The Astounding Facts about Global & US Inequality

In the coming weeks we will be posting a series of articles on the growing discussion about global inequality. The catalyst for this conversation is a recent report from Oxfam that shares some astounding facts about the degree and nature of wealth and poverty in the world today. This article merely attempts to set the stage by sharing some basic statistics that might spur some reflection. The full Oxfam report can be accessed here.

• Almost half of the world's wealth is now owned by just one percent of the population

• The wealth of the 1% of richest people on earth amounts to $110 trillion. That is 65 times the total wealth of the bottom half of the world's population

• The bottom half of the world's population owns the same wealth as the richest 85 people in the world.

• 7 out of 10 people live in countries where economic inequality has increased in the last 30 years

• The richest 1% increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012

• In the US, the richest 1% captured 95% of post-financial crisis growth since 2009, while the bottom 90% became poorer

IS THIS NEW?

Zooming into the US, the chart below shows the share of wealth of the top 1% over the past century. What we see is that during much of the 20th century, the US was a more equal society. The last time inequality approached current levels was in 1928. This was followed by the Great Depression, launched on September 4th, 1929 (Black Tuesday).

There are many causes and explanations for these trends and this isn't necessarily bad news. It's just NEW news.

Lastly, I'll leave you with a closer snapshot of income gains in the last few decades across various economic strata. The graph below shows the change in after-tax income for various economic groups since 1979. What is material to note is that while all incomes are rising, they are rising much faster on a percentage basis for the richest. We expect income gains for the richest to be larger in absolute terms. However, the wide gap in gains in percentage terms shows that the rich are getting rich much much faster than the poor.

Hopefully food for thought!