Richest 0.1% increased wealth by as much as poorest half

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A report has revealed that over the last 35 years, the global top 0.1 per cent of earners increased their wealth by as much as the poorest half.

The World Inequality Report details the widening gap between the very rich and poor.

The researchers suggest that EU-style policies are the best-suited to reduce global inequality and poverty, according to the researchers.

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A report has revealed that over the last 35 years, the global top 0.1 per cent of earners increased their wealth by as much as the poorest half. Pictured is Bill Gates, who is currently the richest person in the world

A report has revealed that over the last 35 years, the global top 0.1 per cent of earners increased their wealth by as much as the poorest half. Pictured is Bill Gates, who is currently the richest person in the world

WHY IS INEQUALITY SO HIGH? 

The top one per cent of earners captured nearly 10 per cent of the income in both the US and Western Europe in 1980.

In 2016 it had climbed to 12 per cent in Western Europe but had more than doubled to 20 per cent in the United States.

The researchers said the spike in inequality in the United States was due ‘massive educational inequalities’ and a tax system having become less progressive.

In Western Europe there was less decline in the progressivity of taxes, and wage-setting and educational policies were more favourable to lower and middle-income groups.

The World Inequality Report draws on the work of over 100 researchers from more than 70 countries.

The report, drafted by a team including star French economist Thomas Piketty, used a massive database combining economic statistics and survey data from around the world.

They found that fast growth in developing countries such as China and India meant that the poorest half of the world population still saw their income grow significantly in recent decades.

The middle class meanwhile got squeezed.

‘In recent decades, income inequality has increased in nearly all countries, but at different speeds, suggesting that institutions and policies matter in shaping inequality,’ said the researchers.

They found market liberalisation and privatisations led to increases in inequality in Russia, China and India, but at different rates reflecting the speed at which they opened up their economies.

Warren Buffet is now worth £56.4 billion/$75.6 billion

Warren Buffet is now worth £56.4 billion/$75.6 billion

Amazon's Jeff Bezos is worth £54.3 billion/$72.8 billion

Amazon's Jeff Bezos is worth £54.3 billion/$72.8 billion

Pictured are Warren Buffet (left) and Jeff Bezos (right) who are currently number two and three on the world’s rich list

Meanwhile they found ‘the divergence in inequality levels has been particularly extreme between Western Europe and the United States, which had similar levels of inequality in 1980 but today are in radically different situations.’

The top one per cent of earners captured nearly 10 per cent of the income in both areas in 1980. 

In 2016 it had climbed to 12 per cent in Western Europe but had more than doubled to 20 per cent in the United States.

The top one per cent of earners captured nearly 10 per cent of the income in both areas in 1980. In 2016 it had climbed to 12 per cent in Western Europe but had more than doubled to 20 per cent in the United States

The top one per cent of earners captured nearly 10 per cent of the income in both areas in 1980. In 2016 it had climbed to 12 per cent in Western Europe but had more than doubled to 20 per cent in the United States

The top one per cent of earners captured nearly 10 per cent of the income in both areas in 1980. In 2016 it had climbed to 12 per cent in Western Europe but had more than doubled to 20 per cent in the United States

LOOKING TO THE FUTURE 

The team looked to the future under various policy scenarios.

If the world follows US-style policies the top one per cent of earners will see their share of global income climb from just over 20 per cent to 28 per cent by 2050. 

On the other hand the bottom 50 per cent would see their share slide from just under a tenth of global income to closer to seven per cent.

Continuing current policies would see a less dramatic divergence, but inequality would still keep expanding.

‘Alternatively, if in the coming decades all countries follow the moderate inequality trajectory of Europe over the past decades, global income inequality can be reduced -in which case there can also be substantial progress in eradicating global poverty,’ they said.

The report found that the average annual income per adult of the bottom 50 per cent of earners would climb from 3,100 euros ($3,650/£2,722) in 2016 to 4,500 euros ($5,306/£3,959) in 2050 if US-style economic policies are followed. 

But EU-style policies would see income nearly triple to 9,100 euros.

The researchers said: ‘The top 0.1 per cent income group (about 7 million people) captured as much of the world’s growth since 1980 as the bottom half of the adult population.’

The researchers said the spike in inequality in the United States was due to ‘massive educational inequalities’ and a tax system having become less progressive.

In Western Europe there was less decline in the progressivity of taxes, and wage-setting and educational policies were more favourable to lower and middle-income groups.

The team also looked to the future under various policy scenarios.

If the world follows US-style policies the top one per cent of earners will see their share of global income climb from just over 20 per cent to 28 per cent by 2050. 

On the other hand the bottom 50 per cent would see their share slide from just under a tenth of global income to closer to seven per cent.

Continuing current policies would see a less dramatic divergence, but inequality would still keep expanding.

‘Alternatively, if in the coming decades all countries follow the moderate inequality trajectory of Europe over the past decades, global income inequality can be reduced -in which case there can also be substantial progress in eradicating global poverty,’ the researchers said.

The researchers said the spike in inequality in the United States was due 'massive educational inequalities' and a tax system having become less progressive. In Western Europe there was less decline in the progressivity of taxes, and wage-setting and educational policies were more favourable to lower and middle-income groups

The researchers said the spike in inequality in the United States was due 'massive educational inequalities' and a tax system having become less progressive. In Western Europe there was less decline in the progressivity of taxes, and wage-setting and educational policies were more favourable to lower and middle-income groups

The researchers said the spike in inequality in the United States was due ‘massive educational inequalities’ and a tax system having become less progressive. In Western Europe there was less decline in the progressivity of taxes, and wage-setting and educational policies were more favourable to lower and middle-income groups

THE WORLD RICH LIST 
Name Worth
Bill Gates £64 billion/$86 billion
Warren Buffet £56.4 billion/$75.6 billion
Jeff Bezos £54.3 billion/$72.8 billion
Amancia Ortega £53.1 billion/$71.3 billion
Mark Zuckerberg £41.7 billion/$56 billion
Carlos Slim Helu £40.6 billion/$54.5 billion
Larry Ellison £38.9 billion/$52.2 billion
Charles Koch £36 billion/$48.3 billion
David Koch £36 billion/$48.3 billion
Michael Bloomberg £35.4 billion/$47.5 billion

The report found that the average annual income per adult of the bottom 50 per cent of earners would climb from 3,100 euros ($3,650/£2,722) in 2016 to 4,500 euros ($5,306/£3,959) in 2050 if US-style economic policies are followed.

But EU-style policies would see income nearly triple to 9,100 euros ($10,734/£8,000).

The researchers recommended increasing the progressivity of tax systems, which they said would also reduce incentives for aggressive wealth accumulation.

They also urged creating a global register of ownership of financial assets, which they said ‘would deal severe blows to tax evasion, money laundering, and rising inequality’.

In 2016, the share of total national income accounted for by just that nation’s top 10 per cent earners  was 37 per cent in Europe, 41 per cent in China, 46 per cent in Russia, 4 per cent in US-Canada, and around 55% in sub-Saharan Africa, Brazil, and India. In the Middle East, the world’s most unequal region according to our estimates, the top 10% capture 61% of national income

In 2016, the share of total national income accounted for by just that nation’s top 10 per cent earners  was 37 per cent in Europe, 41 per cent in China, 46 per cent in Russia, 4 per cent in US-Canada, and around 55% in sub-Saharan Africa, Brazil, and India. In the Middle East, the world’s most unequal region according to our estimates, the top 10% capture 61% of national income

In 2016, the share of total national income accounted for by just that nation’s top 10 per cent earners was 37 per cent in Europe, 41 per cent in China, 46 per cent in Russia, 47 per cent in US-Canada, and around 55 per cent in sub-Saharan Africa, Brazil, and India. In the Middle East, the world’s most unequal region according to our estimates, the top 10 per cent capture 61 per cent of national income

The researchers said the wealth held in tax havens has increased considerably since the 1970s and now accounts for about 10 per cent of global economic output.

The report’s authors acknowledged that economic inequality is to some extent inevitable, but warned ‘that if rising inequality is not properly monitored and addressed, it can lead to various sorts of political, economic, and social catastrophes’.





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