How fast is wealth concentrating at the top?

Astonishingly fast. Here’s what’s been happening in the UK:

Collective wealth of the UK’s 1000 richest people

1997 =   £98 billion

2008 =   £413 billion

2010 =   £336 billion

2012 =   £414 billion

2013 =   £450 billion

2014 =   £519 billion

Source: Sunday Times Rich List

As you can see there was a dip after the financial crash in 2008 – because much of the wealth of the super-rich is in the form of notional, paper values (bonds, shares, and other such so-called investments) that can lose or gain value very quickly  – but the super-rich have bounced back, achieving a staggering 15% increase in their wealth in the last year.

 In the US, between 1979 and 2012, the majority of incomes stagnated or grew very slowly, while the poorest 5th suffered a substantial loss. But meanwhile, the rich roared ahead, swallowing up most of the spoils of economic growth, with the 1% enjoying a 185% increase, and within that group, the top 0.01% pocketing a 685% rise in real income! It wasn’t always thus. In the 1949-1979 period, the incomes of the bottom 20% in the US increased by 121% while those of the top 1% increased by only 38.9%, and the top 0.01% by 29.1%.

Source: Maxine Simpson yachtfan. Creative Commons

Source: Maxine Simpson yachtfan. Creative Commons

Exam questions for the day.

  1. The wealth of the 85 richest people in the world equals the wealth of the poorest half of the world’s population, all 3.5 billion of them. Is this a rational allocation of resources?* Explain and defend your answer. *Note: no marks will be given for mathematical elegance in answering this question.
  2. If the total wealth of the richest 1000 people in the UK equals £519 billion and the NHS (annual cost £130bn) desperately needs another £8billion, what should we do? (Figures from The Sunday Times Rich List and the UK Office of National Statistics: http://www.ukpublicspending.co.uk/central_spending_2013UKbs)
  3. If the total wealth of the richest 1000 people in the UK equals £519 billion and the UK has a deficit of £100billion, should we a) continuing borrowing from the rich and paying them interest, b) introduce a wealth tax, or c) do something else?
  4. Does the UK need austerity?
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