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What the Figures Say

Worldwide Concentration of Wealth

by DANIEL RAVENTÓS

Studies on poverty and the poor abound but studies on wealth and the wealthy are not so plentiful. Around the world, university departments of Sociology, Politics, Philosophy and Economics, academic publications in the social sciences, a host of government departments, statistical institutions, a lot of city councils, periodical publications, international organisms, and so on, churn out vast quantities of reports, studies, doctoral theses, statistics and articles on the most incredible aspects of poverty. Some are good and useful. The well-known spokeswoman and founding member of ATTAC, Susan George, sums up the situation with no little sarcasm. "The poor? Let them eat the research!"

The rich are better protected from awkward investigations that might expose in any well-documented way the increasingly greater inequalities that are made possible and encouraged by the political and economic design of our societies. In some countries of Europe, even where the banks have been the most reckless in their lending policy, blame for the crisis is shifted to the workers in the name of "high labour costs". The next step is to rebuild the banks’ loan reserves at the expense of the workers with new policy and laws permitting private companies and the public sector to cut wages, sack workers at will, scale back pensions and slash social spending. This has only deepened the social divide and is nothing short of class war. However these moves are dressed up (the impossibility of doing anything different, economic realism (sic), or even, surreally, as left-wing policy), the economic policies of the last few weeks are designed to benefit the rich with a counterpart logic of further privation and inroads on the already precarious living conditions of the poor and the working classes.

Since data on the rich are so scant, documents like the annual report published by Merrill Lynch and Capgemini on wealth and its deforciants are of unquestionable interest when it comes to finding out about the present state of things. The very well-known company Merrill Lynch was acquired two years ago by the Bank of America for 44,000 million dollars. Capgemini, a company that is rather less famous than Merrill Lynch, with more than 90,000 employees around the globe and a declared gross income of 8,400 million euros in 2009, states that it provides consultancy, technological and outsourcing services. Merrill Lynch and Capgemini work for the rich. It is not surprising, then, that they need to have good knowledge of the main target of their business. Hence they produce annual reports on the situation of the rich and their wealth, providing extremely interesting data. The last available report on world-wide wealth was that recently published by the two companies in 2010, offering data from 2009 and previous years. They have also published an "Asia-Pacific Wealth Report". The data discussed below come from these two reports and the world report from 2009.

The Merrill Lynch and Capgemini reports offer definitions of the rich on whom their reports are based. Some are designated as HNWIs (High New Worth Individuals), while others are UHNWIs (where the U stands for Ultra). The former are those who have assets of over a million dollars not counting primary residence, collectibles, consumables, and consumer durables. Hence these reports aim to assess what the rich have in terms of ready cash and assets that are easily and rapidly turned into cash. The same definition applies to the Ultra-HNWIs but their assets start from 30 million dollars. These definitions make it clear that they refer to people of a much greater effective wealth than the starting level of one or thirty million dollars, as adding the excluded assets would show.

According to the Merrill Lynch and Capgemini definitions there were 8.8 million HNWIs in the world in 2005, a figure that rose to 9.5 million in 2006 and 10.1 million in 2007. In 2008, with the onset of the economic crisis, the figure dropped to just below 2005 levels, with 8.6 million HNWIs around the world. By 2009, it had risen again to 10 million, almost the same as in 2007, the year before the crisis. In these years, the joint wealth of these individuals worldwide was 33.4 trillion dollars in 2005, 37.2 trillion in 2006, 40.7 trillion in 2007, falling to 32.8 trillion in 2008. In 2009, with the crisis now full-blown, it rose again to 39 trillion. To grasp what these quantities really mean, it might be instructive to consider that they equal some three times the GDP of the United States and, depending on the year, between 30 or 40 times that of Spain. In a word: spectacular.

The select group of the Ultra-HNWIs consisted in 2009 of only 93,100 people scattered around the planet. Around one in every 75,000 people in the world is an Ultra-HNWI. One interesting datum is that they account for 35.5% of the total wealth of the HNWIs, while representing only 0.9% of this group. In other words, these world champions of wealth have assets worth 13,845,000,000,000 dollars – more or less the GDP of the whole of the European Union.

According to the most recent data, from 2009, some 53.5% of the all the HNWIs in the world are concentrated in the United States (almost 2.9 million), Japan (almost 1.7 million) and Germany (861,000). Australia boasts the not-inconsiderable figure of 174,000 HNWIs for the same year, which situates it in eleventh place on the world’s rich-list.

How will the crisis affect this wealth? It will be interesting to see what Capgemini and Merrill Lynch make of the 2010 data. For the time being, it would not be unreasonable to expect that, after the first stumble, it will be all wine and roses. There are two points that support this assertion. First, the forecast made by Merrill Lynch and Capgemini is that by 2013, the HNWIs will have managed to accumulate fortunes (recall this excludes primary residence, collectibles, consumables, and consumer durables) of the order of 48.5 trillion dollars, which if the pundits of these two companies get it right, will multiply the worldwide HNWI wealth by almost 60% in five years. For the moment, 2009 was a good year for the rich. The second point comes from the 2010 report exclusively devoted to the rich of the "Asia-Pacific" region. The most interesting figures from this report show that by 2009 the wealth accumulated by this set of HNWIs also rose to recover the 2007, pre-crisis levels, while their numbers increased by 25.8% and their joint wealth by 30.9% vis-à-vis the previous year. In 2009, Japan concentrated 54.6% of all the HNWIs in the region and 40.3% of their wealth.

The Merrill Lynch and Capgemini report concludes, "Around the globe, then, the creation of HNWIs and wealth is likely to depend heavily on the success each country has in managing the nascent economic recovery while driving expansion and handling ongoing domestic and global challenges in financial conditions." To put it more bluntly, in the words of Michael Hudsonn, this means "using the bank crisis (stemming from bad real estate loans and negative mortgage equity, not high labor costs) as an opportunity to change the laws to enable companies and government bodies to fire workers at will, and to scale back their pensions and public social spending in order to pay the banks more." Nothing less than class war.

DANIEL RAVENTÓS can be reached at: daniel.raventos@gmail.com

 

 

What the Figures Say

Worldwide Concentration of Wealth

by DANIEL RAVENTÓS

Studies on poverty and the poor abound but studies on wealth and the wealthy are not so plentiful. Around the world, university departments of Sociology, Politics, Philosophy and Economics, academic publications in the social sciences, a host of government departments, statistical institutions, a lot of city councils, periodical publications, international organisms, and so on, churn out vast quantities of reports, studies, doctoral theses, statistics and articles on the most incredible aspects of poverty. Some are good and useful. The well-known spokeswoman and founding member of ATTAC, Susan George, sums up the situation with no little sarcasm. "The poor? Let them eat the research!"

The rich are better protected from awkward investigations that might expose in any well-documented way the increasingly greater inequalities that are made possible and encouraged by the political and economic design of our societies. In some countries of Europe, even where the banks have been the most reckless in their lending policy, blame for the crisis is shifted to the workers in the name of "high labour costs". The next step is to rebuild the banks’ loan reserves at the expense of the workers with new policy and laws permitting private companies and the public sector to cut wages, sack workers at will, scale back pensions and slash social spending. This has only deepened the social divide and is nothing short of class war. However these moves are dressed up (the impossibility of doing anything different, economic realism (sic), or even, surreally, as left-wing policy), the economic policies of the last few weeks are designed to benefit the rich with a counterpart logic of further privation and inroads on the already precarious living conditions of the poor and the working classes.

Since data on the rich are so scant, documents like the annual report published by Merrill Lynch and Capgemini on wealth and its deforciants are of unquestionable interest when it comes to finding out about the present state of things. The very well-known company Merrill Lynch was acquired two years ago by the Bank of America for 44,000 million dollars. Capgemini, a company that is rather less famous than Merrill Lynch, with more than 90,000 employees around the globe and a declared gross income of 8,400 million euros in 2009, states that it provides consultancy, technological and outsourcing services. Merrill Lynch and Capgemini work for the rich. It is not surprising, then, that they need to have good knowledge of the main target of their business. Hence they produce annual reports on the situation of the rich and their wealth, providing extremely interesting data. The last available report on world-wide wealth was that recently published by the two companies in 2010, offering data from 2009 and previous years. They have also published an "Asia-Pacific Wealth Report". The data discussed below come from these two reports and the world report from 2009.

The Merrill Lynch and Capgemini reports offer definitions of the rich on whom their reports are based. Some are designated as HNWIs (High New Worth Individuals), while others are UHNWIs (where the U stands for Ultra). The former are those who have assets of over a million dollars not counting primary residence, collectibles, consumables, and consumer durables. Hence these reports aim to assess what the rich have in terms of ready cash and assets that are easily and rapidly turned into cash. The same definition applies to the Ultra-HNWIs but their assets start from 30 million dollars. These definitions make it clear that they refer to people of a much greater effective wealth than the starting level of one or thirty million dollars, as adding the excluded assets would show.

According to the Merrill Lynch and Capgemini definitions there were 8.8 million HNWIs in the world in 2005, a figure that rose to 9.5 million in 2006 and 10.1 million in 2007. In 2008, with the onset of the economic crisis, the figure dropped to just below 2005 levels, with 8.6 million HNWIs around the world. By 2009, it had risen again to 10 million, almost the same as in 2007, the year before the crisis. In these years, the joint wealth of these individuals worldwide was 33.4 trillion dollars in 2005, 37.2 trillion in 2006, 40.7 trillion in 2007, falling to 32.8 trillion in 2008. In 2009, with the crisis now full-blown, it rose again to 39 trillion. To grasp what these quantities really mean, it might be instructive to consider that they equal some three times the GDP of the United States and, depending on the year, between 30 or 40 times that of Spain. In a word: spectacular.

The select group of the Ultra-HNWIs consisted in 2009 of only 93,100 people scattered around the planet. Around one in every 75,000 people in the world is an Ultra-HNWI. One interesting datum is that they account for 35.5% of the total wealth of the HNWIs, while representing only 0.9% of this group. In other words, these world champions of wealth have assets worth 13,845,000,000,000 dollars – more or less the GDP of the whole of the European Union.

According to the most recent data, from 2009, some 53.5% of the all the HNWIs in the world are concentrated in the United States (almost 2.9 million), Japan (almost 1.7 million) and Germany (861,000). Australia boasts the not-inconsiderable figure of 174,000 HNWIs for the same year, which situates it in eleventh place on the world’s rich-list.

How will the crisis affect this wealth? It will be interesting to see what Capgemini and Merrill Lynch make of the 2010 data. For the time being, it would not be unreasonable to expect that, after the first stumble, it will be all wine and roses. There are two points that support this assertion. First, the forecast made by Merrill Lynch and Capgemini is that by 2013, the HNWIs will have managed to accumulate fortunes (recall this excludes primary residence, collectibles, consumables, and consumer durables) of the order of 48.5 trillion dollars, which if the pundits of these two companies get it right, will multiply the worldwide HNWI wealth by almost 60% in five years. For the moment, 2009 was a good year for the rich. The second point comes from the 2010 report exclusively devoted to the rich of the "Asia-Pacific" region. The most interesting figures from this report show that by 2009 the wealth accumulated by this set of HNWIs also rose to recover the 2007, pre-crisis levels, while their numbers increased by 25.8% and their joint wealth by 30.9% vis-à-vis the previous year. In 2009, Japan concentrated 54.6% of all the HNWIs in the region and 40.3% of their wealth.

The Merrill Lynch and Capgemini report concludes, "Around the globe, then, the creation of HNWIs and wealth is likely to depend heavily on the success each country has in managing the nascent economic recovery while driving expansion and handling ongoing domestic and global challenges in financial conditions." To put it more bluntly, in the words of Michael Hudsonn, this means "using the bank crisis (stemming from bad real estate loans and negative mortgage equity, not high labor costs) as an opportunity to change the laws to enable companies and government bodies to fire workers at will, and to scale back their pensions and public social spending in order to pay the banks more." Nothing less than class war.

DANIEL RAVENTÓS can be reached at: daniel.raventos@gmail.com