Posts Tagged ‘China’


The United States, as I have shown over the past week (e.g., here, here, and here), has an obscenely unequal distribution of wealth.

As illustrated in the chart above, the members of the bottom 90 percent own only 27.8 percent of total household wealth, while the bulk of the wealth is held by the top 10 percent: 43.9 percent by the top 10 to 1 percent, 18.2 percent by the top 1 to 0.1 percent, 9.4 percent by the top 0.1 to 0.01 percent, and finally 9.7 percent by the top 0.01 percent.

How do we put that grotesque level of inequality into perspective? One way is by taking a historical perspective; the other is by looking across the world today.

As it turns out, Nature (unfortunately behind a paywall) has just published a study in which the authors attempt to estimate the degree of wealth inequality in ancient societies for which we do not have written records.* What they did is collect data from 63 archaeological sites or groups of sites, used the distribution of house sizes as a proxy for wealth, and assigned Gini coefficients to each society.**

What they are able to show is that wealth disparities generally increased with the domestication of plants and animals and with increased sociopolitical scale. The basic idea is that wealth disparities cannot accumulate within lineages until mechanisms for the transmission of wealth across generations become common, as is much more likely within sedentary societies. Thus, less wealth is typically transmitted across generations in hunter-gatherer and horticultural societies than in agricultural or pastoral societies.


As is clear from the chart above, there were huge differences in the responses of societies to these factors in the New World (North America and Mesoamerica) and the Old World (Euroasia) after the end of the Neolithic period. Much to the researchers’ surprise, inequality kept rising in the Old World while it hit a plateau in the New World. They argue that the generally higher wealth disparities identified in post-Neolithic Eurasia were initially due to the greater availability of large mammals that could be domesticated, because they allowed more productive agricultural extensification, and also eventually led to the development of a mounted warrior elite able to expand polities to sizes that were not possible in North America and Mesoamerica before the arrival of Europeans.

These processes increased inequality by operating on both ends of the wealth distribution, increasing the holdings of the rich while decreasing those of the poor.

The authors note that the highest modeled wealth Gini coefficients in their Old World sample (0.48 at around ad 1, 0.60 at around ∆6,000 in the chart above) are similar to contemporary values for the Slovak Republic (0.45) and Spain (0.58), although much lower than for China (0.73) or the United States in 2000 (0.80).

Thus, the authors conclude,

Even given the possibility that the Gini coefficients constructed here may underestimate true household wealth disparities, it is safe to say that the degree of wealth inequality experienced by many households today is considerably higher than has been the norm over the last ten millennia.

How right they are!


According to the latest Credit Suisse Research Institute’s Global Wealth Report, the members of the global top 1 percent now own more than half (50.1 percent) of all household wealth in the world.

In terms of wealth bands, the United States has by far the greatest number of millionaires: 15.4 million, an increase of 1.1 million adults over 2016. For 2017, that amounts to 43 percent of the world total. (Japan holds second place, with only 7 percent of the world’s millionaires, a decline of 338 from 2016 to 2017.)

top pyramid
Much the same degree of concentration also occurs at the top of the pyramid. According to the Credit Suisse calculations, 148,200 adults worldwide can be classed as ultra-high net worth individuals, with a net worth above US$50 million—an increase of 13 percent (19,600 adults) during the past year.

Once again, the United States dominates the regional rankings, with 75,000 ultra-high net worth residents (51 percent), with China occupying second place with 18,100 ultra-high net worth individuals (up 3,000 on the year).

The authors of the report are clear: since the crash of 2007-08, top wealth holders benefited in particular and, across all regions, wealth inequality has risen, as median wealth declined. And their projections for 2022 suggest “more pessimistic scenarios for the immediate years ahead.”

Yes, indeed, the arc of recent capitalist history appears to be following that of millenia of prehistory, which bends toward greater inequality.


*The archaeological contexts sampled from the Old World range from around 11,000 to about 2,000 years ago (plus one recent set of !Kung San encampments), and in the Americas, from around 3,000 to about 300 years ago.

**The Gini coefficient (named after the Italian statistician Corrado Gini) is a measure of statistical dispersion intended to represent the distribution of income or wealth among the members of a group (e.g., a nation). Inequality on the Gini scale is measured between 0, where everybody is equal, and 1, where all the income or wealth is captured by a single person. I have expressed my own reservations about comparing Gini coefficients across countries or regions here.


The timing could not have been better, at least for me. It just so happens I’m teaching Thorsten Veblen’s Theory of the Leisure Class this week. It should become quickly obvious to students that, as I have argued before on this blog, we’re now in the midst of a Second Gilded Age.

This is confirmed in a new report by UBS/PwC, according to which, after a brief pause in 2015, the expansion in billionaire wealth around the world has resumed.

Thus, billionaire wealth rose 17 percent in 2016 (up from $5.1 trillion to $6 trillion), far more than the 5.8-percent nominal GDP growth figure and double the rate of the MSCI AC World Index.** There was also a 10-percent rise in the number of billionaires globally to 1,542. Despite a period of heightened geopolitical uncertainty, the world’s ultrawealthy are flourishing.

The United States still has the world’s largest concentration of billionaire wealth. It grew by 15 percent from $2.4 trillion to $2.8 trillion as billionaires prospered, far outstripping the MSCI AC World Index. Thirty-nine Americans entered the billion-dollar plus wealth band and 14 dropped off.


Europe’s billionaire population was static in 2016. Twenty-four entered this wealth band, while 21 dropped off.*** There were 342 European billionaires at the end of 2016.

The biggest jump occurred in Asia. Three quarters of the newly minted billionaires are from the region’s two biggest economies—China and India. China had by far the highest number, adding a net 67 to total 318. India’s billionaire population climbed 16 to 100. Taken together, the wealth of Asian billionaires grew by almost a third (31 percent) in 2016, up from $1.5 trillion to $2 trillion.

So, what do the world’s billionaires do with their vast wealth? Most of it is used to capture even more income and wealth. Thus, the 1,542 billionaires in the UBS/PwC database own or partly own companies that directly employ at least 27.7 million people worldwide—roughly the same as the UK’s working population. And, via an array of financial instruments and “club deals,” they manage to siphon off a large part of the surplus created by the rest of the global working-class.****


Apparently, the world’s billionaires are also becoming major patrons of sports, such as football (both global and American), hockey, baseball, and basketball. According to the report, more than 140 of the top sports clubs globally are owned by just 109 billionaires.*****

One European entrepreneur explains why he owns a sports club in the following way. “Sport is my life and my dearest hobby,” he says. “Further, the publicity you get from the broadcasting is global. The business works according to the theme ‘you win on Sunday and sell on Monday.’ People always identify themselves with winners. A er all, I not only sponsor, whatever I do in this eld must be sustainable and needs to make commercial sense.”

It should come as no surprise that Veblen held a quite different view:

Addiction to athletic sports, not only in the way of direct participation, but also in the way of sentiment and moral support, is, in a more or less pronounced degree, a characteristic of the leisure class; and it is a trait which that class shares with the lower-class delinquents, and with such atavistic elements throughout the body of the community as are endowed with a dominant predaceous trend.

Clearly, the Gilded Age today shares with its historical predecessor a “dominant predaceous trend” that enables the world’s billionaires to accumulate more and more wealth and leaves the rest of us behind.


*The title of this post is from the collection of short stories by Mark Twain and Charles Dudley Warner, published in 1873. Apparently, the name chosen by Twain and Warner was inspired by William Shakespeare’s The Life and Death of King John (Act 4, Scene 2):

Therefore, to be possess’d with double pomp,
To guard a title that was rich before,
To gild refined gold, to paint the lily,
To throw a perfume on the violet,
To smooth the ice, or add another hue
Unto the rainbow, or with taper-light
To seek the beauteous eye of heaven to garnish,
Is wasteful and ridiculous excess.

**The MSCI AC World Index is a market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world. It is maintained by Morgan Stanley Capital International, and is comprised of stocks from both developed and emerging markets.

***Germany, Europe’s largest economy, also has the most billionaires, at 117. The United Kingdom comes a distant second, at 55, followed by Italy (42), France (39) and Switzerland (35).

****One high-profile example of clubbing together occurred when Warren Buffett’s Berkshire Hathaway group backed the ill-fated Kraft Heinz $143-billion bid for Unilever in February 2017. Buffett has a record of helping the 3G private equity vehicle behind the bid to finance its deals. 3G is controlled by Jorge Paolo Lemann, Brazil’s richest man, and his partners. Buffett has added his financial firepower to 3G’s acquisitions of doughnut chain Tim Hortons as well as Kraft Heinz.

*****The Glazer family, worth an estimated $4.7 billion in 2015, controls 83 percent of my own favorite sports team.


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Last year, as I reported the other day, I published over 800 new posts.

I’ve never done this before. However, I decided to look back over the year and choose one post for each month of 2016:

January—Liberal ideology

February—Who are the capitalists?

March—Yea, they’re angry!

April—Life among the liberal econ

May—Letting capitalism off the hook

June—Globalization, inequality, and imperialism

July—Trump and the Prosperity Gospel

August—The Mandibles and dystopian finance fiction

September—What about the white working-class?

October—Nobel economics—or why does capital hire labor?

November—Condition of the working-class in the United States

December—China syndrome



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