The share of Australia's mega-rich has gone up consistently since the Coalition got elected in 2014, when wealth disparity was among the lowest in the developed world. Alan Austin analyses the latest global wealth reports.
HOW OFTEN do we hear that the rich get richer and the poor get poorer?
So often, that it is widely accepted as true. But is it?
Over the last five years, the top 10% have increased their share of the nation’s wealth in only 12 of the 28 developed countries for which data is available. In the other 16, the share of the wealth held by the top 10% has either fallen or barely moved.
The top 1% – the seriously mega-rich – have done a bit better. Over the last five years, the very top echelon has increased its share of the nation’s wealth in 14 out of those 28 countries. In the other 14, the share of the wealth held by the top 1% has fallen or remained steady.
Global wealth data
Swiss banking group Credit Suisse releases two valuable documents each November: a global wealth report and a comprehensive wealth databook. Table 6.5 in the databook shows the share of wealth held by the various deciles and percentiles for most of the world’s major economies.
By comparing these over recent years, certain trends may be observed.
Greatest and least disparity — top 1%
Countries where the rich have done best for themselves, where the top 1% now hold more than 40% of the nation’s wealth, are Brazil, China, India, Russia, South Africa and Sweden.
The second tier, where the top 1% hold between 30% and 40%, comprises Austria, Chile, Czech Republic, Denmark, Finland, Germany, Ireland, Israel, Norway, Poland, Singapore and the USA.
Countries where the top 1% hold between 20% and 30% are Australia, Canada, Colombia, France, Greece, Italy, South Korea, Mexico, Netherlands, New Zealand, Portugal, Spain, Switzerland, Taiwan and the United Kingdom.
Only in Hungary, Belgium and Japan, among the 36 countries for which data is available, do the mega rich hold less than 20% of all wealth.
Shifts over the last five years
Now comes the fun part. Which countries have seen the wealth of the top 1% increase or decrease? And by how much?
Of the 28 countries for which Credit Suisse has data going back five years, 14 have seen the top 1% increase their share over that period.
In order of gain, they are:
- China (up 15.0%),
- Sweden (11.3%),
- Finland (11.2%),
- Denmark (10.6%),
- Singapore (9.1%),
- Chile and
- Germany (both up 5.0%),
- Ireland (3.9%),
- South Africa (3.5%),
- Australia (2.4%),
- Norway (2.3%),
- Italy (2.2%),
- Brazil and
- the United Kingdom (both 2.1%).
Countries where the share of the wealth held by the mega-rich has declined over the last five years are: Russia (down by 14.9%), Switzerland (6.3%), the Netherlands (5.5%), South Korea (4.6%), France (3.9%), India (3.7%), New Zealand (2.6%), Czech Republic (2.5%), Japan (2.1%) and Israel (1.4%).
The four countries where there has been no significant shift are Canada, Spain, Taiwan and the USA.
Will of the people
These outcomes show pretty convincingly that it is certainly not inevitable that the rich will always grasp an ever-increasing share of national wealth.
Decisions governments take do influence the distribution of wealth among populations. The critical ones include tax rates on individuals and businesses, enforcement of income tax collections, indirect taxes, wealth taxes, wage levels, paid hours worked per person, spending on education and training, superannuation policy, home ownership assistance, and levels of pensions and benefits.
Case study: China
‘... significant inequality is created by the strong urban/rural divide in China.'
Overall wealth inequality was low at the turn of the century:
‘This was in part due to the absence of inherited fortunes, and the relatively equal division of rural land and privatized housing. Inequality has been rising quickly, however, since 2000.’
Case study: Australia
During Labor’s last three years, 2011 to 2013, the average wealth holding of the top 1% was 20.1%. That was one of the lowest in the developed world. After the 2013 election, changes made to employment, taxation and spending impacted wealth distribution. The share of the mega-rich has gone up ever since – to 21.1% in 2014, then 21.4% in 2015, to 22.0% last year and 22.9% this year.
Simultaneously, the wealth of the bottom 50% has declined.
In Labor’s last three years, the average was 10.6%. This fell in 2014 and 2015 to 10.2%, then plummeted in 2016 to 6.2%. It appears to have recovered significantly to 9.5% this year. Either of the last two numbers may, however, be a statistical anomaly. We will see next year.
Case study: Netherlands
In direct contrast to Australia, the Netherlands Government steered the economy towards greater fairness during the period 2012 to 2017, when Prime Minister Mark Rutte’s People's Party for Freedom and Democracy was in a coalition with the Labour Party.
With Labour’s Jeroen Dijsselbloem as finance minister, achievements included returning the budget to surplus, cutting the jobless rate from 7.9% to 4.5%, reducing government debt and nationalising the SNS Reaal finance company.
The share of the wealth owned by the top 1% tumbled from 27.8 in 2012 to 22.7 in 2014, then fluctuated somewhat, but in a downwards direction, arriving at 22.3 this year.
So it is not true that the rich always get richer. In liberal democracies, we get what we vote for.
You can follow Alan Austin on Twitter @AlanAustin001.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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