Credit Suisse have released their latest edition of the Global Wealth Report, which they describe as “a comprehensive portrait of global wealth”. It’s a fascinating document, and there are a number of facts or graphs worth highlighting. For now, I’ll stick with this one, the global wealth pyramid.
At the top, 0.7% of the population share 112 trillion dollars, 45.2% of global wealth. That means that “the top 1% of wealth holders now own half of all household wealth”, just as Oxfam warned us a few months ago.
At the bottom, 3.4 billion people share 7.4 trillion, or 3% of the world’s wealth. Then there’s a big chunk in the middle, which is where most of us in developed countries fall.
It would be a mistake to think that the big blue block at the bottom represents ‘poor people’. This graph shows wealth, not income. If you have a mortgage, your net wealth may put you in the bottom of the pyramid even if your earnings are healthy. Conversely, the graph might make you look much richer than you feel – I earn less than the UK average, but I suspect that Luton’s rising house prices will have pushed me into the top 5%.
So these numbers don’t tell us that much about wealth and poverty. What really matters is the trends. In particular, are people moving up the pyramid? Ideally what we want to see is that big blue slice shrinking and the middle growing, as people are able to earn and save and invest.
Unfortunately, the trend since 2012 has been in the wrong direction. The turquoise 10,000-100,000 section has shrunk by 2.1% a year, while the base has grown by 2.9%. “Wealth inequality fell up to 2007 but has increased since that time.”
Credit Suisse expect that to reverse in the next couple of years and that between now and 2020, those with wealth between 10k and 100k will rise from 21% to 25% of the world’s population. In the same half decade, the number of millionaires is expected to grow by 46%. As always, it’s easier to make the rich richer than make the poor less poor.