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the world’s households owned property and net financial assets worth almost $256trn in mid-2016. That is about 3.4 times the world’s annual GDP. If this wealth

the world’s households owned property and net financial assets worth almost $256trn in mid-2016. That is about 3.4 times the world’s annual GDP. If this wealth were divided equally it would come to $52,819 per adult. I can understand why it's tempting to perform this calculation (you've got two numbers, may as well divide them), but I kind of wish people would stop doing so then trying to draw conclusions about the result. Especially if they work for an organization that calls itself "The Economist", which implies that the author knows something about Economics. Because all it serves to do is convince people who don't understand how economies work that there is in fact some big fixed pile of "wealth" out there, and that all those rich people have hoarded it already and are now sitting on it, preventing anybody else from having any of it. ... which is, of course, silly. And the author should know that.

jokoon 10y ago
People will always think about keeping their own sweet comfort before anything else in the world. And then, they will try to get some more if they can. Meanwhile, for some weird reason, they won't really bother themselves with all the poverty in the world, because there is simply nothing relevant enough they can do about it. It's called individualism. It's not a matter of rich people hoarding wealth, it's just that it's culturally natural to behave that way. Nobody blames rich people, it's just that everybody is jealous. There is nobody else to blame than every each of us, collectively.
kashkhan 10y ago
So wealth is meaningless and the rich hoarding tons of it aren't materially better off than the homeless sleeping in your doorway? If there isn't a single limited pile of wealth, then why can't we helicopter drop on everyone millions of dollars, and raise all boats to American lifestyle level.
- jasonkester 10y ago
  If it really isn't limited then why don't we give everyone a million dollars. In effect, we have. I work, earn a dollar and put it in the bank... who lends it to a company who pays it to somebody else... who puts it in the bank... There's orders of magnitude less pie to go around than has in fact gone around. That's essentially the basis for the world economy.
  - kashkhan 10y ago
    you don't make the dollar. You get it from someone else. You can't arbitrarily make assets. The total capital in the world grows but grows slowly. And doubly slowly for you if you are poor. I think Piketty wrote something about that.
    - jasonkester 10y ago
      You're mistaken on this point as well. You absolutely can make assets. You can create wealth. For an example, I live off the profits of a SaaS business that I built myself. In addition to creating wealth for me, it is in fact an asset that I can sell if ever I want. It genuinely is "money" poofed into existence out of nowhere. All we've actually done is add an extra zig in to the capital flow I described above. So before, we had Joe earning a dollar, using it to buy a donut from the grocer who puts it in to the bank. Now, Joe gives that dollar to me in exchange for my service, and I use it to buy that donut. No central authority decided to increase the wealth supply. I did it myself.
      - deleted 10y ago
        [deleted]
  - labster 10y ago
    Don't worry, it's turtles all the way down.
- LukaAl 10y ago
  We could give everyone a million making everyone a millionaire. But the value of that million will be pretty low or, put in another way, this will generate a lot of inflation basically returning at the starting point. The thing is that the dollar as no value by itself, its value derives from what it could buy. If the economic activity increases generating more value, the value of the dollar will increase. And that's not just theory, that's what happened in the last 20 years were a large number of population in developing countries were raised out of poverty. Check the Milanovic chart for seeing it [1]. The second problem is that it is not necessary that a society that has an unequal wealth distribution is also unjust. Suppose to have a society where everybody between 20 and 60 years old works for 1K a month. Before 20 years old the could use debt to leave, after 60 years old to their death (let's say 80 years old) they live with the savings. You would agree that this society is just, everybody makes the same amount of money. And yet there is inequality in wealth distribution. Youngs just before turning 20 will have a huge debt, people turning 60 will be, conversely, in the top 1%. This example could sound naïve, replace it with student loan and pension funds and you will see that is pretty much the status of US economy. [1] http://blogs.ft.com/off-message/files/2013/10/Change-in-real-income-between-1988-and-2008-at-various-percentiles-of-global-income-distribution-calculated-in-2005-international-dollars-Branko-Milanovic.jpg http://blogs.ft.com/off-message/files/2013/10/Change-in-real...
  - kashkhan 10y ago
    Yes there will be inflation but it will hurt the rich much more than the poor. Assuming the real world value of dollar goes down by 10x due to inflation, the median would still be the equivalent of $100k, while the top guys will go from $100B to $10B. As opposed to today's $2k median and $100B top.
    - JLK_121416 10y ago
      If bread becomes 10x as expensive, who will be hurt more?
      - kashkhan 10y ago
        The homeless guy has no money to buy a $3 loaf today. After he gets a million dollars he will have money to buy a $30 loaf of bread.
cm2187 10y ago
The biggest factor being real estate. As houses appreciate in value, home owner become wealthier on paper, but that doesn't change anything to their way or quality of life. They can't afford a nanny more than before. They can't buy a bigger car than before. But these statistics would suggest the contrary. The only way home owner can monetize their asset is by selling it and go live in a cheap place. That's only a meaningful argument if tens of millions of people do that which they do not.
- ricardobeat 10y ago
  The fact that they choose not to exercise the worth of their assets does not make them less valuable.
- MagnumOpus 10y ago
  > They can't afford a nanny more than before. They can't buy a bigger car than before If they want to inherit their house to children, that might be the case. But that is the case with any asset - it is irrelevant whether any jewellery or painting you own is worth $1 or $1 million if you never intend to sell it, ever. But the house is real wealth and that wealth can be unlocked - a reverse mortgage is not unusual, and the more valuable the house, the higher the annuity you can earn from releasing the equity from it step by step. And that allows you to get a nanny or make car payments or go on cruises or whatever.
  - cm2187 10y ago
    A mortgage is not creating wealth. You are merely borrowing against your future revenues. The house is merely used a collateral. The only way you can release this wealth is by selling it and moving to live in a cheaper place. But to a family who lives in London, always had and has no plan to leave, this is only theoretical wealth. It doesn't really say much about wealth inequality between different cities or countries.
DocTomoe 10y ago
Not to mention that $53k in Laos makes you live like a king, while $53k in central Tokyo makes you homeless.
- twblalock 10y ago
  Lots of people in central Tokyo make less than $53k and are not homeless.
savanaly 10y ago
To expand on this poster's point (at least, I think this is where you were going with it), one of the biggest differences in perspective between non-economists and economists is that the former focus more on money and the latter more on goods. Economists recognize that money is in and of itself useless, it is simply a store of value. At the end of the day, it matters not who has more money in their bank account but who has claimed more of the scarce resources of the world for themselves. Seen in this way, statements about redistributing the monetary wealth of the world are pretty much useless, since people spend money in different ways. It may be that everyone holds $52,819 after the great redistribution, but the value of money and price of goods would have to change drastically such that the number is meaningless and not representative of what such a state of the world would be like (we would have to build a lot more big screen tv's, medium income housing, etc. if the plan were taken to fruition, and a lot fewer opulent dwellings in big cities and yachts). Furthermore, the very wealthy invest and save a lot more (how else would the great wealth accrue if they spend it as quickly as they earn it?). If the wealth of the very wealthy were redistributed we would quickly learn that what really limits the welfare of your average consumer is the production capacity of the economy-- not the total amount of nominal money they hold.
- pg314 10y ago
  > what really limits the welfare of your average consumer is the production capacity of the economy A counterpoint: some 795 million people in the world do not have enough food to lead a healthy active life. That's about one in nine people on earth. [1] I do not think that is because of the production capacity of the economy. A little redistribution would go a long way... [1] https://www.wfp.org/hunger/stats https://www.wfp.org/hunger/stats
  - savanaly 10y ago
    Right, and if you redistributed the monetary wealth down to the starving people, they would quickly buy up all the slack in the existing food chain and still not have enough food. If we're lucky and the free market is allowed to operate from there (oops-- hope the government didn't institute a price ceiling for food when the price shot up or this next part won't happen!) then some yacht factory somewhere will be broken down and recreated as a farm to make the now high in demand (and profitable) food and in the end the production capacity of the economy would satisfy those 795 million. So we're not in disagreement, but I think the distinction between redistributing money and reorienting the supply side of the economy to be more egalitarian is very important.
drieddust 10y ago
> Unlike many studies of prosperity and inequality, this one counts household assets rather than income While I disagree with his premise of translating it into money, I think his point still stands that whomsoever holds assets alo control means of becoming rich out of those assets which means poor and bound to become poorer.
wojcech 10y ago
> ... which is, of course, silly. And the author should know that. This is not sufficient to explain to people why there are no rich conspirators hiding wealth. Mind you, I mostly agree with you. But I personally feel we need to have as simple as possible, verifiable, non debated arguments before we are allowed to think of things as silly. > ... which is, of course, silly. And the author should know that, since I assume he is aware of $clear_refutation Otherwise we either delude yourselves or dismiss others

jokoon 10y ago

People will always think about keeping their own sweet comfort before anything else in the world. And then, they will try to get some more if they can. Meanwhile, for some weird reason, they won't really bother themselves with all the poverty in the world, because there is simply nothing relevant enough they can do about it. It's called individualism. It's not a matter of rich people hoarding wealth, it's just that it's culturally natural to behave that way. Nobody blames rich people, it's just that everybody is jealous. There is nobody else to blame than every each of us, collectively.

kashkhan 10y ago

So wealth is meaningless and the rich hoarding tons of it aren't materially better off than the homeless sleeping in your doorway? If there isn't a single limited pile of wealth, then why can't we helicopter drop on everyone millions of dollars, and raise all boats to American lifestyle level.

jasonkester 10y ago
If it really isn't limited then why don't we give everyone a million dollars. In effect, we have. I work, earn a dollar and put it in the bank... who lends it to a company who pays it to somebody else... who puts it in the bank... There's orders of magnitude less pie to go around than has in fact gone around. That's essentially the basis for the world economy.
- kashkhan 10y ago
  you don't make the dollar. You get it from someone else. You can't arbitrarily make assets. The total capital in the world grows but grows slowly. And doubly slowly for you if you are poor. I think Piketty wrote something about that.
  - jasonkester 10y ago
    You're mistaken on this point as well. You absolutely can make assets. You can create wealth. For an example, I live off the profits of a SaaS business that I built myself. In addition to creating wealth for me, it is in fact an asset that I can sell if ever I want. It genuinely is "money" poofed into existence out of nowhere. All we've actually done is add an extra zig in to the capital flow I described above. So before, we had Joe earning a dollar, using it to buy a donut from the grocer who puts it in to the bank. Now, Joe gives that dollar to me in exchange for my service, and I use it to buy that donut. No central authority decided to increase the wealth supply. I did it myself.
    - deleted 10y ago
      [deleted]
- labster 10y ago
  Don't worry, it's turtles all the way down.
LukaAl 10y ago
We could give everyone a million making everyone a millionaire. But the value of that million will be pretty low or, put in another way, this will generate a lot of inflation basically returning at the starting point. The thing is that the dollar as no value by itself, its value derives from what it could buy. If the economic activity increases generating more value, the value of the dollar will increase. And that's not just theory, that's what happened in the last 20 years were a large number of population in developing countries were raised out of poverty. Check the Milanovic chart for seeing it [1]. The second problem is that it is not necessary that a society that has an unequal wealth distribution is also unjust. Suppose to have a society where everybody between 20 and 60 years old works for 1K a month. Before 20 years old the could use debt to leave, after 60 years old to their death (let's say 80 years old) they live with the savings. You would agree that this society is just, everybody makes the same amount of money. And yet there is inequality in wealth distribution. Youngs just before turning 20 will have a huge debt, people turning 60 will be, conversely, in the top 1%. This example could sound naïve, replace it with student loan and pension funds and you will see that is pretty much the status of US economy. [1] http://blogs.ft.com/off-message/files/2013/10/Change-in-real-income-between-1988-and-2008-at-various-percentiles-of-global-income-distribution-calculated-in-2005-international-dollars-Branko-Milanovic.jpg http://blogs.ft.com/off-message/files/2013/10/Change-in-real...
- kashkhan 10y ago
  Yes there will be inflation but it will hurt the rich much more than the poor. Assuming the real world value of dollar goes down by 10x due to inflation, the median would still be the equivalent of $100k, while the top guys will go from $100B to $10B. As opposed to today's $2k median and $100B top.
  - JLK_121416 10y ago
    If bread becomes 10x as expensive, who will be hurt more?
    - kashkhan 10y ago
      The homeless guy has no money to buy a $3 loaf today. After he gets a million dollars he will have money to buy a $30 loaf of bread.

cm2187 10y ago

The biggest factor being real estate. As houses appreciate in value, home owner become wealthier on paper, but that doesn't change anything to their way or quality of life. They can't afford a nanny more than before. They can't buy a bigger car than before. But these statistics would suggest the contrary. The only way home owner can monetize their asset is by selling it and go live in a cheap place. That's only a meaningful argument if tens of millions of people do that which they do not.

ricardobeat 10y ago
The fact that they choose not to exercise the worth of their assets does not make them less valuable.
MagnumOpus 10y ago
> They can't afford a nanny more than before. They can't buy a bigger car than before If they want to inherit their house to children, that might be the case. But that is the case with any asset - it is irrelevant whether any jewellery or painting you own is worth $1 or $1 million if you never intend to sell it, ever. But the house is real wealth and that wealth can be unlocked - a reverse mortgage is not unusual, and the more valuable the house, the higher the annuity you can earn from releasing the equity from it step by step. And that allows you to get a nanny or make car payments or go on cruises or whatever.
- cm2187 10y ago
  A mortgage is not creating wealth. You are merely borrowing against your future revenues. The house is merely used a collateral. The only way you can release this wealth is by selling it and moving to live in a cheaper place. But to a family who lives in London, always had and has no plan to leave, this is only theoretical wealth. It doesn't really say much about wealth inequality between different cities or countries.

DocTomoe 10y ago

Not to mention that $53k in Laos makes you live like a king, while $53k in central Tokyo makes you homeless.

twblalock 10y ago
Lots of people in central Tokyo make less than $53k and are not homeless.

savanaly 10y ago

To expand on this poster's point (at least, I think this is where you were going with it), one of the biggest differences in perspective between non-economists and economists is that the former focus more on money and the latter more on goods. Economists recognize that money is in and of itself useless, it is simply a store of value. At the end of the day, it matters not who has more money in their bank account but who has claimed more of the scarce resources of the world for themselves. Seen in this way, statements about redistributing the monetary wealth of the world are pretty much useless, since people spend money in different ways. It may be that everyone holds $52,819 after the great redistribution, but the value of money and price of goods would have to change drastically such that the number is meaningless and not representative of what such a state of the world would be like (we would have to build a lot more big screen tv's, medium income housing, etc. if the plan were taken to fruition, and a lot fewer opulent dwellings in big cities and yachts). Furthermore, the very wealthy invest and save a lot more (how else would the great wealth accrue if they spend it as quickly as they earn it?). If the wealth of the very wealthy were redistributed we would quickly learn that what really limits the welfare of your average consumer is the production capacity of the economy-- not the total amount of nominal money they hold.

pg314 10y ago
> what really limits the welfare of your average consumer is the production capacity of the economy A counterpoint: some 795 million people in the world do not have enough food to lead a healthy active life. That's about one in nine people on earth. [1] I do not think that is because of the production capacity of the economy. A little redistribution would go a long way... [1] https://www.wfp.org/hunger/stats https://www.wfp.org/hunger/stats
- savanaly 10y ago
  Right, and if you redistributed the monetary wealth down to the starving people, they would quickly buy up all the slack in the existing food chain and still not have enough food. If we're lucky and the free market is allowed to operate from there (oops-- hope the government didn't institute a price ceiling for food when the price shot up or this next part won't happen!) then some yacht factory somewhere will be broken down and recreated as a farm to make the now high in demand (and profitable) food and in the end the production capacity of the economy would satisfy those 795 million. So we're not in disagreement, but I think the distinction between redistributing money and reorienting the supply side of the economy to be more egalitarian is very important.

drieddust 10y ago

> Unlike many studies of prosperity and inequality, this one counts household assets rather than income While I disagree with his premise of translating it into money, I think his point still stands that whomsoever holds assets alo control means of becoming rich out of those assets which means poor and bound to become poorer.

wojcech 10y ago

> ... which is, of course, silly. And the author should know that. This is not sufficient to explain to people why there are no rich conspirators hiding wealth. Mind you, I mostly agree with you. But I personally feel we need to have as simple as possible, verifiable, non debated arguments before we are allowed to think of things as silly. > ... which is, of course, silly. And the author should know that, since I assume he is aware of $clear_refutation Otherwise we either delude yourselves or dismiss others