaires with lots of Reasons to be Fearful), no takers. The sellers have asked for suggestions of what puts off potential purchasers. Weak infrastructure in key areas is at the top of the list (hence the upgrade projects) but also cited is a dual problem the solutions to which are mutually incompatible.
The island is too close to the proletariat for some worried plutocrats (a short boat trip) from the nearest — small — mainland community. But if it was too far away from civilisation (even if that civilisation is the great unwashed 99.9%) then even the most sociopathically inclined oligarch or warlord realises that there is a limit to how cut off you want to be — life without fairly easy access to doctors, machinery spare parts, labour for menial household tasks and so on is pretty grim no matter how much money you have.
Which brings me to the point in relaying my friend’s story about the island retreat (I know you were starting to wonder what, if any, there was…) — the 0.1% might, possibly, be in just as much of a malaise as the rest of us in our connected, interdependent world. The nastier and more miserable life is for the vast, overwhelming majority who are slipping down the wealth scale, the more susceptible the elite thinks it is. They may well be right. But the more the elite rely on the rest of us to produce the things they want and need — but at the same time drive the systems which produce them to ever more specialised, narrow, dispersed and vulnerable supply lines — the more precarious and dependent the elite is to systemic shocks which are outside of anyone’s control.
So perhaps we all — intuitively — know that there are indeed some things which money just can’t buy, no matter how wealthy you are. There is no “product” you can buy which offers a way of genuinely insulating yourself from a significant degradation in social cohesion. Let them have all the paper wealth they can squirrel away, I don’t really care. It may buy a facsimile of happiness, but it won’t buy them security — is the way I feel about it. Maybe I am not alone in this, hence the general ho-hum around reading about yet more inequality ?
Those of a more cynical stripe might offer that NONE of the Squillionaires have a clue how to do anything different than accumulate more, take more, debase more, defraud more, impoverish the rest of is more. The extant general political economy contains no constraints, no negative- feedbacks, no limits other than death, on a personal or global scale, at least on any efficient and effective scale, nothing to impel doing anything other. Almost seems like a pre-programmed kind of unacknowledged death wish, no?
Yah, we’re all in this together, all right — including the large fraction of us who aspire to join the Elite in some Elysium, by dutiful accretory service of and to the plutokleptocracy and roving in search of either a market to corner or The Next Big Thing Ten Bagger Short The Pound jump to a vastly higher quantum level. With cohorts of People willing, for room and board, to support us there…
Say again how the supposed HasASad I’m So Lonely Up Here unhappiness of a Koch or Gates or Buffett or Blankfein or Obama is likely to result in any change in the incentives and momentum and inertia that have us “successfully” burning the only house, Oikos, we have to the ground, joist by shingle to keep the Few, and ourselves of course, if we are “successful” enough to afford it, and as shortsighted as we mostly are, comfortably warm…?
Oh, no, I wouldn’t ever say that I thought that a thoroughly miserable elite class would ever be the catalyst for any meaningful beneficial change. Probably just the opposite — it’s been my observation that the more fed up an UHNW individual is the more they want to make every one and every thing around them even more unhappy than they already are.
If I was a psychologist I’d probably explain it as they are taking from the world what they think they lack and has been denied them and taking it out on the agents who they believe are doing the denying. But enough pop psychology for one comment.
But you’re right, the cluelessness of your typical elite member can be staggering. I mean, really basic stuff. The island I went on about above is off the main utility power supply network. It has fossil fuel generator sets. The problem is (in terms of resiliency) guaranteeing supply of replenishment fuel and safe storage. The request from the selling agent floated by a possible purchaser to my friend who I was discussing this with was to make the problem “go away” by the magic of renewables. But all the alternatives to utility supplied power have some inherent failure nodes. Solar PV needs inverters, these have a finite lifespan and you can’t keep that many on standby. Plus fitting a replacement is a highly skilled technical job, if you’re not to get a nasty — and possibly fatal — electrical shock and/or damage the PV array. Similarly with wind turbines which come with even more maintenance overheads. Trying to explain this pretty simple to grasp set of information was apparently like talking to small children.
Clive, I suppose the best part of your story is that it appears the richest don’t, at this point in time, have an army of slaves they can deploy to make their hidey holes liveable…(or perhaps the ones with slaves don’t want to live in cold climates….) I always wondered about the overhead of the Bond villains, since their lairs seemed so enormous on screen. Lots of toilets, offices, kitchens, etc., to take care of their stormtroopers – where are the cleaning people, garbagemen, electricians, etc., etc.?
Is it just me that always wondered, at the end of every Bond movie where the island/submarine/space station is destroyed by Bond and all the scientists, henchmen, mercenaries and, er…, maids flee the impeding disaster — how did the megalomaniac villain do their recruitment ?
I’m going a bit craazyman-esque here, but do they have their own recruitment agency ? And how do the job ads run ?
Positions available for domestic staff. Our client, an international criminal mastermind, is seeking experienced kitchen staff, cleaners, maids, chauffeurs and butlers. Also security personnel. Applicants must be of the highest calibre and preference will be given to those with proven capability in operating in a busy household such as of a ambassador/diplomatic, CEO, royalty, mafia/underworld or similar family. As our client is often away on business, vacation and world domination trips, the utmost trustworthiness is essential. Aside from the expected responsibilities, those with recent familiarity of live-in situations where the main residence is in an experimental nuclear reactor building or disguised as an extinct volcano are especially welcome…
And can they join a union ?
Pretty sure international criminal mastermind types have their own union focused solely on recuitment. Pensions not included, although I imagine they have very good medical. Can’t run a lair without vaccines, isolation for illness, treatment for gunshot, etc. HR must be busy, although probably not with paperwork – wonder what the retirement options are? IRA? 401K? Pile of loot? Probably nothing – like working for Walmart.
Loved your Craigslist ad…..hilarious.
This was the theme of an episode of “The Simpsons”. See this for information:
http://simpsons.wikia.com/wiki/Hank_Scorpio
Several years back there was a great game called “Evil Genius” where the point was to be a villain and build an impenetrable island lair whilst becoming a notorious worldwide criminal.
Don’t mind me, I’m going to go dig in the garage for a bit…
“a Koch or Gates or Buffett or Blankfein or Obama”
Seriously? Giving a $100,000 speech once a week would yield $5 million a year which would require 200 years to reach a single measly billion.
Cheap shot!
Jim
…on the other hand, how many trillions has Obama signed off on the “redistribution plus mayhem” of? And of course in addition to speechifying, he’s got his postPres “pension,” the value of all that marginally competent Secret Servicing, and whatever “wages” he will get for his sins…
So don’t sell the man short! I bet he will have lots of opportunities to sell short that I at least would never be offered…
I recommend Edgar Allen Poe’s Masque of the Red Death.
Who says only science’s experiments repeat? (Let’s hear it for liberal arts!)
BTW, I recently attended a political event where, after putting down those welfare losers, one of our conservative sisters proclaimed that we needed no more of those fripperies like liberal arts. STEM only, dammit!
…And although I said nothing to answer her (this was a Concord Coalition “Budget Workshop” so I had my hands full calling bullshit on most of the presentation) that’s exactly what Mao wanted. Obedient little STEM robots, none of that “thinking for yourself!”
My response to that sort of nonsense is to say, “Why do you think they call it the Humanities? – Answer: because it teaches you how to be a human being.”
And these are the people who think they can escape to Mars. What a great thread.
To Elysium, fellow plutocrats! Now…Who knows how to fly the spaceship?
I am also of the opinion that the elite are unconcerned about the “great unwashed” unless the elite’s personal safety is at risk.
We have seen how impoverished countries such as Haiti can have an elite class that arises from a populist platform (Papa Doc was elected in 1957 on a populist platform) that then extracts wealth for their class.
One can view the USA as well conditioned, by the media and politicians, to accept the wealthy as a natural outcome of the touted USA’s up by your bootstraps “economic freedom”.
One can see the media and political support the parasitic USA’s financial industry, estimated by Paul Woolley to be 2x to 3x the optimum size, received in the 2008 rescue..
No one of note went to jail for financial crimes.
As a poster child for the clueless elite, or perhaps as a poster child of a servant of the clueless wealthy elite, an example is George W. Bush, who accepted 100K to speak at a wounded veterans event in 2012 (http://www.snopes.com/2015/07/09/george-bush-speaking-fees/).
See one vet’s comment.
“For him to be paid to raise money for veterans that were wounded in combat under his orders, I don’t think that’s right,” said former Marine Eddie Wright, who lost both hands in a rocket attack in Fallujah, Iraq in 2004. “You sent me to war,” added Wright speaking of the former President. “I was doing what you told me to do, gladly for you and our country and I have no regrets. But it’s kind of a slap in the face.”
I expect the wealthy elite to remain concerned about personal and capital preservation and not much else.
I am surprised the fact Bush collected 100K for this event did not lead to a revolution. Did he give it to “charity.”
There was some news bit about the DOD paying the NFL for all those heart warming vet family reunions and military salutes we all remember from NFL games over the last 10 years or so. And we all thought the NFL was doing it as a public gesture or the good of their hearts… yeah, right.
An article from 2014 gives the typical speaking fees for some big wigs:
http://abcnews.go.com/Politics/washingtons-highest-lowest-speaking-fees/story?id=24551590
Donald Trump – $1.5M per speech during 2006 and 2007 for the Learning Annex.
Bill Clinton – $200K, although he has received as much as $750K for a speech.
Tim Geithner – $200K per speech.
Ben Bernanke – $200K to $400K
George W. Bush – $150K. His $100K fee for the veterans speech might have been a bargain discount.
Condoleezza Rice – 150K
Larry Summers – $135K
This 2013 article says that Rudy Giuliani once got $270K for a speech:
https://www.washingtonpost.com/news/post-politics/wp/2013/07/11/hillary-clinton-isnt-alone-former-politicians-rake-it-in-on-speaker-circuit/
A lot of these speeches could be considered delayed bribes for services rendered.
Someone said to me once, “some people take more power than
they deserve”. I have some phrases that continue to reverberate
within me way after they are spoken. It seems to me that those people who need so much more at the expense of everyone to be secure in their short lives demonstrate a great distortion in the mind which should disqualify them from too great an influence in our world.
But here is the rub. All that paper wealth acts to separate them
from the rest of us while at the same time instilling confidence in
the diminished humanitarian perspective of the rarified percentage
in which they exist. I care. I must.
Oh, I looked at the link. He did not give it to charity. Having spent some years in AFG and IRQ I have to say I find him accepting a dime for this event an outrage. I wonder why it never hit the New York Times?
How much does Kissinger and did McNamara get per speech, in current dollars? Will Kissinger and Cheney and Bush (all of them) get publicly funded state funerals and flags at half mast and final volleys over their perfect caskets?
I note Cheney, the sh-t who’s wheeling around with some kindly or just unfortunate mope’s heart perfusing his evil carcass, ain’t on the speech menu above. What’s his spittle and sneer worth, to the Oiligarchy, per performance?
According to http://www.politico.com/blogs/ben-smith/2010/03/hiring-the-cheneys-025876, 5 years ago:
Considering his health problems, I wonder whether he still gives speeches…
Dante on the nature of greed (the wolf):
She is by nature so perverse and vicious / her craving belly is never satisfied / still hungering for more food, the more she eats.
That sounds familiar. Capitalist societies don’t know the meaning of enough.