America and Canada have some 10% of the poorest people in the world and also some 30% of the richest, while Europe has 20% of the world’s poorest people and 35% of the richest.
China has pretty much none of the world’s poorest people and about 8% of the world’s richest. Yet we know very well that America and Europe are supposed to be very much richer than China.
So, what’s going on? Is it all just that the wealth is being taken by the plutocrats in our deeply unfair and unequal societies?
To determine how global wealth is distributed across households and individuals – rather than regions or countries – we combine our data on the level of household wealth across countries with information on the pattern of wealth distribution within countries.
Once debts have been subtracted, a person needs only $3,210 to be among the wealthiest half of world citizens in mid-2015. However, $68,800 is required to be a member of the top 10% of global wealth holders, and $759,900 to belong to the top 1%.
While the bottom half of adults collectively own less than 1% of total wealth, the richest decile holds 87.7% of assets, and the top percentile alone accounts for half of total household wealth.
So, you need $3,000 or so to be in the top half of the world’s wealthy people. And $70,000 or so to be in the top 10%.
In pretty much all of Europe and America this means that anyone who has paid off their mortgage is in the top 10%. And anyone with a reasonable private pension would be too.
So, how do we end up with all those poor people, poor in wealth that is, in those rich countries? The USA and Europe have developed financial and banking systems, in a manner which most of the rest of the world does not.
If you’ve no debts and have $10 in your pocket you have more wealth than 25% of Americans. More than that 25% of Americans have collectively that is.
It is possible to have negative wealth. To have debts that are greater than your assets. But this is only possible in a reasonably advanced society, where there’s a financial and banking system that will lend to people without assets.
And that’s what that negative wealth is. Part of the financial life cycle rather than evidence of great poverty. Those poor people in India and Africa aren’t poor in this same manner.
They’re the people standing there with their labor and the clothes on their back and nothing else. But the people in the rich countries who are in that bottom 10 to 20% of the world’s wealth distribution are simply people with more debt than assets.
And the reason there are no Chinese in there is because the Chinese financial system doesn’t work that way. Mortgages, student loans and so on pretty much don’t exist: so there’s no one with negative wealth.
Forbes / ABC Flash Point Wealth News 2020.